Yes, Apple will do a television set

“The other day well-known Apple analyst Gene Munster reiterated that, despite years of being wrong, he still believes Apple will produce a television set,” Rocco Pendola writes for Seeking Alpha.

“While Munster didn’t provide new or concrete information, he pointed to Tim Cook’s recent appearance with Charlie Rose where Cook said what he’s been saying all along: When you sit down in your living room and flip on your TV, it’s like you have stepped back in time,” Pendola writes. “Couple this with Cook’s admission that the living room is an area of interest for Apple and Steve Jobs’ contention that Apple cracked the code for innovation in the parlor and you have, even though Munster has missed on this prediction for a long time, a pretty convincing qualitative case.”

“The fact that television sets remain relatively cheap doesn’t mean Apple won’t enter the mix. In fact, it probably makes entry into the space even more likely. As Munster stated in 2009 and certainly still believes today, this is what Apple does – it comes into an area on its own terms and institutes a whole new set of rules,” Pendola writes. “Munster’s not nuts. This is the next logical step for Apple. We already multi-task with our iPhones and iPads while we watch TV. It’s high time to leverage this reality and pull the experience together in a logical and groundbreaking way. But only when Apple’s good and ready. On its terms, not the competition’s. Because, after all, the competition is merely sitting around waiting to see what Apple’s going to do in the living room. Just like it sat around and waited to see what Apple would do on the wrist.”

Read more in the full article here.

Related articles:
Piper Jaffray’s Gene Munster: Apple Television quite possible in 2016 – September 24, 2014

34 Comments

      1. These “worthless” media companies have many outlets for their content. Apple is just one more middleman that hasn’t distinguished itself as providing new customers for these media companies.

        Sadly, Apple TV is not even a good set top box, it doesn’t offer iOS apps or gaming capability or anything more than reproducing what your Mac + iTunes have offered for 5 years. And as we all know, all iTunes delivers is pre-canned stuff, no functional difference than any other set-top box. We see how badly Apple does with live feeds.

        Furthermore, streaming service quality still lags Blu-Ray. Since Blu-Ray players are as cheap or cheaper than Apple TV, that’s the better value for many people. You would have to be homebound invalid with no cable service, no satellite, unfamiliar with Netflix (built into most Blu-Ray players), but somehow smart and wealthy enough to have super-fast internet in order for you to calculate Apple TV to a better value as a consumer.

        Apple TV as it exists today is so disappointing that Munster has decided to make rumors out of thin air to deceive himself into thinking that the future will be all better. It won’t, because there is nothing Apple can do to deliver services to the customer more efficiently (profitably) than cable & satellite providers already do.

        1. Hey Mike, I know the WordPress plugin MDN uses doesn’t allow editing, so I pulled your comments out to a real editor and fixed them up the way I suspect you meant for them to be written, providing more thorough context and integrity — see what you think:

          “These “worthless” media companies have many outlets for their content. Apple is just one more middleman that hasn’t yet distinguished itself as providing new customers for these media companies.

          Sadly, in my opinion, Apple TV is not even a good set top box: it doesn’t offer iOS apps or gaming capability, which I would really like, or anything more than reproducing what your Mac + iTunes have offered for 5 years, aside from the larger screen, the better audio, AirPlay sharing of what’s on your Mac, iPhone, iPod touch or iPad. And as we all know, all iTunes delivers is pre-canned stuff, no functional difference than any other set-top box aside from the iTunes Extras, the concerts and other exclusive events. We see how badly Apple did with one live feed versus the many past live feeds of product intros and iTunes Festivals that have gone off without a hitch.

          Furthermore, streaming service quality still lags Blu-Ray, and I, thankfully, still have the eyes that can discern this difference. Since Blu-Ray players are as cheap or cheaper than Apple TV, that’s the better value for many people who prefer to buy over-priced discs that require storage and handling and will never have additional content added to them without repurchase of the whole package. You would have to be homebound invalid with no cable service, no satellite, unfamiliar with Netflix (built into most Blu-Ray players), but somehow smart and wealthy enough to have super-fast internet in order for you to calculate Apple TV to a better value as a consumer if you value all the same things I do.

          Apple TV as it exists today is so disappointing to me that I believe, though I haven’t asked and he hasn’t said, that Munster has decided to make rumors out of thin air to deceive himself into thinking that the future will be all better. It won’t, in my opinion, because there is nothing Apple can do to deliver services to the customer more efficiently (profitably) than cable & satellite providers already do, because the only way I see them doing anything is by continuing to play the game others have set forth, in sharp contrast to how Apple moved from being a computer company to being an experience company that sells devices and services.”

  1. actually they got it wrong. apple will be licensing their UI and internal components to tv makers. You can still buy the tv you want but it will be apple software running it. Apple will do to TV like what google/android did to smartphones

    1. this is true. by taking this approach, they won’t have to make the tv’s, but can advertise along with makers to get people to buy them. the allure of an HDTV run by apple is it will get people to either expand their apple ecosystem they are already in or introduce others to it

    2. No Way. Apple does not let other parties get between them and the customer. I don’t see Apple beholding to a couple of TV makers who have the volume and muscle to make Apple cut prices as soon as they are able to buy a near enough knock off.

  2. This is the next illogical move. Simple math says Apple won’t do it. They like to sell things with 40% margins which means adding 67% to the cost of materials. TVs are sold at very slim margins sometimes none, so let just say Apple TVs only cost 50% more than the competition.

    Then take me a true Apple believer:

    Do I want to pay 50% more for a TV that will be obsolete 1 year later? (I have had the original iPhone and every model since). No way.

    Do I want to pay 50% more for a large TV the same size as I already have instead of get a box? No way.

    Apple can let TV screen manufacturers kill each others margins and sell a high quality, high margin box. Maybe find a way that you don’t even have to see a box. I will upgrade that on both my TVs every time they produce a new model.

    1. I agree with your discussion on Margins.

      However, consider the following factors as pro such a product:
      – Buying Beats with senior people joining the team – they must have a plan for them otherwise why pay so much and keep the mgmt.
      – Huge capacity CDN – why the expense to create and the cost to maintain it
      – AppleTv has proven that Apple can make a good profit on delivering content
      – Homekit – meaning Apple has far more plans for home than just AppleTV
      – Acquiring products that can easily go into a TV but it could also go into a future version of AppleTV

      Quite frankly, I would be happy to go either way.

      1. AppleTV is all that is necessary for all the things you listed, and then there’s e margins. And to your two questions, the reason the Beats execs are stills there is because it was likely part of the deal they made with Apple, I mean who in their right mind wants to get off of the gravy train? And why should they have the giant CDN? Well, because they can sell iTunes and Beats content through AppleTV.

  3. The argument that Apple needs content has merit, but I’d argue that it already does—in the form of exIsting iOS apps. Interactive video games in particular. They will pull the trigger on that when they are ready with sensors and controllers that will work properly with decent 3rd party televisions to deliver a great user experience. Gene Munster’s futile craving for an Apple branded television will not change the logic of what is an established commodity market resitant to new entrants, especially one that has always emphasised healthy profit margins.

    1. I think Apple only needs to partner to get the content it needs. I’d argue the whole Apple Pay is a demonstration project to content providers of how Apple can be a good partner, in large markets, and only require a reasonable share of the recurring revenue stream. Being able to forge win / win’s is a huge attribute that TC has and SJ didn’t.

  4. The only thing that makes it a possibility in my mind is the cost for 4k TV have dropped drastically and they all provide silly apps.

    Also, Apple has created its own CDN (Content Delivery Network) so potentially it could distribute the program via it’s own network.

    This suddenly makes more sense why Apple has created it’s own huge capacity CDN. What a waste if it is to deliver OS updates or say AppleTV.

    I keep my fingers crossed and I can only imagine SameSung is scared shitless…

  5. There are no margins in making televisions (10-20% above cost) and the rate at which people replace them is very slow, because even cheap TVs are expensive, and a television made by Apple will be anything but cheap.

    AppleTV however are cheap to make and have good margins (33% above cost), and are cheap enough to buy that it is easy to justify upgrading as often as new models come out. And they allow Apple to sell content and services on everybody else’s televisions.

    For Apple, a $99 set top box is a much better strategy than going into an already saturated market that doesn’t generate much profit.

    It amazes me that these analysts can’t do simple math.

  6. anybody can say whatever they want about an Apple Television but there is a reason why Apple hasn’t even upgraded their Thunderbolt display with USB 3.0 ports yet. Even with the spectacular Mac Pro coming out. I’ve always thought that the reason for this is that it is a low margin product.

    When Apple comes out with a monitor with above 200DPI, then I’ll start thinking about an “Apple Television”.

  7. Once Consumer Reports builds their authoritative test room, the media should post photos of both Apple and Consumer Retards equipment.

    That would be like the Roman Army heading straight into the German blitzkrieg.

  8. Wow, Rocco must be reading MDN. Only two references of the word “I” in the whole article, great improvement.

    And most of the stuff makes sense, as an opinion piece.

    Thing is though this Apple TV stuff is dated. Yes they will make a disruptive TV set when and if they get around to it. That’s part of the Apple magic.

    Until then you can speculate, formulate and opine away, but it’s not updating on facts.

    That day will come when Tim Cook takes the stage and reveals future history. That’s the Apple trademark.

    Meanwhile, well it’s all speculation.

    Keep trying Rocco, you are making progress.

  9. The argument that TVs are thin-margin commodity doesn’t hold water, just as the same argument for cellphones didn’t seven years ago. Today’s Android smartphones are also razor-thin margin commodity, yet Apple has hundreds of millions of consumers who paid 60% margin for the iPhone. Same with Macs, iPads and other categories of hardware where Apple competes. One could argue that if Apple decided to enter TV set market, they would likely offer a product that would justify such high margins.

    The principal problem for Apple with TV sets is the replacement cycle. iPhone is Apple’s main revenue and profit driver today because mobile phones have an average replacement cycle of 15 months. iPad’s replacement cycle is showing to be much longer (around 3 years), and Macintosh is close to that (4 – 5 years). Average consumer will likely hold onto their TV for close to 10 years before upgrading / replacing it (unless it breaks down).

    Apple will never license their software to run on anybody else’s hardware. It severely dilutes the brand and the image. When a consumer buys an LG TV with some embedded Apple software, who do they contact for service and support? Well, if it is a hardware issue, LG, but if it is a software issue, Apple? How does consumer know that, when TV picture is all pink and red, whether it is a hardware or a software issue? In other words, it is extremely unlikely that Apple would ever cede even a fraction of their complete control over the entire product.

    So, based on all that, what are the chances of Apple making a $2,000 TV set? Fairly slim, in my opinion.

    1. I agree with many of your points but if during the course of the 10 year tv ownership you spend $5-10 per week in apples Eco system then you may find the math a bit different. I think it makes sense. If 20% of Americans buy a really expensive tv.then spend the next 10 years giving the money they currently give to a cable company to apple instead then it makes great business sense.

      1. In my assessment, I missed that element and you are correct. Even if that revenue is smaller than $5-10 a week, it would still be a significant differentiator (both for the consumers, who simply can’t get such service/contend from anyone else, as well as for Apple, where such spending would make up for the long replacement cycles and low sales volumes).

  10. Why would Apple ever want to dive into that low-margin TV Set nightmare? I can see them expanding the whole AppleTV idea… It’s pathetic that Roku has a more compelling offering right now.

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