Steve Jobs’ Living Room Problem

No, it’s not where to put the couch. Silicon Alley Insider reports that in last night’s earnings call, Steve Jobs admitted no one has succeeded yet at connecting the living room TV to the Internet—including Apple, whose Apple TV set-top box isn’t exactly setting sales records.

“I think the whole category is still a hobby right now. I don’t think anybody has succeeded at it and actually the experimentation has slowed down. A lot of the early companies that were trying things have faded away, so I’d have to say that given the economic conditions, given the venture capital outlooks and stuff, I continue to believe it will be a hobby in 2009.”

The current Apple TV box is actually pretty good, and it makes more sense at its current, lower $229 price and ability to rent movies. However, SAI thinks it can do more. “We still think the Apple TV would benefit from a DVD drive—people still own/rent a lot of DVDs, and then the Apple TV would be able to replace something in the living room, not just add to the mess of cords. And we think opening the gadget up to video beyond Apple’s iTunes store and YouTube—sites like Hulu, MLB.TV, ABC/NBC/CBS/Fox, or any Flash/Silverlight-enabled video on the Web—would be a smart, harmless move.”

That would put the Apple TV more in the role of traditional media extender, rather than the walled iTunes Store garden it currently represents—and still preserve its easy mobile media transfers to iPods and iPhones.