Is Apple Going to Start Making TVs?

By John Biggs

Gene Munster of 1313 Mockingbird Lane and Piper Jaffray are positing that because the Apple TV isn’t doing so well that Apple (AAPL) will soon sell a TV with Apple TV features built-in, an idea so ludicrous that it caused me to spit out my Metamucil.

Let’s look at his reasoning: the Apple TV is “losing ground” to other subscription services - I’d argue it’s lost ground to everything and is now, in its current incarnation, an also-ran - and so Apple will create a DVR combo/download system with Hulu, Joost, FARK, Digg, JDate, and other web services built-in. So that’s not so far fetched, right? But get this: Munster thinks a TV is also in the cards.

An Apple television set within the next two years that could wirelessly sync with iPods, iPhones and Macs. “Such a device would command a premium among a competitive field of budget TVs; we believe Apple could differentiate itself with software that makes home entertainment simple and solves a pain point for consumers (complicated TV and component systems).”

He’s got all the points right - Apple sells at a premium, Apple thinks different, Apple can solve pain points - but he gets one thing wrong: TVs are so off Apple’s message that he might as well be proposing the manufacture and sale of spear-fishing gear.

Apple is in the living room race, to be sure. But a TV isn’t the way they’re going to win it. The set-top box is much more logical and they could build a kick ass DVR inside a sexy little box. They sell hardware with an upgrade cycle of about eight months - a year on the topside - so for them to blow out a TV would be non-conducive to their goals. Something smaller that sits next to the TV can be upgraded ad infinitum. Most folks keep their TVs for years, even decades. Why would Apple want to be in that market?

Apple knows it’s got a winner with the iPhone OS and an App Store-containing, video-streaming, DVR-ing UberApple TV is a sure bet. However an Apple TV TV? Not so much.

Original post

Comments

[Prudent Man...:]

Where are they going to make them?

Why do I feel that the love of APPL reminds me of the love for MOT, Philco, RCA, Zenith of the sixties, GM, , GE, FNMA, MSFT and INTC of the eighties? I'm not knocking the company, just thinking back.

As in anything in life, it is the price one has to pay.

Aug 21 11:06 AM

[JAFAO:]

Don't be so sure mister crunch. "convergence" (i.e. internet/tv/radio/sex {well maybe not sex yet}) is just around the corner and whoever gets it right will get mucho dinero. an imac tv is not too far fetched in achieving that. in fact, it's quite close fetched.

Aug 21 11:16 AM

[disposablei...:]

If Apple has a way of revolutionizing the television world (perhaps through a combination of slick & responsive interface, iTunes-style downloads, live streaming video, reasonable subscription pricing, intuitive search & recording functions, apps, games, etc.) they'll either deliver it as a totally new set-top box and/or offer a literal "AppleTV".

They could easily do both.

Apple offering a TV isn't a crazy idea if they bring something unique to it. Make it a platform. Keep it on-brand. Years ago when Dell offered TVs (plain old TVs with no interactive/computing functions whatsoever), now that was crazy.

Aug 21 12:19 PM

[jack dee:]

Apple would have a pretty hard act to follow. Tivo has a huge base, and its customers like it.
Media center has evolved into the best system by far, a small box under the set, ties netflix instant , XBOX , dvd , DVR, Tv guide , music etc. it supports touch screen, win 7 and MC really is a hub. I am sure there is plenty more to add going forward.
Apple is years behind, I am sure they have the latest Win 7 MC PC setup and are wondering how they can copy it and pretend they did not....

Aug 21 01:27 PM

[disposablei...:]

@jackdee, and yet Microsoft can't find a way to make any money on the Media Centre / Xbox combo. It's slick. It should be a powerful force -- but for every unit they sell to a non-game-buying customer, they lose money.

Aug 21 01:34 PM

[CaliforniaC...:]

I'd put an iMac in the kitchen if I could figure out how to run ethernet in there. Between podcasts and all the other streaming sites I cant watch plenty of content.

Aug 21 03:01 PM

[jack dee:]

ummm Media center is part of Win 7 comes with 2 of the four vers.

SO I guess every time someone builds a box or buys a media center PC MSFT makes plenty of money.
SO not making money out of Media Center? well that would be very hard to figure out, are all MediaCenter PC sales of Win or MC? or both. Is it hugely driving sales, no has it shifted MSFT bottomline? No . But it is cool check out a demo of the latest release with Win 7....... (and of course this is free bundled with Win 7 non basic and non biz.

Aug 21 03:16 PM

[disposablei...:]

I'm surprised PC manufacturers haven't really made an effort to push media extenders for Media Centre PCs. It would be a great up-sell opportunity. Maybe it's just not what people are looking for. Apple's only sold a few million AppleTVs so far. Not an earth-shattering number.

That's why I think an actual Apple TV is a great idea. Everyone wants/needs a TV. But honestly, TV today sucks about as much as cell phones did a few years ago.

I hate my cable box's interface. I'd love to find programs more easily, but I can never figure out what's on. Flipping channels takes too long. I only want a limited number of channels/programs, but I'm willing to pay good money for what I watch. In fact most of the TV we watch these days is on DVD.

Apple's great at taking a commodity (mobile phone / computer), bringing the hardware to a new level and and adding some innovative and intuitive software (iPhoneOS / MacOSX), creating a completely new market. It's what Apple does best. It's their M.O.

Aug 21 04:53 PM

[LT:]

I bought an Apple TV when they first came out, We love it. Our city gave one cable provider exclusive rights to the entire city to get cable years ago..therefore we get crappy programming from Insight both on regular TV and their TIVO box. To them a new release is a movie made in 1960's-90's.

Refer to the article here on SA about AAPL blowing the NFL deal, APPL is probably not quite ready for the big push into the living room. HDTV needs more improvement and the programming deals need changing.

But trust me, they will be there. With the App store, iPhone OS, iTunes platform, Apple is building the foundation to be #1 there too. "Disposable" has it right in the above post,

What apple does best is "Apple's great at taking a commodity (mobile phone / computer), bringing the hardware to a new level and and adding some innovative and intuitive software (iPhoneOS / MacOSX), creating a completely new market. It's what Apple does best. It's their M.O."

This is also what makes Apple cheap, they have an unlimited market for new revenue streams built around iTunes and iPhone OS. NFL, Golf, MLB, NBA....the list is never ending. I don't want a dish, or another monthly bill either. But, I will pay for what I want.

Apple haters said the iPhone would be a flop, now it is the one to beat, IF they do the same with a TV...it will sell too.

Aug 22 03:20 AM

[Kris Tuttle:]

Doesn't seem like Apple really wants to be in the "TV" business. AppleTV after all attaches to your TV. Apple wants a TV business but that would hinge on content rather than devices. For Apple to want to make the display there would have to be something unique about it for them to make it attractive in terms of gross profits.

See the related post on Apple and the NFL deal. I think it raises more interesting questions about Apple strategy vis a vis content.

Aug 24 11:23 AM

[Cali-arch:]

An apple TV would actually make a lot of sense...screens are almost a commodity at this point, so having an itunes integrated hard drive would be a viable product.

apple TV is like buying a mac tower...you can sell them, but i macs and laptops are a more compelling product because they are integrated.

If apple is going to be competitive in the home entertainment scene, it will need to move beyond the current model.

Aug 24 01:01 PM

[disposablei...:]

The profit potential comes from turning a commodity into a premium product (really a whole ecosystem) that no one can duplicate. I suspect that Apple is waiting for two things to "gel".

One is access to content (it has to be on terms that make it compelling for consumers and allows for a nice cut for Apple. So far movies & television are not there the way music is).

Two is a stabilization of HDTV prices (both component costs, and retail prices). As long at they are dropping like crazy Apple can't really "jump in". Eventually they will stabilize like any technology. That's when Apple can add the most value.

Aug 24 01:06 PM