Did Steve Jobs Call Microsoft "The Smarter People": Who Owns the Living Room Edition

Someone asked Steve Jobs about television at the all things D Conference and he explained why Apple TV remains a hobby. In the clip above he explains the existing market market is heavily subsidized by cable operators who "give everybody a set top box for free, or for $10 a per month. That pretty much squashes out the opportunity for innovation because nobody's willing to buy a set top box." Everything makes so much sense when he says it. . . but Microsoft got consumers to purchase their set top box and through the sale of content they are able to turn the sale of the box and operation into a profit center.

He then says the problem with adding a box to the user's experience is they end up with a variety of different boxes each with its own remote and user interface. "The only way that's ever going to change is if you can really go back to square, tear up the set top box, redesign it from scratch with a consistent UI across all these different functions, and get consumers it to consumers in a way they're willing to pay for it. And right now there is no way to do that." Well again, isn't this exactly what Microsoft is doing. I play games, watch the same films in the Zune store that are available in iTunes, access Facebook, watch netflix movies and communicate with friends all through a single interface and remote. Once Natal is launched - the success of which is admittedly subject to debate - I will not even need the remote. The same number of people pay for these services as subscribers to the largest cable company in US.

He says the TV is going to lose until there's a better -- until there's a viable -- go to market strategy. Otherwise you're just making another Tivo. It's not a problem with technology, not a problem with vision it's a fundamental go to market problem. " He said he could not partner with a cable company because there is not a national operator and all the countries have different standards and government approvals. Microsoft encountered the same issues, so they made their own cable network. They anticipated fatter pipes into peoples' homes and built a system around it. They built an international cable network that is not a retread of television, but better than television - and this is important.

It is important because the fight is not about television. It is about a shared experience. We come together around a television. The 20th century saw the television become the hearth of the home. t was a gathering place for the family to consume information and entertainment. Apple products all bring information to individuals. We find something we like while we are alone, download on to an iPhone or iPad and maybe hand it to a friend so they can watch it by themselves while they are sitting next to us. Apple products connect us from a distance, but no Apple product provides a shared experience to a group of people in a room. Not games like Scrabble on an iPad, but collaborative games, movies, news of the day. I While Apple is blowing it up and moving consumption into individualized experiences, Microsoft is trying to transform the hearth into an on demand, bi directional, more useful experience.

Finally, he said "smarter people than us will figure this out." Earlier in the discussion Jobs said Apple lost the platform war to Microsoft because Apple did not know it was fighting one. I hope this is not another war.