A New Apple TV Is On the Way, and You May Be Able to Download It

What started out years ago as rumors of a full fledged Apple television set has focused this year into a speculated new model of the Apple TV, one that adds widespread support for iOS-style apps, live TV, and wireless game controllers. There have also been rumors that a new Apple TV-like device will merge the functionality of the existing Apple TV and AirPort Express, the company’s small Wi-Fi router and extender that has been left out of the 802.11ac updates that its larger counterpart, the AirPort Extreme, received last summer.

While Apple rarely telegraphs future products, the company recently began to feature the Apple TV more prominently on its online store, giving the product — once publicly classified as merely a “hobby” — the same standing as Apple’s other key product categories: Mac, iPad, iPhone, and iPod (the Apple TV was formerly relegated under the iPod heading). Today, we also learned that Apple is launching a week-long promotion for the Apple TV, offering U.S. purchasers of the product a $25 iTunes Gift Card (25 percent of the device’s full retail price).

Despite recent reports to the contrary, and the surprising proposed merger of Comcast and Time Warner (Time Warner was rumored to be a key partner in Apple’s plans for the device), many Apple watchers point to the company’s increased activity around Apple TV as proof that the launch of a new model is imminent. Apple’s recent moves have been interpreted as both an effort to remind customers about the product category as well as a push to clear unsold inventory of existing models before the upgraded unit launches in the coming weeks or months.

It’s impossible to know the full details of Apple’s plans, and the Comcast-Time Warner merger may have indeed thrown a wrench into the company’s release schedule or feature set, but I hold a different interpretation of Apple’s recent moves, one that many existing Apple TV owners may be happy to hear. With Apple now trying to move an increased number Apple TV units, it’s more likely than not that the key functionality of a future Apple TV will be available to existing owners of the third-generation model via a software update.

Of course, this doesn’t apply to hardware features, like the proposed integration of AirPort Express functionality, but I don’t think that an integrated router will be the killer feature of this new device. There have also been rumors that the new product will include a built-in cable tuner (in partnership with Time Warner) to allow for live TV and DVR features, but this seems unlikely when Apple could instead work with a cable provider to give customers IP-based live TV and on-demand access, in the same fashion that Time Warner customers can access live TV on the Xbox, Roku, and iPad today.

Instead, if the rumors hold even an ounce of truth, the truly desirable features of a new Apple TV will evolve around third party apps and games, something which the third-generation Apple TV’s A5 processor (a single core version of the same processor that powers the iPhone 4S and iPad 2, products that Apple still supports today) could likely handle. Users might not get the best experience compared to those purchasing the anticipated new model, but that same market dichotomy already exists now with users still running older devices; they can use most software found on the App Store, just not always with the best quality or frame rates.

Playing games on a new or existing Apple TV may also require a controller, although the possibilities of a Wii U-like second screen experience via an iPhone or iPad are interesting. But here, too, the existing Apple TV should work fine. New iOS game controllers use Bluetooth 2.1 for connectivity, a feature that the Apple TV has enjoyed since the second-generation model.

Both the third-generation Apple TV’s processor and Bluetooth support for current wireless game controllers could give existing owners a compelling new experience without having to upgrade to a new model. And that’s the key.

We don’t know how Apple will price future models of the Apple TV, but with the current models prominently advertised at just $99, it may be difficult for the company to unveil a new model, however well-featured, at a much higher price point. It’s therefore likely that Apple will look to make its monetary gains on the services of a new Apple TV instead of the hardware, a notable change from the company’s strategy with iDevices and the iTunes Music and App Stores, where low margin software and content sales drove highly lucrative hardware sales.

In this scenario, even if a new Apple TV isn’t slated to launch until the end of the year or later, why would the company take the effort to sell a significant number of existing Apple TVs only to have its expanded customer base locked out of whatever new features are coming down the pike? Despite the perception of some Apple opponents, the company has been surprisingly active in supporting customers with older devices, especially in the quickly changing mobile space, and its continued sale of the iPhone 4S and iPad 2 (and support for iOS 7 on the iPhone 4) clearly demonstrates that Apple has no problem with offering customers most of the latest feature set, even with a sub-optimal experience.

It is possible, however, that Apple thinks enough new and existing customers would rush to grab a new Apple TV, especially if it launches at a $99 price point. But Apple stands to gain so much from an expanded customer base that I cannot see them placing potential hardware profit over the opportunity to bring millions into the new Apple TV ecosystem on day one with a free software update.

Many have tried to offer customers the ultimate “cord cutting” solution, but perhaps Apple stands the best chance of succeeding. A highly polished platform that gives customers access to their existing media libraries, new purchases, live streaming TV, third party apps, and hugely popular mobile games could be a major influence on the industry (if not the groundbreaking change that was teased in Steve Jobs’s biography). And I’m betting now that you may not have to buy new hardware to join the party.