Microsoft, Sony Were Right, Consoles Are the Future. Where's Apple?

(MoneyWatch)  Years ago -- back in the dark ages before the Internet bubble ?€" many people spoke of convergence. One group, those who built gaming consoles, such as Sony (SNE) and Microsoft (MSFT), predicted that their devices would become the entertainment centers of the future. Although events didn't unfold on their timeline, it may be that ultimately they'll be shown to be right.And that might be a problem for Apple (AAPL).

Let's tally what's working in their favor (and as I'm likely to miss something or other, please feel free to chime in with a comment):

• Broadband is getting more pervasive at higher delivery speeds, which is one of those necessary conditions for entertainment streaming.
• Netflix (NFLX), Hulu, the BBC, Sky television (NWS), YouTube (GOOG), and other sources of video programming are streaming content -- movies and network television -- to various consoles.
• Game console vendors are also concentrating more on making video available.
• Console users can also download complete movies.
• The consoles can play video DVDs and music CDs and connect to a network that would provide mondo storage capacity. (Have you seen how much a terabyte drive costs these days? Scary cheap.)
• Importantly, the consoles are designed so that even adults can figure out how to use their features.
• The graphics and processing horsepower could easily let you display and probably edit photos and video.
• Oh, and, yeah, you can play games on them.

Enough time has passed that the technology, the delivery infrastructure, and the variety of content and services are finally meeting at a place where people can get and use what they want without the insanity that is trying to bring together your PC, a television, and an aesthetically pleasing user experience if all you want to do is play a flipping movie. The studios don't like the idea of online review instead of traditional TV ad rates, but in the long run they probably don't have a choice.

In other words, the gaming consoles are powerful computers that are set up as specialized devices with a consumer-appealing array of offerings. Because of the restricted intent (No spreadsheets, please, we're coach potatoes.), the user interfaces can be simple, clean, and effective. Plus, generations of future users are developing the habit of using consoles as their connection to entertainment of all sorts, and the content providers will likely have to learn to play nicely.

Easily getting media and a rounded entertainment experience on user-friendly devices. It sounds right up Apple's alley, except the consumer electronics honcho is a no show because it believes in closed systems. That's worked marvelously with the iPod and the iPhone because Apple could get enough content providers to agree to do business. When it comes to video to consoles, however, there are already established online channels and markets that have developed broad market acceptance.

If Apple wants a large piece of the home entertainment, it has to adapt to the market. Apple TV is a curiosity whose sales are so small relative to other Apple products that they get wrapped into one or another category. The means quarterly unit movement is measured in the hundreds of thousands, as opposed to order of magnitude higher game console sales. If it's going to compete in this market -- which would seem vital if Apple wants to maintain its hold on mobile entertainment over the long run -- then it has to bring a more open approach and gaming to the living room.

If not, well, how long before one of the gaming vendors wakes up and realizes that there might be a future in an Xbox or PS3 or Wii phone? Portable games, full entertainment, and phone capabilities in a handset. Sure, you can get it from Apple. But the console vendors are seeding the market for loyalty, which might explain why they've been willing to handle what have at times seemed to be senseless losses.

Image via stock.xchng user mzacha, site standard license.