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.