Apple's TV Revolution Delayed

The long-awaited set-top box won't make it out of the gate on time; Jobs & Co. are mum on the reasons why

Apple confirmed what many have been suspecting for several days now: Its much-anticipated Apple TV device will be delayed.

First unveiled by Apple Chief Executive Steve Jobs late last year with the code name iTV, Apple TV is a TV set-top device designed to receive digital content such as downloaded TV shows and movies over a wireless network and play them on a TV set.

When officially announced by Apple (AAPL) on Jan. 9, Jobs said the device would ship by the end of February. Apple's story now is simply that it's "taking a few weeks longer than expected" to finish the project and that the target is to have the product on store shelves by mid-March. A specific date was not given.

Regulatory Snag Possible

Apple is not the first tech titan to try to devise a better way to take video downloaded to a PC and make it available for viewing on a TV. Nor is it the first to hit snags (see, 1/29/07, "Internet TV Is Finally a Reality Show"). What's not clear is the cause. "At this stage of the game, they should be accumulating in a warehouse somewhere, ready to get out of the retail gate," says analyst Dave Carey of Portelligent, a research firm based in Austin, Tex.

The company hired to make the Apple TV device is widely believed to be the Taiwanese contract manufacturer Inventec, which makes the video iPod for Apple (see, 1/8/07, "Apple's Chinese Supply Lines"). An Apple spokeswoman wouldn't comment on the identity of the company involved. Other companies that make products for Apple include Hon Hai Precision Industry, also known as FoxConn, as well as Asustek and Quanta Computer.

One possibility is that Apple has yet to receive approval for the device from the Federal Communications Commission. The most recent Apple product to receive FCC approval was the latest version of the Airport wireless networking hub. It was approved on Jan. 9. The Apple TV device doesn't readily appear among the many products for which Apple has sought approval since the beginning of 2006, based on a search of the FCC Web site. "A pushout of two to three weeks suggests to me more of an issue with the FCC than with anything else," Carey says. Calls to the FCC weren't immediately returned.

In Search of the Holy Grail

Another issue may be a component shortage. Component suppliers known to have pieces in the Apple TV include Intel (INTC), Marvell (MRVL), and Seagate (STX). But a parts shortage probably would have been known long before Jobs set such an aggressive ship date for the product. "I doubt that it's an issue in the supply chain, because Apple is using common parts," says Chris Crotty, an analyst at iSuppli, a market research firm that specializes in electronic supply chain information. "Unless there's a special custom chip being used, there's no obvious component that strikes me as likely to have caused this delay."

Then there's the prospect that Apple—like so many other consumer electronics makers before it—simply had a harder time than expected in reaching the PC-to-TV entertainment holy grail. Whatever the cause, if it does meet its mid-March deadline and Apple TV is a success, Apple will still be well ahead of the pack.

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