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If You Think Apple Customers Are Loyal Now, Watch And See What's In Store

Mark Rogowsky, Contributor - Forbes

apple_tv_interface_2012Third in a series

People who use competing products just don’t get the loyalty of Apple AAPL -0.83%users. “What is so special about the iPhone? That Macbook Air? An iPad Mini?” The product specs rarely seem extraordinary, yet customers love them. Even in Korea, Apple scores higher on customer satisfaction than native son Samsung. Certainly, the answer lies partly in the designs and the underlying software that makes Apple’s products simple to use and above average in reliability. Increasingly, though, the company is pressing another important edge — the ecosystem that binds all its gear together. In an effort to push customer lock-in to an even higher level, Apple is going to take that ecosystem much deeper into two places it has only barely begun to make its presence felt: your living room and your car.

What Apple TV doesn’t yet offer is some reason for tens of millions of people to buy one, but the company is working on a couple. First, there are apparently discussions under way with Time Warner TWX +2.23% to allow it to act as a cable box. Similar functionality on the Xbox 360 for AT&T T +0.59% U-verse has been around for a while and Microsoft’s console has enjoyed some success as a TV hub on top of its primary use a gaming platform. Again, Apple is following, but unlike Microsoft, it won’t require an additional subscription fee and it also will have a lower entry price.....

Game on?

But if the other shoe drops, expect that quiet approach to change in a major way. As Microsoft and Sony both announced their gaming consoles in recent months, much was made of how the former spent a great deal of time talking up the TV features of its product while the latter didn’t (despite very solid functionality in that regard on Sony’s PS3). Some even breathlessly proclaimed Microsoft’s new box an “Apple killer.” But here’s the odd thing: The gaming consoles each sold fewer than 10 million units a year on average over the last generation. With prices of $399-499 and a real shift in gaming both upscale (to PCs) and downscale (to smartphones), the odds of the new consoles even doing that well seem remote.

Apple TV already seems like it could eclipse 10 million units in 2014, especially if Apple offers more movie content in more countries (something it has tended to do over time) and iTunes Radio goes live. And if Apple enables game playing on the device? What’s the limit then for a $99 game console with inexpensive, addictive, high-quality games? You know, the kind that are eating up all kinds of time on iPhones and iPads, like Candy Crush Saga (which is a $200+ million-a-year- business on its own).....

Taking it on the road

The next step for Apple is to get all that magic to occur when you’re on the go as well, driving in your car. To do this safely requires the cooperation of auto manufacturers who can integrate a simplified version of iOS into the built-in screen of the vehicle and allow you to navigate it simply, mostly with Siri and voice commands. What 300 million fiercely loyal customers gets you is the ability to sign up a dozen automakers to support an initiative like this: Honda/Acura, Nissan/Infiniti, Mercedes, Hyundai/Kia, Volvo, Chevy, Jaguar, Ferrari and Opel. more...


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