COMMENT: If Apple do go into the TV business they are going to need two things to give them an edge, superior content and software similar to AirPlay that delivers a TV experience beyond what we have today from other TV manufacturers.
The Apple TV rumour mill went into overdrive when Apple co-founder Steve Jobs told his biographer Walter Isaacson that he’s come up with a new way to interact with television. “I’ve finally cracked it!” he told Isaacson.
Getting traction in the TV market is not going to be easy despite Apple being a business savvy Company, when Apple introduced the iPod and iPad there was little if any competition, today the TV market is saturated, further complicating the issue is the issue of price and the turnover period for a TV Vs a PC or smartphone.
While a TV is turned over on average every 40 months a smartphone is replaced on average every 24 months or less.
Research shows that consumers are less likely to replace a large screen TV than they are a notebook or smartphone which for Apple does not bode well as TV’s are currently suffering from margin erosion with manufacturers struggling to compete.
Sony has not made a profit in eight years with their Bravia TV brand so unless Apple has something that no one else has they are going to find it very hard to compete.
Another problem for Apple is that they do not have the capacity to manufacture their own TV’s so they are reliant on third party vendors to deliver superior hardware in particular the display hardware and this is where it gets tricky.
LG Electronics is about to reveal a 55″ OLED TV while Samsung, Sharp, Panasonic and Toshiba are all set to deliver TV’s with processors built into the TV hardware. These manufacturers will also deliver new tablet and smartphone applications that allows a TV to be viewed and programed from a variety of devices along with new built in Intel processors which deliver a superior application and web experience.
At the same time arch rivals like Samsung and LG are going to loath giving Apple a TV display advantage unless they can make money selling Apple display components at a premium price.
Several years ago Samsung were highly successful at seducing Sony into a so called TV joint venture that was 51% controlled and run by Samsung.
Several times during the relationship which has just come to an end, Sony accused Samsung of not playing fair when it came to display screen allocation, so I suspect Apple are going to be wary of climbing into bed with partners who already has a major share of the TV market.
When it comes to TV content Apple does not have a track record in the TV market while Samsung, LG, Panasonic and Sony do. This present’s Hollywood studio’s with a dilemma, do they give Apple access to exclusive content or do they share it around for a price.
Google along with Netflix and all the major TV brands have current relationships with Hollywood studios with several organisations currently delivering movie and TV content into the home via a TV or projector hooked up to a Blu ray player.
With the introduction at the 2012 CES of processors, new storage capabilities and voice controlled applications streaming is going to be easier it will also deliver a better viewing experience via the introduction of new software and third party applications.
Another component that Apple is lacking is a broadband relationship which brands like Samsung, LG and Panasonic already have via their current relationship with Telstra. What consumers don’t want is a massive broadband bill when they watch a TV program or movie.
Currently Telstra is rolling out a new application that will sit on any TV, set top box or Blu ray player. The application delivers thousands of movies, free to air TV and next year Foxtel.
Google is set to deliver movie content which will incorporate advertising and I suspect Apple could do the same in an effort to lower the purchase cost of a movie Vs what a broadband operator can deliver.
What Apple do have going for them is that already have millions of music customers, they have also recently introduced cloud services. By offering these customers a new TV experiences via their Mac or a TV streaming experience via a new TV could appeal to the Mac faithful especially if the TV content is offered as part of a monthly content subscription.
What I suspect Apple is going to do is introduce a new range of TV’s along with some neat new software that delivers a superior experience to what the likes of Microsoft and Google have not been able to deliver in the past.
One commentator said recently in Fortune Magazine “If Apple is targeting the 32? and 37? market, I would not be surprised if they intend to handle their entry into the television market quite differently than, say, Bose with its 46? high end set. A 32? TV would not be much bigger than the 27? iMac, which leaves me wondering if they are going to be trying to go after the second TV set market – bedrooms, study, etc. – while leaving the living room to the popular 42? (and larger) sets and panoply of media devices people already own (DVD players, cable boxes, game consoles, etc.).
“Then, having made the stealth entry, they can wow consumers with their technology and interface, before they start producing larger sets for the living room. It would be a departure from tradition for Apple to license the manufacture of hardware to other manufacturers, but if it can control the OS (and they weren’t scared off by Apple’s historic pulling of the plug on the third party production of computer hardware) I could see Apple doing that as opposed to trying to stay at the leading edge of television technology – a market in which the big, experienced players seem to have a lot of difficulty maintaining profits.
“Their size choices suggest that their goal is to sell something other than the television itself – TV’s are notorious for their thin profit margins, and smaller sets aren’t likely to appeal to the traditional high end electronics buyer. It seems obvious that the TV would include the iTunes Store, where you could rent (and perhaps buy) shows and movies. But you would also likely see sets powerful enough to support some impressive app- and cloud-based gaming, as with the iPad.
