As more rumors of an Apple TV emerge, Jim McGregor looks at the impact such a device might have on the home entertainment industry.
I usually avoid wading into rumors, especially one like the iTV, which has been rumored for several years. However, this is not only a rumor that continues to arise, but one that could mean significant changes to many segments of the high-tech and entertainment industries if Apple is successful.
I say “if” because entering this segment is likely the most challenging Apple has faced thus far. Unlike Smartphones and tablets, where the markets were in their infancy and the product offering were poorly defined, the TV is a well-established industry that was recently transformed by the digital age.
In addition, the television industry has worked diligently to transform the products and devices beyond a passive viewing experience to no avail. TV manufacturers have tried just about everything, including interactive software, 3D, and integrated solutions like hard-disk drives, cable cards, and even full-blown processors that essentially provided the same functionality as a PC.
With the exception of internet connectivity, all these attempts have failed to garner wide-spread interest. So, the first question is why could Apple succeed?
Apple has many things going for it if it chooses to enter this market. The most important is the Apple user experience. Although the user interface differs between Apple products, the company still provides the most intuitive and fluid user experience of any electronics OEM.
Apple controls the experience by closely coupling the user interface, applications, and with the operating system and hardware platform, and in some cases even develops the microprocessor. Even though Apple does not control the service connections for its existing devices, the company does work closely with select service providers to influence this important part of the value chain as well, especially in the mobile segment.
Apple also has a strong and growing worldwide brand that stands for both quality and consumer appeal. And finally, Apple has something no other electronics OEM has today, the ability to charge a premium for its devices. This is important because increasing the functionality means increasing the cost of building the TV, and this has been a major pushback by consumer in this highly competitive and price sensitive segment. When you combine this with the industry leading content and applications available on Apple products, you have the potential for a winning scenario. If this happens, however, the iTV could have significant ramifications for the rest of the electronics and entertainment industries, much like the iPhone.
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