Interchange Project

The real Apple TV (a computer for a TV).

For the longest time I’ve believed that a real Apple TV — a standalone TV product — would not happen.

People don’t buy TVs like they buy computers. They rarely upgrade and usually do when their current TV starts to go. And what could Apple really bring to TVs beyond a better industrial design and much nicer user interface?

But the rumblings have grown louder. And when Steve Jobs said before his death that he finally cracked the TV market, I knew that this might actually happen. And for Steve Jobs to say he “cracked it,” means he has something big up his sleeve.

For this TV to be a success, it would have to transform TV. It couldn’t just be the best TV available; it has to reinvent TV. The Apple TV/iTV would have to be like the iPhone was to the mobile phone market.

The more I thought about it, the more I realized that there are ways that Apple could crack this. Apple would have to make the TV into a computer in the mold of the iPad — friendly, enjoyable and approachable. It would have to be something that people think of as more than just a dumb box that pipes in TV programming.

This new TV would be the true center of a family’s digital life. It would not only do TV, movies and sports well, but it would also do photos, music, games and, yes, apps, well. It would link up to your smartphones, tablets and laptops. It would be like making your TV into a computer, in a good way.

This new TV will be similer to Apple TV set top box. In a perfect world, perhaps the current Apple TV would be Apple’s dream, but the problem is that most people already get a free set top box from their cable company. People haven’t been keen to add another one.

It’s increasingly looking like the only way to usher in a new era of TV that is more user friendly and much more connected to people’s digital lives is to create a dedicated TV. I don’t expect the Apple TV set top box to go away, and, in fact, I could see it becoming much more popular after a dedicated Apple TV is released.

But this new TV will be much more than just a TV with an Apple TV built in. Rest assured of that. The Apple TV makes a standard TV better, but that’s still a standard TV with a bad user interface and hard-to-find programming.

Below are my thoughts on what the dedicated Apple TV/iTV will be like. This is based off of what I’ve read, my years of following Apple and my own intuition about digital video.

One plug design

First, we can all agree that this would be a very good looking TV. It would most likely have an all glass front that spanned the entire face like the iMac, iPad and Apple’s 27-inch display. It would probably have an aluminum back. And it wouldn’t require a rats nest of wires to make it useful.

Out of the box the Apple TV/iTV will only need one plug — the power cable. It will have built in wifi and be connected to a myriad of Internet services that will allow users to download and stream movies, TV shows and sports content. No external boxes needed.

The central hub for this TV will of course be iCloud. In iCloud all of your TV shows, movies (this will eventually happen), photos, music and other multimedia content will reside. This will be the center of your Apple TV/iTV experience. The best part is that all of this content will also work on all of your other devices, making it seamless to consume this content at home and on the go.

It will also have a built-in and hidden antenna for viewing over-the-air broadcasts. It might support cable card (not sure on this though). Most likely, Apple will try to reimagine TV from something that you watch at a specific time to something much more ethereal. You watch TV when you want to. No DVR to mess with.

A DVR is a hack. The new Apple TV is a reimagining of TV.

You buy, rent and stream movies straight to your TV, no external boxes or discs needed.

Oh, it will play games too. Video games, with no big, loud, expensive console required.

Yes, you’ll be able use other boxes to with this TV, but it will require only one plug out of the box. And for most people that will be all they need.

This will be the TV of choice for chord cutters. View TV and movies on your schedule, with an incredibly easy to use user interface.

I also believe that this TV will have surprisingly good audio, just like the iMac and Apple 27-inch display have. Perhaps taken to another level. TVs have really bad audio, especially considering that this tepid audio is being paired with large and beautiful HD displays. Home theaters are expensive, hard to set up and not exactly attractive. Most people could benefit from having better built in speakers.

At the very least, expect this TV to have a 2.1 sound setup that has rich sound and good bass. It’s entirely possible, however, that this TV will have surround bar technology built in that will provide a surround sound experience.

Will this replace a good dedicated home theater set up? No. Will this audio be much better than most people are used to? Yes. Will this audio be completely hidden? Yes.

The design will be a big part of the allure of this TV. You’ll be able to do so much with just one cord. This TV will be strikingly beautiful.

It’ll just work

Plug the TV in and sign into your iTunes/iCloud account. That’s it.

You’ll also be able to sign into other digital accounts such as Netflix, Hulu+, MLB, NBA, etc. There will also be YouTube, Flickr and other online services.

No sources to manage. No wires everywhere. No maddening and slow UIs that make no sense. This will have a UI that anyone can grasp and use. It will be fast, unlike many cable and DVR boxes.

But the biggest switch will be that the concept of time will be gone. The cloud doesn’t care about time. Why should you care about time?

If you want to watch the Wonder Years, just ask your Apple TV how you can do so. No wondering when an episode might be on.

Sports? The current Apple TV already supports the streaming options from the NBA, NHL and MLB. I expect the NFL to be added by next fall. Instead of worry if a game that you want to watch on TV is on, you’ll just be able to watch it.

Gone will be the days of wondering if what you want to see if actually available. But won’t this be expensive? Instead of spending $50-150 a month on cable, you can put that money towards just viewing the content that you want.

Maybe the only sport that you care about is baseball. The MLB package is $100. That’s a month or two of cable. Now, however, you don’t have to worry about whether or not a game is on — you get them all, not just local games. (Except for those stupid blacked-out games, but that concept will eventually go away as digital distribution takes hold).

Maybe there are a few shows you really, really like. It will be cheaper to buy every episode of the shows you really like than to get cable. Or you can stream the shows from Netflix or Hulu+. But this sounds confusing, right?

View content by what’s available

The Apple TV/iTV will solve the balkanization of video content problem. Right now, you can view video content over the air, on cable, on Netflix streaming, on iTunes, on Hulu+, on set top boxes, etc. It can be really time consuming to search all of those services to see if what you want to see is available. But what if you didn’t have to search all of them?

The Apple TV/iTV will throw all of the content that is available to you in one searchable stream. You can search for what’s available to watch right now — over the air, cable, iCloud, Netflix, NBA/MLB/NFL/NHL streaming packages, etc. The TV will have apps for all of them, but it will also allow users to throw all of this together and view it as one giant content feed.

Why should you have to search iTunes, your iCloud account, Netflix and Hulu+ for a movie you want to see? The Apple TV will allow users to just search for a movie or TV show and the TV will intelligently show you it from across those services. Already own it in your iCloud account? Then we’ll show you that. Don’t own it, but it’s available on Netflix or Hulu+? We’ll show you that. Don’t own it and not available on those but available on iTunes to stream or buy? That’s your option.

It just works. Why should users have to even care where a TV show, movie or sports game is located? They just want to see it, and they’ll be able to, because this TV will just work.

User interface and remote

The user interface will be nothing like a standard TV or cable set top box. The UI will be similar to what is currently offered by the Apple TV set top box. In addition, I believe there will be a way to intelligently search through all of the content available to you. That will be the killer UI paradigm.

The remote will be simple, of course. Perhaps as simple as the current Apple TV remote. Or perhaps it will be a touch screen, similar to an iPod Touch.

With the Apple TV set top box, Apple has to have a cheap remote. Apple also knows you already have another remote that can change the volume, channel and input sources. A touch screen remote could greatly simplify navigating a TV.

By going touch screen, the remote can be exactly what it needs to be in a given situation and nothing else. A remote with buttons has to be all things at all times. That’s why they’re so confusing.

It’s certainly possible that this TV will come with a basic remote ala the current Apple TV and then allow for users to use their iPhones, iPod Touches and iPads as more full-featured remotes. How many people would buy this TV and not own either an iPhone or iPod Touch?

Or maybe Apple just throws in the cheapest iPod Touch with every TV. Why not? The Remote App for the iPod Touch is great, and Apple can easily make it even better. It’s especially great when you can enter text using the onscreen keyboard.

Rest assured, the UI and remote will be nothing like a standard TV. Apple will not be releasing a Sony TV: a really nice TV that looks like a nicer version of a competitor’s TV. Apple will release a TV nothing like what is out there.

Facetime

This will be one of the monster killer features of this TV. Apple will have more than 100 million Facetime devices out by the time this launches. Those devices will be able to do Facetime video chats with the Apple TV. Facetime on a computer is fine, especially for one-on-one uses, but it really breaks down for using it with multiple people. When I chat with my brother, his wife and two young children, it’s hard to really do this when their sitting around a computer Web cam.

Imagine be able to sit on your couch and do video chatting. The whole family could be sitting with you and you’d be able to get a lot more in the frame.

Because this will be built into a TV, the camera should be quite good, allowing for 1080p video conferencing. TVs are thicker than phones, tablets and computers. This will allow for high-quality lenses. The Macbook Air, due to being so thin, can’t do HD video chatting. But the Apple TV will be able to do great video chatting.

Bringing Facetime into the living room will take video conferencing to the next level. Facetime has tried to be video conferencing for the rest of us, but this will really cement that idea.

Airplay and mirroring

Perhaps two of the best reasons to get the current Apple TV set top box are AirPlay and mirroring. With AirPlay, you can send video, audio and photos from your iPhone, iPod Touch or iPad to your TV. You can go pumpkin picking with friends, take photos with your iPhone and then all view them on your TV when you get back by sending the photos from your iPhone to your Apple TV. Or you can rent a movie on your iPad, watch part of it on the train and then come home and finish it on your big-screen TV. It’s pretty nice.

Mirroring takes it to the next level. With mirroring, the iPad 2 and iPhone 4S can mirror what is being displayed on that device to a TV. This means that people can see what you’re seeing on your iPad. This is great for presentations, showing people how to use an iPad, surfing the Web and more.

The Apple TV/iTV will have this built in. No separate box needed. It will just work out of the box.

Having this just work out of the box will really make these features more accessible. People are creating a lot of content on their phones, but phones aren’t a great way to display content. The Apple TV/iTV will solve that issue.

Games

The iPhone, iPod Touch and iPad have been surprising video game hits. Now Apple is pushing the iPod Touch as a portable gaming device (the most popular in the world). The Apple TV will most likely run on iOS and run on the same hardware as the iPad. The iPad 2 can do HD video and play some pretty good looking games.

The Apple TV will have at least iPad 3 hardware, if not better. It will be able to do graphics in the same class as the PS3 and Xbox 360. People will be able to use iPhones and iPod Touches as controllers.

I don’t expect this to hurt so-called hardcore games — first-person shooters and role playing games — I do expect it to be great for the casual games market. I know many people who would never think about buying a PS3 or Xbox 360 that own a Wii.

You’ll get great looking games right out of the box. Even if you don’t buy this TV for games, you might just pick up a few to play. Imagine playing quiz games where you have four different iPhones to enter in answers? Or party games? Or digital board games?

For these kinds of party games, this Apple TV will really excel. The ability to have four touch screen controllers for a video game will allow forms of video games that current dedicated consoles can’t do. How cool is that?

Will Apple develop controllers beyond iPhones and iPod touches that people can buy? Not sure about that. But this TV will at least have the power that Apple could release controllers that could be used for hardcore gaming.

Apps

I would bet anything that this TV would run on iOS. Just like it could run video games, it could also run other apps developed for the Apple TV. At the minimum, the Apple TV/iTV will allow users to display what they’re doing on their iPhones, iPads and iPod Touches to this TV. I expect more, however.

Games are a certainty, as I’ve mentioned before. I believe this will not be as open as the App Store for the iPhone, iPod Touch and iPad. Rather, certainly classes of apps will be allowed. Games, audio applications, digital books with illustrations (The Night Before Christmas on a 50-inch TV, anyone?) and maybe some other apps.

Maybe Apple’s app and game model will be based on around Airplay and mirroring and that the actual apps and games will reside on other iOS devices. That’s possible, but it won’t matter much. Either way, this Apple TV will be able to use apps and games on a big, beautiful TV.

If you love the status quo, this isn’t for you

I believe this TV will accept HDMI inputs, and you’ll be able to hook up a cable box or video game console to it. But if you really like your current set up, this isn’t for you. This isn’t for people just looking for a more attractive TV.

This TV will be for people who don’t like the status quo, just like the iPhone was for people who didn’t like Blackberries and Windows Mobile phones with tiny screens and big keyboards. This TV will be for all the people upset that TVs are so hard to use and are such bad citizens of the Internet. This TV will be for people who don’t care about time and just want things to movie and TV shows.

This TV will be for people who value simplicity. This TV will be for people who have the Internet at the center of their media lives.

This TV will be for people who prefer Netflix streaming over getting physical discs in the mail.

For many people this TV will be harder to use. If you’re really used to the old paradigms for viewing TV, this might be a radicaly shift that won’t work for you. If you’re someone who has watched TV shows online and streamed movies, this new way of using your TV will be a breath of fresh air.

Conclusion

I think the Apple TV/iTV is real. I believe that Apple has working prototypes. Will Apple actually release a production product?

I’d put that at about a 75 percent chance that they do. Just because Apple has a pretty good prototype doesn’t mean this will be successful. And just because Apple thinks what they have is good, doesn’t mean they’ll release it. Insanely great is the bar they want to hit.

The iPhone wasn’t just good when it was released — it ushered in a new mobile computing era. Either this product really reinvents the wheel or Apple won’t release it. The Apple TV Take 2.0 is doing much better than the older Apple TV. Apple could just decide to keep making better Apple TV set top boxes with better iCloud and iTunes offerings.

Apple needs to get movies into iCloud. Imagine being able to buy and store movies in the cloud and be able to watch them on a variety of devices whenever you want? Apple needs that first. Apple also needs the NFL (the PS3 already has this, so it should happen) and some other content licenses first (ESPN, anyone?).

I would expect the earliest you would see this product is mid-2012. I wouldn’t be surprised if it was still a few years away. This product hinges completely on access to high quality digital content. Not enough is available right now. This product would fail today.

Once NFL Sunday Ticket comes to current Apple TV and movie studios allow movies to be bought and stored in iCloud, then you can really start looking forward to a real Apple TV. Those are the two main stumbling blocks right now.

What I have laid out here would be a revolutionary product, and if anyone could do it, it’s Apple. I hope they do it. The current state of TV is atrocious.

This TV would be a great product for people who enjoy getting content digitally and who don’t enjoy dealing with cable and all the assorted boxes making their living rooms ugly. I don’t have cable. I don’t like paying for a product that gives me a bunch of stuff that I don’t want and not nearly enough of what I want.

What I’ve laid out here is all feasible and is what we deserve. Will our lack of competition and net neutrality derail this dream? Let’s hope not.

We deserve TV like this.

iOS needs background syncing to make iCloud ‘just work’

iCloud is a strong addition to iOS and will help the iPhone, iPad, Apple TV and future iOS devices stand out. But iOS has a major missing feature: background syncing.

This is one of the biggest features that iOS needs to add. It’s nice that my devices can sync with each other and keep documents, applications and data synced, but there is a flaw in the model. Outside of a few areas, I have to open each app for them to sync, and the syncing does not occur until an app is opened.

For instance, Pages, Apple’s Microsoft Word competitor, can sync documents between iPhones and iPads. I can start a document on my iPad, make changes on my iPhone to that document and then those changes will sync over to my iPad version. However, these changes don’t happen in the background and require user input on all devices for the changes to occur.

So, what happens if I make changes to the iPad version of the document and then go on a plane with my iPhone? I need to review and make changes to my Pages document before an important meeting, but alas I don’t have Internet on the plane and thus don’t have the latest version of the document on my iPhone. Worse, what happens if I make changes to the iPhone version of that document while I’m offline, after I’ve made changes to the iPad version?

Which version wins? With background syncing, this wouldn’t be an issue.

For those of you who use Dropbox on multiple computers, you know this isn’t an issue. Dropbox just works. It’s always running, always syncing.

That’s how iCloud should be. Dropbox will always be a geek tool that is wedded to the old way of doing things through folders and windows. But it works.

iCloud should be the Dropbox for everyone else. It should be the Dropbox for iOS users (Dropbox doesn’t really do syncing for mobile).

My iPhone could check the sync server at regular intervals like it does with email — say every 30 minutes (or sync could be pushed). With this method, my iPhone would have seen that I made changes to a Pages document on my iPad and then brought those changes over to my iPhone without me needing to do anything.

Shouldn’t syncing just happen in the background without any of my input? Of course. Here’s another example:

I use Omnifocus for task and project management. If I add a new project to my iPad — complete with due dates — it won’t automatically show up on my iPhone version of Omnifocus, unless I open up the app. Why is this an issue? One of the best parts of Omnifocus is push notifications. Omnifocus alerts me as to when I should start a task or project and to when something is due. Well, without background syncing, my iPhone version can’t send me these push notifications, unless I have made sure to open the iPhone version after using the iPad or OS X version (Omnifocus syncs with all three).

Certain applications do truly sync. Email obviously does. If you read, delete or respond to email, it shows up on all of your devices without the user needing to do anything. Same thing is true with Apple’s new iCloud calendars (or with Microsoft Exchange or Google’s calendars on iOS). If I add a new appointment on my iPhone, complete with a notification an hour before I need to be at that appointment, it will automatically appear on my iPad and computers. I don’t have to open calendar to get this syncing to work, which is important since notifications are an important part of how calendaring apps work.

I have two guesses as to why we haven’t seen more background syncing in iOS yet:

1. There are battery concerns. It’s easy to sync calendars and email in the background. Neither take a long time to do and people expect this to happen. The iPhone couldn’t compete with other phones in business environments if it couldn’t sync these in the background. Syncing Omnifocus wouldn’t take much time or data either. Some apps, however, would require a lot more time and data to sync. How do you handle a big Pages or Numbers document? Should that only sync over wifi? Or should users be able to select when something syncs. For instance, if I’m a business user, and going over my data plan isn’t a big concern, I’d tell my iPhone to sync over 3G and wifi. Just make sure everything is synced. Maybe you’re just a casual user and you don’t have any interest in going over your data allotment if that were to happen. you’d tell your iPhone to just background sync over wifi. Having syncing pushed to your phone would use up more battery, even if the syncs weren’t big. There is no denying this. Apple believes that battery life is king in mobile devices, and I agree. However, syncing isn’t nearly as powerful as it could be if it doesn’t happen automatically in the background. Just like with multitasking, Apple could develop a solution that covers the most important background syncing needs without killing battery life. Apple has already begun rolling this selective background syncing with mail, calendar, contacts, music, apps and magazines/newspaper. More on that in a second.
2. Apple hasn’t had time to roll out a good background syncing solution. iOS 5.0 is arguably the biggest leap over a previous generation of iOS ever. It has a ton of new features, including some such as Notifications, that are deeply embedded in the OS. Apple may have simply run out of time, and so while they would love to have background syncing, they simply didn’t have time to roll out a high quality system. My best guess is that when Apple does roll out background syncing, it will be like multitasking with specific use cases supported. Apps such as Omnifocus are no brainers to offer background syncing. Same with word processing, spreadsheet and presentation applications. But what about photo and video applications? Would that be too much out of the gate? Apple doesn’t allow desktop-computing class multitasking. I would doubt that they would allow background syncing to be a complete free-for-all either.

Apple has brought background downloads to music and application downloads and to Newsstand, Apple’s app for managing magazines and newspapers. This gives me hope. Now if I subscribe to a bunch of magazines and newspapers on my iPhone or iPad, new editions are automatically downloaded in the background. Some of these issues are big too, and they still download in the background.

These leads me to support the second theory: Apple just hasn’t had time to roll out more background syncing and downloading yet. Certain parts of iOS already support this, and we should see more of it in iOS 6. To me, this should be one of the top priorities for the next version of iOS or even for a iOS 5.5 release. iCloud can’t reach its potential without background syncing and background downloads are the first step towards true background syncing.

Without background syncing, people will run into issues where documents are out of sync, or where they accidentally erase changes made to a document by making changes on another device before syncing occurs. This is bad for users and frankly un-Appple like. This could genuinely give users a worse experience than if they had no syncing at all.

Syncing should just work. Syncing and iCloud currently doesn’t just work.

This will change.

Magazine publishers already seeing uptake in sales from Apple’s Newsstand

Paidcontent reports that some magazine publishers are seeing substainally higher sales with Apple’s new newsstand service that puts magazines and newspapers in one place, instead of as disparate apps:

“Sales across the board have shot up, more than doubled the normal daily sales rate,” according to Adam Hodgkin, co-founder of Exact Editions, which digitises print titles including The Spectator and Press Gazette for purchase over the web and as iOS apps. “Some magazines have experienced a 150 percent increase in sales. This appears to be continuing beyond the launch weekend.

“Exact Editions noticed exceptionally high levels of activity over the weekend. Freemium sample apps were downloaded much more over the weekend than normal. Sales through iTunes are rapidly getting stronger and stronger.”

I’m not surprised. Newsstand is a much more elegant way to consume news content on the iPad. By putting magazines in one place, it’s much easier to consume magazine content on the iPad. In addition, newsstand downloads magazines and newspapers in the background. After a new issue is released it automatically downloads to your iPad.

Most news apps still have a long way to go, but newsstand should help make the experience better for users. A better user experience should mean more sales.

How do you use your iPad for work?

We’re doing our next show on how we use our iPads for work, which apps we have and how our iPads are set up.

We’d love to hear from you too. What are your top five most used apps? How does or doesn’t the iPad enhance your productivity? What kinds of apps and features would you like to see?

Please share your thoughts in the comments below or send me a message on twitter @pwthornton.

Episode 09: Babies like usability

This week we focus on usability, usability, usability. And babies. And walking.

What good is technology if it doesn’t make our lives easier? What good is technology if it’s not easy to use? What good is technology if it doesn’t help us do things we couldn’t do otherwise and help us do other things even better?

We start the show by focusing on iPhone and iPad applications that help with pregnancy,  birth and after the baby is born. Jeremy discusses which apps helped him and his wife out with their new baby.

The conversation then turns to walking, but don’t run away. I review the Fitbit, which is the geekest pedometer you’ll ever find. It’s not the cheapest, and some do more things, but it is the most usable and it really gives you great data.

Things are a little slow around the Interchange Project with Jeremy’s new baby and I have a few things that I need to wrap up this week. But next week and the rest of the year, we should be back with more great stuff.

Thanks for your support.

Listen to this week’s show:

Download the MP3

Show notes:

• Pregnancy? There’s an app for that
• Fitbit — Very geeky.

Apple doesn’t make big acquisitions, but they do make small, important purchases

Every time you hear that Apple is rumored to make a big acquisition of a company like Barnes & Noble or AMD or Sony or Adobe or whatever other huge company, just read this story about all the companies that Apple was rumored to purchase but never did:

For years, Apple has confounded the rest of us by not buying things that it should clearly be buying. Not purchasing other well-known companies is so core to Apple’s strategy that it must have a whole department devoted to non-mergers and un-acquisitions.

Apple does purchases companies and many of them have been key acquisitions for Apple. These acquisitions, however, are rarely big name, and they aren’t the kinds of acquisitions that Wall Street analysts or glib tech columnists predict. These are purchases or smaller companies that have specific skills and talents that can help Apple improve products or create new ones.

But let’s get back to the ridiculousness of many of these takeover rumors: Why would Apple want to buy Sony, a company that wants to be like Apple, but consistently can’t execute or get any of the details right? Sony has become a third-rate Apple wannabee with no direction. Apple buying Sony would be like one of those movies where the attractive, popular jock goes out with an artsy, homely girl as some sort of penance or charity thing or something (not one of those hot artsy, geek ladies).

Apple was once rumored to buy Adobe, markers of Steve Jobs’s most hated product, Flash. That tells you how silly these rumors are. I can only assume that these rumors have two origins:

• Uninformed tech columnists trolling for pageviews and discussion. These people care more about stirring up trouble than sound analysis, and they seem to have very little understanding of Apple’s historical purchases.
• Trouble makers on Wall Street looking to drum up the value of the company that Apple is rumored to be purchasing, so that a few wealthy clients can make a bunch of money off of false rumors and hope.

Apple makes small, targeted purchases that help them bring new products on line or bolster existing products. Take a look at a few key acquisitions by Apple:

• Apple purchased NeXT in 1996. NeXT was Steve Jobs’s old company, and while the software and hardware of NeXT was advanced beyond Mac OS or Windows, NeXT was not a successful company. NeXT’s OS became the foundation of OS X. It took five years for OS X to hit the market, and it wasn’t until late 2001 that OS X was ready for primetime (and this version was still very early and not near the caliber of OS X today).
• In early 2008 Apple acquired fabless chipmaker PA Semi, which had been working on creating powerful, low power computer chips. PA Semi helped give Apple engineering talent that would help Apple create its own line of powerful and low power chips.
• Apple purchased streaming music service Lala in late 2009. At the time this purchase was largely assumed to be for engineering talent to help Apple setup its own streaming music service. That may or may not still be in the works, but it seems safe to say that Lala’s engineering expertise and cloud experience will be a big help for Apple with its upcoming iCloud efforts. I believe what we are seeing with iCloud this Fall is just the beginning of what will become of iCloud.
• Apple purchased fabless chip maker Intrinsit early in 2010, a company that developed technology to accelerate ARM chips. Apple has used ARM chips in the iPhone since the beginning, but Intrinsity’s engineering helped them create the A4 and A5, which have helped Apple distinguish their products from other ARM licensees (ARM chips power all smartphones and modern tablets, but there are different variants of these chips based on ARM’s reference designs). PA Semi and Intrinsity were both smaller fabless firms that have helped give Apple the ability to create ARM-based chips that are unique from what other phone and tablet makers use. Almost all other phone and tablet makers use Nvidia’s Tegra lines, Samsungs Snapdragon lines or Texas Instrument’s OMAP lines of ARM-based processors. Apple’s chips have stripped out everything that Apple has deemed not necessary (and helped save power and space) and have also focused heavily on 3D performance for video games and other applications. While Nvidia is a 3D graphics manufcatuer by trade, Apple’s A5 is about twice as powerful as the Tegra 2 when it comes it 3D performance.
• Apple purchased personal assistant app Siri in early 2010. Siri is a voice-controlled app that finds stuff on the Internet for users. Users can use natural commands such as, “send a taxi to my house” and Siri will help complete that task. It’s really cool technology that could help take iOS, particularly on the iPhone, to the next level. Siri’s technology is most likely being rolled into iOS and will help Apple create better voice command features (perhaps the biggest weakness of iOS) and help Apple compete better with some of the strengths of Android.

The biggest purchase Apple ever made was NeXT for under $500 million. I severely doubt Apple will be looking to make a huge blockbuster purchase of a strong established brand anytime soon. How do I know? Apple has never done it before, and they have been wildly successful by making small, targeted acquisitions.

Look for Apple to make more purchases of companies like Intrinsity and PA Semi. As Apple goes deeper into producing its own unique processors that fit Apple’s specific needs, they’ll need more engineering talent and R&D. Apple has gained a clear advantage in the mobile processor space by creating chips that do exactly what Apple wants it products to do, rather than building products around what other company’s processors can or cannot do.

Also look for Apple to make more targeted acquisitions of companies and products that will help them build out iCloud and iOS features. These small acquisitions add up and helped Apple deliver better products.

The next company Apple purchases most people will probably never have heard of.