An Apple-Branded TV? Why Bother, Asks Analyst

An Apple-Branded TV? Why Bother, Asks Analyst

Photo: Terretta (Flickr)

The idea of Apple entering the fractious and shark-infested waters of the television set industry has always made us scratch our heads. We were almost convinced the fever had passed when Steve Jobs biography was released, quoting the Apple co-founder that he’d “finally cracked” the problem of integrating home computers with television. Now comes an analyst suggesting the whole idea is bonkers and why even bother?

“We wonder if Apple’s aspiration to revolutionize television might be better served by selling a consumer-electronics box — i.e. Apple TV 3.0 — instead of a full-fledged integrated television,” Sanford Bernstein’s Toni Sacconaghi suggests. Why indeed?

Although the flat-panel TV set market might be worth $112 billion in 2012, sales are expected to decline and eek out only small profits for manufacturers. Additionally, prices of luxury TV sets are falling, only increasing doubts about why a profit-centered company such as Apple would want to get into the business now.

Think of when Apple entered past markets. The personal computer was in diapers when the Apple I was unveiled. Mobile phone usage was climbing when the iPhone was introduced, revamping the industry and accelerating smartphones. The iPad virtually created a market that PC makers had largely abandoned. So why television sets, now — at a time when TV viewership is declining in favor of the Internet and video-streaming services such as Neflix?

Sacconaghi said even after Apple dragged licensing rights out of Hollywood studios, the Cupertino, Calif. company would be hard-pressed to capture 3 percent of the flat-panel TV market. The company could sell three times as many Apple TV setboxes for a sixth the price, he argues. So, why bother?

With luck, those expecting Apple to get into the TV set business will just lie down for a minute until it passes.

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  • Lake Elkhorn Park User

    Oh No!  They might only get a few percentage of the annual tv sales!  When iPhone came out, they only hoped to get 1% of the phone market, and look how well that turned out.  They are just barely up to 10% of the phone market now in the US and maybe 6% worldwide.  If they can put out a successful Apple TV, it doesn’t need to take over the market to make a huge impact. 

  • prof_peabody

    Ironically, while he lambastes Apple for not telling us how they can make a profit in this industry, he does the same thing when he doesn’t say why they won’t.  He says it’s stupid, he says sales (might) decline in unspecified future scenario, he says the profit margins are currently thin, but he doesn’t actually give a reason as to why Apple will necessarily fail in this market.  

  • AndyandNancy Hyatt

    Let the Samsungs and Panasonics of the world crank out the big panels. I love my AppleTV but would love to see Apps like News, Weather and IMDB. Plus games and Video Conferencing. ATV3 perhaps?

  • Sean

    Apparently Toni has forgotten similar dismissals of Apple’s entry into smartphones and tablets.

    And if anything needs disrupting, it’s TV. And if anyone can disrupt it, Apple can.

    Think different.

  • FriarNurgle

    I love my ATV and current HDTV but will likely not purchase another HDTV (smart or not) for quite a few years. However there are plenty of people who are still buying HDTVs now and plenty of die hard Apple fans that will snag up an Apple branded TV… 

    Plus it’s one more way Apple can stick it to Samsung. Think that is reason enough to make one for Apple.  

  • CharliK

    Except who knows how many vital patents Samsung holds so its not like they wouldn’t get something.

    That said, this is a solid argument for why Apple might not make a full tv. I find myself agreeing.

  • CharliK

    Yep, content is what is vital and it can be served just as well by a better little black box hooked to ny ld hdtv

  • MacHead84

    People dont buy TVs frequently enough for Apple to get into the TV biz. The life cycle of TVs are too long to for Apples interest. They want a product that gets upgraded every 18 months or so. People keep TVs for 4 or more years.

  • Wayne_Luke

    Samsung, Toshiba and Panasonic do crank out the panels. Who do you think provides the displays for Apple’s products? Apple doesn’t make their components. They buy them. They are Samsung’s largest customer. They then have the parts assembled under contract.

  • Wayne_Luke

    Samsung would most like continue to make the chips and displays for said Televisions. Just like the make the processors and displays for the iPad and iPhone today.

  • Don Pope

    A TV just doesn’t fit Apple’s strategy. They usually create new markets, they don’t join saturated ones.

  • Jhails

    I already have an Apple TV.  I watch everything on my iMac using cable and an Elgato TV tuner and Elgato TV app for my Wi Fi enabled iPad. Don’t miss the big screen at all. I haven’t turned my old TV on in two years.

  • IGetIt

    Apple can win in the TV market the same way they’ve won elsewhere…by creating a superior experience. First a box that can take all manner of video sources and put them under an integrated user interface that is dead simple to use. I’m guessing both voice and iOS as well as dedicated “remotes” will be supported. Second, uncouple the screen from that box…i.e. send the screen wireless video and audio. This way all the hardware can be hidden away far from the screen.

  • Philyd2k01

    Right, because there’s a finite amount of people. It’s not like new consumers are popping up every single day all over the world….oh, wait….

  • Philyd2k01

    Exactly. This entire article, and all of the comments, are just the opinions of people who have NO IDEA what Apple plans. It’s all speculative. Personally, I believe the idea is to have one OS work everything with a screen in your home, all connected. And that is the future.

  • quee

    who said -TV sets?- it’s tv concept only

  • Ronteras

    What drives me mad is to deal with four remotes: From TV, from DVD player, from cable receiver and from ATV. Also the choice of the channels are terrible – there are 6-7 channels out of 100 which might be interesting for me. If Apple solves this, then I’m sold. But I suspect (even if its solved by Apple) that if rumored new ATV comes alive, it will be available only for US for the first few years, because the regulations in other countries and unions, i.e EU, it varies from country to country, in some cases from region to region and its like jungle.

  • atimoshenko

    Obviously Apple is not interested in simply sticking an OEM display panel into an Apple designed aluminium frame. There will have to be a smart device there somewhere for Apple to be interested, hence the only question is if the ‘smart’ part is integrated into the frame or sold as a standalone box.

    The former means that the Apple UI is the only UI on the TV and that all content sources must go through it for a more cohesive and potentially disruptive experience. The downside, however, would be slower adoption because the cost will be much higher (and people do not change TVs so often).

    The latter can make for quick adoption at a low price (just like Apple TV today), but at the cost of a cohesive experience.

    Perhaps Apple will do both? Sell the fully smart TV to gain living room dominance, and sell the standalone box with an identical experience for those who are not yet ready to switch their TV? Seems decent from a business standpoint, but feels a little too inelegant for Apple’s approach to their product line… Guess we’ll have to wait and see…

  • SSSTHAR

    But what if you’re a family, how are you going to be able to use the computer while someone else wants to watch TV. This is the function of a TV – to consume media with others, from either; the Internet, an iPhone, your computer, someone else’s computer, an iPad etc. – the content will be somewhere else – but the experience will be on the TV.

  • SSSTHAR

    I think theres a huge market for a “smart” TV. I mean the function of a TV is – to consume media together with others, from either; the Internet, an iPhone, your computer, someone else’s computer, an iPad etc. – the content will be somewhere else – but the experience will be on the TV.
    And that’s the one thing Apple lacks, a product to connect them all.

  • misdemeaning

    If it lets me to convince my wife to ditch cable and makes a variety of content easily available without having to have a mess of boxes lying around, I’m game.

  • timborama

    “Smart” TV, Smart car… limited market at best.

  • yoyogipark

    Are you really so clueless or if this is just link bait? Television, like other consumer devices, will become all about software. Apple is in a perfect position to build a TV that integrates into its platform. It’s a no brainer. A $99 box that appeals to only a tiny slice of the market is temporary hack.

  • Chtis

    I ditched cable 3 years ago, hooked a Mac mini to a 47″ LG, hooked surround sound to the mini and have a camera bluetoothe keyboard & mouse. Dumping cable tv paid for it in a single year. Put it all in a tv set? Sold!

  • Ray

    I’m sure something very similar was said about a gadget called iPad!

  • mrjones11

    Anyone who has sat on the couch controlling their Apple TV or sending video from an iPhone or iPad to their television can see where this is going. Just add being able to control and record  network TV and we can finally get rid of all the remotes and boxes that clutter up the living room. That’s the killer app here – your iPhone in your pocket controlling everything…

  • MacHead84

    You obviously know nothing about Apples business model if you think they make products that people upgrade once a decade.

  • Leetninga

    I agree, the appleTv and iOS work well even now. However there is room for improvement. For instance AirPlay works great but it ties up your iOS device. For instance; if we are streaming a movie from my iPhone or iPad and then, I need to step outside, everyone watching will have to wait for me to come back. A better Apple TV might not be so reliant on an iPhone to do some of the work.

  • Alfiejr

    ATV + iPad is all the hardware Apple needs. iPad apps like Bloomberg TV are the new equivalent of CATV channels. and more sophisticated than any TV-only channel can ever be, even on a “smart TV.” because they have two screens to work with at the same time, dummies. a lot more are coming.

    whereas HDTV’s are just big monitors. there is no reason for Apple to compete in that market.

    it’s becoming clear Apple was hoping to reach some kind of agreements with the big medicos that would circumvent the cablecos. kinda like AT&T’s U-Verse does now (except AT&T owns its own “pipes”). but it’s also becoming clear the medicos just aren’t going to do that. they fear losing their control of the cable market to a more flexible IPTV service.

    so we aren’t going to see same-day prime time TV shows on iTunes/iOS. but all the other secondary media companies that get pushed around by the cablecos see a lot of possibility in putting their channel/apps on iOS. so do sports leagues that have been trying to set up pay TV networks for years.

    Apple needs to accept the fact it can’t replace CATV, at least not quickly. if Jobs thought he could, he was wrong.

    so right now Apple should “complete” Apple TV. the obvious step is to add an HDMI pass thru so you can use the ATV for all input selection, with iOS apps running on it replacing all those darn IR remote controls (Comcast’s Xfinity app, for example). Apple’s own Remote app for Apple TV is terrible and needs a total redesign too.

    we’ll see …

  • aardman

    The reason analysts are analysts is that they have no imagination or foresight at all.  Everything they say is backward looking then projected unintelligently into the future.  I bet Apple has in its labs a fully functioning prototype of a smart home system controlled through Siri.  

    Set up has always been the big stumbling block to smart homes.  Nobody has the patience to sit through the tedious process of putting in the settings for each component (lights, security, climate control, appliances, etc.) of a smart home system and learning the interface commands for dealing with short term deviations from the settings.  Siri can eliminate this tedious process. The TV is only one part of that smart home system but it is one of the most complex because of the mishmash of services and providers surrounding it.

  • LeoCastillo

    i’m pretty sure in 2007 the market was saturated with cellphones… 

  • Don Pope

    But the iPhone was a revolutionary kind of cellphone.
    Will Apple be able to come up with a revolutionary kind of TV?

  • MacAdvisor

    Apple consistently has a relatively small part of its markets (there are some exceptions, such as the iPad and iPod), but racks up a huge percentage of the profits in that market. If Apple were to repeat this with TVs, capturing say 1% of the market, but gain 10% of the profits, that would make entry well worth it in revenue terms. 

  • Bob Forsberg

    The article and guessers (you call them analysts) miss the entire point. Apple is about creating easy from existing complexity.

    The Apple TV will be a giant iMac (36″-42″) with an Apple TV tuner built in. Torrents, iTunes, home movies and pictures. Think offspring of a Roku box-iMac marriage.

  • yerkanian

    With Samsung aggressively deploying SmartTV devices, Apple should really think about getting a quality product that would please the existing iPad, iPod, iPhone and iTunes customers. I don’t know a more loyal customer base than those in the industry. Perhaps it won’t be a TV set, but a new version of the atv, as most of the households already have the tv. Should have a hard drive to become the new home media center, should have air play and should play mkv files :)

About the author

Ed SutherlandEd Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.

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