I have a new theory about Apple. No, it's really a reverse engineering of their larger mission, a unified theory of Apple that explains everything the company does.
Here it is: Apple's mission is to replace old-and-busted content-consumption products and services with new-hotness Apple solutions.
The company is like a shark in the water, seeking out weak and wounded content-delivery systems.
The reason Apple focuses on the content experience is because there's just so much money in it. Apple can make money on hardware, on software, on cloud services, on providing content, on allowing others to provide content and on advertising. The content focus is why, for example, the revenue Apple earns from the iPhone is twice as high as the combined revenue of all other phone makers.
It started with music. Apple saw that music fans were being abused by the industry, forced to buy $13 CDs just to get the one song they wanted. The devices required to play those CDs were huge, and the interfaces were clunky.
Apple set out to replace that lousy content experience, and it did so with iPods and iTunes.
Next, it noticed that people started consuming a lot of content on mobile phones. But the experience was terrible. Phones were ugly and clunky. Mobile interfaces were awkward and counterintuitive. The carriers were gouging users and offering lousy content. So Apple fixed the horrible content consumption problem on mobile phones with the iPhone and the App Store.
Then, Apple noticed that people like to consume content like Internet videos, websites and ebooks while they're sitting around the house, away from their desktop PCs. But they were doing it with laptops and netbooks, awkwardly balancing them on their laps. So Apple came out with the killer iPad tablet to solve the around-the-house content-consumption problem.
As Apple looks around for other bad content experiences to replace, the elephant in the living room is television.
For the past few years, Apple's "hobby" has been solving the TV and home video content consumption problem. Now, it looks like Apple may turn pro.
How Apple will change your channel
The Wall Street Journal reported on Friday that "people familiar with the matter" say Apple is working on "new technology to deliver video to televisions" and may "launch a subscription TV service."
The article says that former Apple CEO and current Chairman Steve Jobs "often criticizes, in public and in private, the experience of watching TV as clumsy and bad for consumers" and says that the "existing system, where consumers get content from different cable and satellite providers that use different technologies, makes it difficult to innovate."
Translation: "We are going to kill cable TV."
This news makes perfect sense in the context of recent announcements, reports, rumors and speculation about Apple's other plans.
Apple already has licensing deals to sell individual TV shows or entire series in the form of a "Season Pass" on iTunes. The problem is that those season passes are way too expensive. Hot new cable shows like Breaking Bad run about $35 per season, which is somewhat reasonable. But even crappy old reruns like MacGyver and the original Hawaii Five-O cost $20 for a season pass. Selection is poor, but the iTunes and Apple TV experience is great.
Recent changes to iOS and Apple TV enable TV shows to be stored in the "cloud" for watching later on any Apple device that starts with the letter "i." This is not so much a technology triumph as it is a negotiating win, because Apple convinced TV studios to allow not only storage of TV shows, but also the viewing of them on any device.
In order to kill cable, Apple needs more leverage to persuade TV studios to make deals. Apple must convince studios that it's more important to make Apple happy than it is to avoid angering cable TV companies.
One source of leverage is already apparent: As more people watch TV on iPads and iPhones, as well as via Apple TV, Apple gains a stronger negotiating position. Apple iPod Touch, iPhone and iPad devices all have icons in the video applications to send the video to another device. As people get used to this setup, and as they increasingly use Apple hardware to watch TV, Apple gains clout in comparison to the cable companies.
Apple is rumored to be working on a physical TV set with Apple TV built in. This would help, too.
But the biggest play could be the one the Journal sources mentioned: new technology for streaming TV, and a new subscription service.
If Apple can offer subscriptions to shows or even entire networks for a reasonable monthly fee, a lot of users would be happy to bypass cable TV altogether. This is especially true if rights holders can bundle programming, including reruns.
If the shows are up to date and offer new technology for swapping ads or localizing commercials, then the revenue models of TV networks wouldn't even have to change much.
At first, only a minority of TV watchers would be willing to dump cable in place of Apple's subscription service. But that minority would be a killer demographic -- most likely better educated, wealthier people who could be served premium advertising in addition to generating actual revenue for subscriptions.
Because the experience of using Apple in place of a cable TV service would be vastly superior -- especially the on-screen user interface and even the remote -- and would include cloud storage, multidevice support and other benefits that cable operators could never match, everyday TV watchers would gravitate in Apple's direction.
This scenario would be a repeat of what Apple did with music. At first, just like the music industry did, Hollywood will resist the change. However, some of the biggest users of the Apple service will be Hollywood people (if you've ever hung out with TV and movie people, you soon realize that most of them are hardcore Apple fanboys). TV executives will realize that the existing cable TV model is obsolete, outdated and broken beyond repair. The final stage will happen when networks realize that they simply cannot succeed without being on iTunes.
Because of Apple's killer strategy for fixing broken content consumption with pretty Apple hardware and easy Apple services, Apple now gets the lion's share of revenues for the delivery of downloadable music, mobile apps, tablet-based magazines and many other content types. And now it wants to deliver TV shows.
Can Apple really kill the cable box like it killed the music CD? I think it can, and I think it will.