Arguments Against And For An Apple TV Set

Arguments Against And For An Apple TV Set

Will Apple declare war on the rest of the TV manufacturing industry?

Rumors have been saying for many, many months that Apple is working on a standalone TV set (dubbed ‘iTV’) that will revolutionize the way we consume media from traditional content providers and the internet. Steve Jobs himself added more fuel to the fire when he told biographer Walter Isaacson that he had “finally cracked it,” referring to an integrated TV set. He wasn’t talking about the black set-top box Apple currently sells for $99.

Questions have been raised regarding the plausibility of Apple releasing its own TV set. Is this an example of the rumor mill spiraling out of control, or is Apple actually planning a full-on assault to take over the living room?

If there’s any one source who has been mainly responsible for feeding Apple TV rumors over the past few years, it’s Piper Jaffray’s senior Apple analyst Gene Munster. In case you didn’t know, analysts are industry watchdogs who are paid to publish forecasts about sales and future company plans. Before Apple releases official sales numbers for a business quarter or announces a new product, analysts will send out number estimates and “informed” speculation. Most of the time they are wrong, but sometimes they are right.

Gene Munster, a lover of Apple who was recently profiled by Bloomberg Businessweek, has been following Apple closely for nearly a decade. Munster advised people to invest in Apple way back in 2004 when AAPL stock hovered around $16. He started the Apple television speculation back in February of 2009:

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).

Years later, and Munster reveals to Bloomberg why he initially started banging the Apple TV drum:

“Somebody close to Apple said we needed to be doing more work on the television and that started it all,” he says. “You start with these crumb trails, then it turns into a dirt road, and now it’s a paved road.”

Fortune seems to think that Munster and Piper Jaffray may have gotten the iTV rumor wrong. Here are the reasons cited by Fortune:

  • The market is crowded with low-cost producers.
  • The margins are terrible.
  • The machines are big and heavy and often require professional installation.
  • They need large retail display areas and lots of warehouse space.
  • There’s no single global market. (It’s NTSC in the U.S., PAL in Europe.)
  • People tend hold on to the TVs for decades. (Apple prefers to sell products that get frequently replaced — every two years for iPhones, every three years or so for Macs.)
  • Dealing with the cable companies that control the local delivery of content is like dealing with mob.

There are rebuttals for every single one of these arguments:

  • The Mac has always been sold in a crowded market of low-cost PC producers.
  • TV margins are terrible, but if there’s any company that can find a way to make a product profitable, it’s Apple.
  • Whatever Apple makes will be thin, elegant, and very easy to install. Your mom will be able to get it working. That’s just the way Apple stuff works.
  • Imagine a wall section in every Apple Store where three different sizes of Apple TV sets hang. Like the Macs on display, video reels would play highlighting the TV’s features. Apple would also package the thing super minimally, thereby minimizing storage space requirements.
  • There isn’t a single global market, but that never stopped the iPhone from being available in over 70 countries. The smartphone industry is very convoluted and fragmented throughout different countries around the world.
  • Diehard fans will buy an Apple-branded TV the moment it’s available, and many, many others will also undoubtedly buy it. Apple doesn’t do something if it doesn’t expect it to sell. And even then, it’s not like Apple couldn’t afford to take a gamble right now.
  • Steve Jobs pressured the music industry into partnering with iTunes when music piracy was a looming threat, and now Hollywood is worried about piracy. Sounds like the same mob deal all over again.

The point is that, at this stage in the Apple TV rumor cycle, every argument can be turned around and used for another opinion. There is no hard, empirical evidence that Apple is planning a TV set, and there’s no hard evidence to say otherwise. There does come a point, however, where enough chatter means something. Supply chain rumors and pundit speculation would not be continuing to surface years later if Apple wasn’t about to move into the TV space in a new way.

Skeptics think that Apple will just release a beefier Apple TV hockey puck and call it a day. No way. Something is coming, and the rest of the industry is sweating and trying to top a product that hasn’t even been announced yet. We’ve heard that gaming will be a part of the equation. Siri integration and IP-based TV is also expected.

Apple is about creating an ecosystem of products that all carry the Apple logo and compliment each other. A little set-top box you have to hook up to your HDTV does not fit in with that longterm vision.

  • Joshua Clare

    I’m still unconvinced that Apple will release a branded TV. A siri-enabled version of the existing AppleTV which uses iOS devices as remotes just strikes me as being a far more plausible approach. Not to mention that it fits with apple’s upgrade year-on-year release cycle far more closely than an expensive television set ever would.

  • mr_bee

    In rebuttal to the seven points “against” from Fortune …

    1 & 2 are the same, 3 & 4 are the same, and 5 & 7 are the same, so it’s really only 4 points. If, as most people in favour of the concept point out, you forget about having cable inputs at all, then it’s only three points. It boils down to … margins are (currently) small, people don’t (currently) upgrade as often, and TVs (currently) tend to be big and heavy as far as electronics goes.

    None of those are really killer objections or things that can’t be easily gotten around by a good design.

  • likethepear

    OH MY GOD! What is your address there at Cult Of Mac because I’m gonna send you a box of Swiffer Dusters. Every picture you guys take is of Apple products covered in dust and schmutz!

  • John Howell

    I still don’t understand from what crack pipe these pundits are smoking.
    1: Apple dont even have a blu-ray player in iOS or OS X because of the “Bag of Hurt” to get copy protection and licencing compliance. They dont even support HDCP on the cinema displays. They dont play nice with ANYONE else’s copy protection and DRM. These are actually the things that make modern TV buying a hassle.
    Wonder why current TVs dont have a nice simple analog stereo out? the sound is protected. No AV out? the image is protected, even if you used HDMI, you wont be able to go to some device that hasnt paid it’s HDCP tax.
    The stupid thing? I can RIP a Blue-ray with my Mac in an hour or so, turn it into an .mkv and do what I want with it. All this other shit just makes it expensive to put a nice system together.
    The screen is only part of it, and probably not the most expensive bit.
    Oh, and don’t even start on the crippled ATV. The best thing you can do with it is jailbreak and install XBMC, then you never again have to deal with iTunes. Here in NZ the movies are over priced, crippled with DRM, and the TV content is nonexistant.
    Apple is sooooooo far away from solving any of these issues that it may as well be looking back at this tech with the Hubble scope.
    Yup, spending NZ$4000+ on a 27″ iMac can be justified for some people, but by now, those who can affor this probably already have their home cinema set up. A box top like the ATV is the best way into these people.
    For Me, I’m still rocking a 12 year old Sony 5.1 Amp system and good speakers that sound very nice using the optical out from my Mac, my TV is a simple Samsung 40″ full HD plasma, and my media player is a 2008 Mac Mini running PLEX, and a 2TB NAS for storage. For a remote, I turn everything on with a logitech Harmony unversal remote with some macros, then once PLEX is up, just use the Apple clicker from the Mini or a small wirelss keyboard/trackpad. Simple enough even my 5 year old can use it. And play games, and use it for homework and web browsing and youtube (neat plug in for PLEX) or Vimeo. I buy bluerays, but I don’t have a player, I just rip them. If I want really high quality, I play right from the RIP copy, after a while I delete the rip just use the .mkv transcoded version instead. I’ve always got the disk if I want to rip again.
    I wont download DRM protected video or music. DRM doesn’t work anyway.
    Apple might be able to make something that you can just buy and do most of these things, but it will cost way more than I’ve spent, and wont play .mkv or DIVX AVIs without a transcoder.

  • rogifan

    I have DirecTV. How would an AppleTV box with Siri control that? Now if Apple could simplify the mess of cables and cords behind my TV I’d be in heaven.

  • Gimpymw

    NTSC? PAL? WTF? Stop living in the stone age! The world of HD is ATSC everywhere.

  • joe smith

    Nice article. I tend to believe we will see a Apple TV set soon, but so far it’s speculation and rumors.

    For Apple to continue the type of growth they are use to, they need a new product like a TV. At this point a TV is priced into the stock. While a TV may not be certain, I am certain they have plans for making Apple TV more than a hobby.

    Anyone thinking Apple won’t enter a market because the competition has low margins hasnt followed Apple.

    http://iostv.com

  • sonofsci

    I cancelled cable when I purchased my Apple TV and Netflix over a year ago. I paid $170 a month for Uverse, even though I had a $129 package that somehow always seemed to creep up in price. I now pay $38 (30 for the Uverse internet and $8 for netflix). I save about $1300 a year with my Apple TV and I know several people who have done the same. I have a new Sony TV in the bedroom and the interface sucks so bad we rarely bother to use it at all.

  • macowling

    @John Howell: You know there’s a version of Plex for the Apple TV, right? It’s pretty damn special and uses the same library as your Mac Mini. My setup is basically the same as yours, but with an extra Apple TV on the TV upstairs in the bedroom. It works really well.

    As for the article above, I can see both sides. The TV market is a low-cost market, but Alex is right, if anyone can crack it Apple can. So I can see a TV coming out of Apple, but I can also see that they might decide that the AppleTV is good enough to crack the market and they don’t need the cost and complexity of making the panel.

  • Vicente

    I don’t see HOW Apple can be the savior of TV technology.

    They can’t even get Apple TV right. I bought an Apple TV recently, and I love Apple products. However the ATV wouldn’t let me remove any of the “apps” excuse me provided content icons. There’s no store to add new ones. There’s no “wall” around the garden, there isn’t a garden! Oh, and of course still juggling remotes to watch anything. Because of course ATV has no API for IP controls, so my nifty Roomie Remote app on my iDevices could control every other device under the sun, but not the ATV. I ended up returning it.

    TV technology is a complete disaster these days with a bunch of competing technologies all seeking to maximize inconvenience. I wanted to create a SIMPLE setup for my 80+ year old Dad, and it’s blasted hard work to try and setup a TV he can use. I sorely miss the days when watching TV just needed 2 wires hooked up and one simple remote. As it is I expended days trying to simplify it and still get support calls from him.

About the author

Alex HeathAlex Heath has been a staff writer at Cult of Mac for three years. He is also a co-host of the CultCast. He has been quoted by the likes of the BBC, KRON 4 News, and books like "ICONIC: A Photographic Tribute to Apple Innovation." If you want to pitch a story, share a tip, or just get in touch, additional contact information is available on his personal site. Twitter always works too.

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