“Carl Icahn makes a pretty compelling case for why Apple should get into the television market,” Ian King reports for Bloomberg. “The billionaire investor says people spend a quarter of their free time watching TV, and that the market, which he says is worth about $575 billion, excluding advertising, is more valuable than smartphones.”
“Sounds nice on paper, but the reality is that the economics of building a TV set are very different from those of mobile phones or laptops,” King reports. “The key difference is that the entire product essentially hinges on one component: the display. In many TVs, the screen accounts for about 80 percent of the production cost, according to data compiled by Bloomberg. In a smartphone, it’s about 20 percent, says market research firm IHS, which leaves plenty of room to differentiate with other features.”
“People tend to choose TVs based on picture and price,” King reports. “Apple doesn’t make its own displays, so both factors would rely almost entirely on whatever ones it can procure from a competitor in Asia. Perhaps that, more than the lack of exciting new features, is why Apple put an end to its efforts to develop a TV set last year, according to a report in the Wall Street Journal.”
Read more in the full article here.
MacDailyNews Take: Apple is simply sticking with the philosophy that made them the world’s most valuable company:
When Apple looks at what categories to enter, we ask these kinds of questions: What are the primary technologies behind this? What do we bring? Can we make a significant contribution to society with this? If we can’t, and if we can’t own the key technologies, we don’t do it. That philosophy comes directly from [Steve Jobs] and it still very much permeates the place. I hope that it always will. – Apple CEO Tim Cook, March 18, 2015
Related articles:
Gene Munster gives up the Apple Television ghost – May 19, 2015
Behind Apple’s move to shelve their UHD TV project – May 18, 2015
Even so-called smart TVs are just displays. The content comes from some other source, something else which is connected to the display/TV: cable, DirecTV, TV, internet (with Netflix, Hulu, etc.). What separates one TV from another is the size, picture quality (somewhat subjective), but mainly price.
The problem with Apple producing a TV is that there is almost nothing Apple could bring to the display/TV market that would be markedly different from a Samsung, Visio, LG or Sony TV. Content still depends on what the user connects to it, even if Apple built-in an TV.
And Apple is LOATHE to sell hardware which doesn’t make 35%-40% profit margin. No way that happens with TVs, or the only people buying Apple TVs would be fanboys with lots of money to spend, because TV profit margins are just way too thin (TV industry has itself to blame for that, after the Christmas price cutting spree it went on about 4-5 years ago to get everyone an HDTV).
The money in TV isn’t in the television, it’s in the services.
Tying their tech to a high screen cost would make it difficult for even their most happy customers from upgrading very often.
Leaving large percentages of their customers behind due to such a huge upgrade cost wall would be bad for Apple and customers.
So why does Apple force iMac buyers to get the screen permanently attached to the rest of the hardware?
32″ or 42″ screen iMac problem solved.
To dominate the living room TV, Apple doesn’t have to make the actual TV screen, they just have to get the right device (with the right services) to be the first thing you see when you turn your TV on.
Making a screen is easy, the services are much harder – hence the delay.
Interesting, Apple can’t make TVs better, they may be able to make the viewing experience better. Carl’s figuring is really this, Apple is hot right now, it has an established custom base, that’s looks like they will buy anything Apple, and rumors move the stock price up.
Think about it, what do you want in a TV? Higher resolution, OK, Light weight, OK, Large screen, OK, Great sound, well, a better remote, hum, and an Apple logo?
No, I think you want something interesting to watch. I think, if you are paying to watch a channel or channels, you don’t want any commercials. The hard part is there are so many different taste.
In today’s world there are so many other things to do then sit and watch TV. Smart TVs are just not a compelling product. Plus manufactures feel they still own the product, by providing nutty user agreements that let them compile data, listen and watch you.
The winner of this race will just make a TV, no smarts, smarts will be left to the user.