Why an ‘Apple Television’ set is still a bad idea

“Doesn’t Apple have a magic touch in new product categories? After all, it disrupted the entire music and smartphone market and is now attacking new sectors such as mobile payments and wearables with its Apple Watch,” Tales From The Future writes for Seeking Alpha. “Why can’t the same winning formula be applied to TV hardware as well?”

TFTF writes, “Apple stockholders should be thankful that Apple did not enter this market up to now and hopefully won’t in the future.”

Why An Apple TV Set Is Still A Bad Idea:
1. TV Gross Margins And Logistics Issues
2. Longevity And Low Turnover in TV Sales
3. Apple’s Business Model At Risk: TV Hardware Is A Commodity
4. TV/On Demand Content Delivery Issues
5. Content Cost and Bargaining Issues

TFTF writes, “Apple can – and should, in my opinion – achieve both a better user experience (SDK for iOS developers, more content deals, ‘appification’ of TV stations with personalized content and advertising, iPad/iPhone as second screens) and increased market share in the living room with improved Apple TV box revisions sold around current price points ($99) without creating its own TV set.”

Read more in the full article here.

MacDailyNews Take: “Apple Television” is not a bad idea unless you think Apple won’t bring something completely new to the table. Anyone who’s watched Apple even cursorily, understands that when Apple enters a market they deliver unique, new value propositions. Apple disrupts. If Apple sees a way to disrupt the broken “TV” experience, they will work to deliver “Apple Television.”

Related articles:
Yes, Apple will do a television set – September 26, 2014
Piper Jaffray’s Gene Munster: Apple Television quite possible in 2016 – September 24, 2014

36 Comments

  1. they won’t be making tv’s, but will be selling their internal components and UI to tv makers. they will continue to make tv like they have but now they will be powered by apple.

    1. Not a chance. In Apple’s 30-year history, they have given away their software only ONCE to other hardware companies to build devices, and that didn’t work out well. If an Apple logo is to appear anywhere on the device, that device will have to be made by Apple, from inside out. Who do you call if you have a problem with your Toshiba TV with AppleTV software in it? How do you separate the quality of your consumer experience with Apple’s software component, vs. the Toshiba’s hardware part? Any such combo would cause rapid and serious erosion of Apple’s brand value.

      If Apple decides to make a TV set, it will be much more expensive than competition, but it would be worth it for the quality, design and most importantly, software functionality.

      1. What are referring to when you mentioned Apple has only given away their software once? They did this recently with CarPlay. I would agree with you it hasn’t worked out very well at all.

      2. Apple has licensed software applications more than you remember. Airplay to the Denons and Yamahas of the world, Carplay to the car manufacturers, and I’m sure I am missing several others.

        1. Airplay, CarPlay, Health kit, Apple Pay and others aren’t really running Apple’s software; they are using Apple’s API to talk to Apple’s devices, but all have their own operating systems.

          The only time other maker’s hardware was actually running Apple’s software was the clone programme in the mid-90s. That’s the one that didn’t out work at all.

  2. If Apple Television became the primary way people watched television, giving 70% to the networks/producers and keeping 30%… they would crush it. Even if the hardware had long life in living rooms and margins were low, yada yada yada.

  3. The “longevity” argument has always been one that I have never found convincing. I mean, how many times do you replace your Mac/PC? Specially an iMac or desktop PC. Apple could very well build a TV set with impressive specs and just keep updating the FW, hell, even charge for those updates as if it were an OS release like in the old days for a considerate price!

    1. Apple could build TVs as well as something like the current TV which would offer the same features. Apple won’t release a TV until it has something different to bring to the table, and regardless of current TV profit margins, Apple will make plenty of profit on its sets. Don’t forget, Apple has the financial wherewithal to buy in volume, build its own plants, and otherwise control the supply chain like no other company.

      However I see TV as a much more likely product. It’s cheaper, so more people will buy units and update them more regularly. Plus, the reality is a TV is just a screen (no matter how much Samsung wants to make you think its TVs are “smart”). The true usage of a TV is to display content, and that content has to be delivered and present an interface for navigation. That is where Apple will make its product must-have.

  4. There’s no money to be made in the television market. 3D, 4K and curved screens are just variations on display. Unless Apple comes out with something like REAL 3-D, they should just concentrate on the Apple TV and making it more and more integrated with iOS and OS X.

    1. There is no money to be made in the smartphone market either (ask all those Android makers who sell their stuff at razor-thin margins). There’s no money to be made in the desktop computer business as well (ask IBM, who bailed out and sold to Lenovo, or Compaq, who merged with HP, or Gateway, who closed up their stores). All selling at razor thin margins.

      Yet, we have the iPhone and the Macintosh.

  5. Apple needs to partner with Sony/Sharp to integrate the Apple Hardware/Software into their TVs.

    Those two manufacturers are fiercely competetive with Samsung and would be open to a deal. Perhaps Sharp moreso than Sony.

  6. Until consumers can be liberated from a couple of legacy things, home video on an Apple device will be less than it could/should be:

    1-Bundled Cable Content. An IP cable setup would allow unbundled choice and a true free market for TV channels. Currently, liberals who would never watch it have to help fund Faux Newz Channel. Hip Hop fans have to subsidize CMT and country fans BET which is really stupid. Non Golf fans must subsidize the Golf Channel, Outdoor Life and a whole raft of narrowcast bullshit. Let me pick the channels I want and not subsidize the crap I don’t.

    2- Localization of network content. Broadcast network contract with local affiliates grant a death grip on a lot of programming. Some of us do not give a rip about the local affiliates and would prefer an out of market view. You can currently do this with the PBS app, but it regularly pesters you if you select an out of market station as your home station.

    I am all for a free market where viewers are free to pay for and view that which they choose to support and not have to buy crap they do not care for. The cartels that control content and distribution are against this, but the consumers and viewers are all for it.

    1. Hey Darwin, don’t you be a knocking the Golf Channel. It is not paid for by others, it is like HBO. That is it is additional fee for Golf Channel fans. Also most of what you call home channels are actually owned by the national conglomerates. There is very little useful local channels. Here in Silicon Valley however you can near 100 channels over the air. Cannot understand most of them are Chinese, Vietnamese, Spanish, Indian, Yiddish, you name it, we got it. And they are free.

      1. Comcast owns the Golf Channel and we pay for it in a bundle. I used to play golf and have even been to the Masters (saw Larry Mize win the Green jacket when stationed at Ft Gordon in Augusta), but have no interest in watching it on TV.

        There are more than enough golf fans to support The Golf Channel without making me pay for it, same with MTV, BET, CMT, Fox News, CNN, USA and other such channels. I support pay for only what you want via Internet Protocol Cable TV.

        BBC World News, CNN International (Global feed- not the US version), NHK, DW TV, France 24, HBO, Showtime, TCM, MGM, PBS (KQED would be my preferred over my local PBS) and just enough ESPN to satisfy my occasional viewing of College Football.

        The rest they can keep. Channel 4 UK would be nice if they could get clearance over here.

        I have no problem paying for TV, I have a problem being robbed by a cartel to support schlock like the bulk of American TV.

  7. The world is changing fast.

    Young 20 somethings are NOT watching TV on the wall like older viewers. That portends a collapse coming in TV networks and monopoly “cable” connections over time as far as watching “TV content” goes.

    Watching video clips and content on laptops is becoming more the norm.

    I have no doubt Apple can do better than anyone at making on-demand content easy to find, buy and play. Unfortunately, those distributors and cable companies don’t want ‘the new guy on the block’ to cut into their game.

    My guess: AppleTV keeps progressing in its present form along with its capabilities to connect to & be controlled by Apple devices.

    1. I’m not so sure about this oft-repeated, generation-specific seeming truism…
      “Young 20 somethings are NOT watching TV on the wall like older viewers.”

      When I was in my early twenties (a fair while ago) I watched basically no tv. Didn’t own one for about a decade. Same with nearly all my friends and acquaintances. Got a little older. Starting enjoying a nice comfy chair plus a good program.

      What 20 somethings are doing today may or may not indicate what they’ll be doing a decade from now.

      1. “What 20 somethings are doing today may or may not indicate what they’ll be doing a decade from now… ”

        But I also think that what 30-40 year olds did a decade or 2 ago, is also not what they’ll be doing a decade from now. TV viewing is changing.

        When I was in my twenties (also a fair while ago) I watched more than my share of tv. But tv today is crap.

        I got sick of being ripped off by cable a couple of years ago, got rid of it & haven’t looked back. I still like to watch the tv screen, but it certainly isn’t showing cable.

  8. The “margin” issue can be solved if Apple works with one of the TV content providers, one per market. This is a similar strategy used when Apple entered the smartphone market with iPhone. With a TV content partner, create a version of the Apple TV box that replaces the ubiquitous (and often derided) “cable box.” It’s “free” with contract, subsidized by the TV content provider (charging a monthly “rental fee”). The Apple TV “box” provides the same TV content the service customer already has, but through an Apple-designed interface, plus Apple-supplied content (like on current stand-alone Apple TV).

    As an option, the service customer can choose the COMPLETE Apple “smart TV.” With a subsidy from TV content provider, the service customer gets it for an “up-front” cost that matches or beats the price tag of “commodity” (dumb) HDTVs with equivalent screen specs. The customer gets controls for TV content, Apple-supplied content, and TV settings, all in ONE elegant unified Apple-designed interface. The TV content provider gets to exclusively market “powered by Apple,” to increase its customer base (just as iPhone helped AT&T with initial exclusivity). Apple gets acceptable profit margins on its complete smart TV, due to the subsidy. (Apple can also sell a stand-alone unsubsidized version of the complete TV, as well as future versions of the current Apple TV.)

    The “longevity and low turnover” issue is a non-issue. Macs have longevity and low turnover (compared to iPhones), and Apple still sells Macs.

    The “commodity” issue is also a non-issue. Apple profitably sells Macs in a PC markets that is otherwise commoditized. The smartphone market is now essentially iPhone versus Android, and the Android portion is becoming commoditized. iPhone remains HIGHLY profitable. Apple can similarly provide “unique value” in the TV market, and be profitable.

    The “TV/On Demand content delivery” and “content cost and bargaining” issues are not relevant, IF Apple partners with one of the TV content providers. The service customer’s content is exactly the same as before. Apple is adding value to their customer experience by providing an elegant “delivery” interface plus additional Apple-provided services. And there is no need for Apple to “bargain” for content to improve its own competing service. The partnering TV content provider has already done the bargaining.

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