How a deal with Comcast could force Apple to cede tight control over its products

How a deal with Comcast could force Apple to cede tight control over its products

By Brian Fung, Updated: March 24 at 11:44 am

Years after a cryptic claim by Steve Jobs that he’d “finally cracked” the TV business — a statement that’s led nowhere so far — Apple’s trying its hand at television again, this time with a streaming entertainment service that’s reportedly launching with the help of Comcast.

Details are still being worked out, but according to The Wall Street Journal and The Information, the deal would connect Comcast customers to pay TV through an Apple-made set-top box. The biggest news, however, may be behind the scenes: Apple is said to be seeking a dedicated fast-lane for its streaming product over Comcast’s broadband pipes. The “managed service” would separate programming bound for Apple’s box from other Internet traffic going to the same home, enhancing the viewer experience.

Apple’s negotiating hard for this special carveout, and with good reason. It’d be a major blow to the company if it launched a streaming TV service that stuttered and lagged because of congestion problems. By demanding its own lane, Apple could ensure video quality wouldn’t be affected by the same problems that befell Netflix customers before Netflix signed its own partnership with Comcast to improve streaming speeds.

These negotiations aren’t just a big deal for the future of TV, or even for the future of the Internet. It’s also a major milestone for Apple, the company with a reputation for exercising iron-fisted control over its products. Steve Jobs was an infamous micromanager who hated multi-button computer mouses. The App Store, and iOS more generally, is still largely the walled garden it was from the start. And it’s getting increasingly difficult to take apart Apple’s hardware yourself to make repairs or install new parts. Even when Apple made the iPod available through competitors like Dell, the business deal never changed anything about the device itself.

Until now, Apple’s self-sufficiency has paid off magnificently. But to make any streaming TV product work, Apple needs the cooperation of broadband providers. That’s a market Apple has neither the scale nor the expertise to enter on its own, which makes its streaming TV product dependent on a third party in a way few, if any, Apple products have been before.

For the first time in a long time, Apple is putting some of its fate in the hands of another company.

Netflix shares fall on Comcast-Apple report

12:04pm EDT

(Reuters) – Netflix shares slumped more than 7 percent on Monday after a report about a new television streaming product that Comcast and Apple were working on together.

Netflix shares fell $31.49 or 7.78 percent to $374.67. The drop came a day after a story that first appeared in the online edition of The Wall Street Journal said Comcast and Apple were in talks about teaming up for a new TV product that stores programming in the cloud and would replace clunky cable boxes in people’s homes.

Apple and Comcast have declined to comment on the report but a source familiar with the matter told Reuters the discussions were at an early stage and there are a lot of hurdles to be crossed before any agreement is reached.

Apple also wants the TV service’s Internet traffic to be separate from public Internet traffic and would be looking for special treatment from Comcast’s cable pipe to give customers a better experience, the newspaper said.

Arris Group Inc, a company that makes set-top boxes for the cable industry and paid Google $2.35 billion for Motorola’s cable box unit last April, also saw its shares fall 6 percent on fears that an Apple-Comcast partnership could hurt sales of traditional set-top boxes.