As more rumors of an Apple TV emerge, Jim McGregor looks at the impact such a device might have on the home entertainment industry.
Let’s address the electronics value chain first. The electronics industry is already struggling to deal with the growing dominance of a few select vendors in select segments like PCs and smartphones. This reduces the number of device designs for technology suppliers and puts more pressure on pricing. The situation is exacerbated when the leading OEMs develop their own hardware and software technology, such as Apple and Samsung in the smartphone segment. The market for applications processors used in smartphones are a good example. While Samsung still uses third-party or merchant market processors in some smartphone designs, Apple does not.
As a result, the captive market for processors from these two companies is over a third of the total smartphone market. With an 80 million to 100 million unit threshold just to break even on the development of an applications processor, there is only room for a handful of merchant market processor vendors. This leads to industry consolidation, which is what is occurring today as several technology segments. The entry of Apple into the TV market could have the same impact on a segment that is already struggling with over capacity and weak demand.
The entertainment industry could face an even larger upheaval. With most consumers and content already migrating to the web and content aggregators like Apple, Netflix, Pandora, and Amazon, a dominant position TVs by Apple could potentially realign the market for television content much like what iTunes and the iPod did for music and e-readers have done for publishing. With simple user interface changes, high-speed wired or wireless connectivity, and a broad stream of content sources, all traditional service providers could face a daunting challenge maintaining existing pricing strategies, especially cable providers which bundle content for a relatively high price. In addition, Apple would further improve its already powerful bargaining position with the studios. It would not be far-fetched to see Amazon and others following suit with a competing solutions using the Android platform.
Of course, this all hinges on the consumers’ willingness to purchase and use Apples’ products and to be attracted to new interactive features that would likely accompany the device. If it were any other company, I would say that this is possibly an overwhelming challenge, but Apple has all the pieces of the puzzle that could finally push consumers over the top and change the TV technology, usage models, and associated industries. This leads me to believe that it is not really a matter of if, but rather when Apple enters this market and the fallout that is likely to follow.
Founder & Principal Analyst
My 2 Cents.
Now they are selling their Apple TV box as a separate stand alone. They most likely make a decent profit and target the entire TV market; I imagine development is a fraction of the cost they spend on Ipads/Iphones.
TV's have a longer life span then cell phones/tablets and it’s a bit harder to get people to buy a new TV every year. It’s a hell of a lot easier and more profitable to get people to buy a new little black box to put under their TV though. Logically they will focus effort in making this device easier to integrate into the "Apple" user experience, bring a "new" model to market periodically to drive sales. As well as pushing their market place.
Building their own TV is a bit silly if anything they would brand license to a partner and have them integrate iOS (or just the Apple TV hardware) into the display. Pretty much the direction manufacturers will be going with Andriod and WindowsRT. Doing this though will cause better integration of Andriod and WinRT which will then hurt their standalone box sales. (Bit of a vicious circle). I don't have any numbers to look at but I don't think the profit margin is there to justify this level of effort.
The current lead manufacturer for displays is Samsung. It’s not likely Apple would be able to make a superior first round product which ultimately means they would be hurting the image of their brand. Giving Samsung the chance to push their brand image and possible get some apple converts.
In the end I think Apple see’s this and will avoid jumping into this space.
Many companies have been working hard for so many years to glue together the devices inside and outside the home. The goal is to offer consumers ah-ha experiences which they didn't before realize being possible. TV is only one of the devices inside and outside the home. It is arguably the dominant device especially in the living room which is in the center of a family. If Apple ever wants to become truly dominant and has a lasting legacy, it has to control TV or become the gateway to the TV. As a consumer, I don't want to limit my choice, hence a dominant player is no good. As a technologist, Apple is simply not qualified because they don't create audio and video contents, they don't have server technology, they have very limited range of CE products, they are not in tune with the pulse of entertainment. Sony is much more qualified, albeit it does not have a visionary leader.
Those chanting for Apple TV are simply pushing hypes for the benefit of the greedy CEOs, the skin-deep analysts, and the Wall Street bankers looking for the next big gamble, but not for the benefit of the consumers. If history is what we can reliably lean on, the out-flow of such hypes will not stop until the group of fortune tellers find the next big money spinning machine.
TV market is a crowded market. Japanese brand has dominated the market for a long time. Now, there comes Korean. Everyone has been trying to innovate the TV. There have been changes here and there. Yet, it lacks a Ah-Ha from the market. If Apple is able to do it, they will extend the unbelievable story of Apple. Regardless of my doubt, I will keep my eyes open and tune to the channel.
So many naysayers here. I would expect that when Apple finally takes the plunge into TV, they will offer some compelling surprises in UI, content integration and cloud leverage. The bigger question is how much margin can an Apple TV command.
As far as Apple TV is concerned, Apple is going to offer something with a twist or a slightly better combination of whatever exist today, but that something are going to cost the taker almost an arm and a leg for very little value. Didn't we already know most of the technologies/features exist today: gesture control, augmented reality, voice control, network streaming, wireless connectivity, wired connectivity, remote control through mobile devices, media hub, NFC, 10-ft projected UI from computer, games, apps, etc. In honesty, what can Apple TV give us beyond all these? Business models, I dare Apple is willing to give consumers a truly pull model, or content/video on demand (i.e. le carte model) instead of the current fixed # of channels model!
Please stop propagating the rubbish which do nothing but give Apple the credit which they don't and should never deserve!
I am afraid that this article is more b.s. than anything!
Many companies have tried over since 1990s to offers different kinds of connected devices in a "connected homes". Nobody ever succeeds. Anyone who expects Apple to succeed should better stop day-dreaming. A good analogy is home network. In the past many years, we saw analysts proclaiming home networking based on homogeneous interconnect HomeRF, HomePNA, WiFi, MoCa; audio video connectivity through DVI, then HDMI (more b.s. than real substance because source materials are always pre-compressed!). What do we have now? Home Network is based on heterogeneous protocols and interfaces/wirings.
Apple always wants to monopolize the market and take no prisoners if at all possible, as evident by their lawsuits over Samsung and others over the tablet design, by their demand of US$1 royalty per port for IEEE 1394 (a brain damaged thought from Steve Jobs) technology. At the end of the day, consumers purchase different brands of products at different times. Given that Apple almost always want to work with nobody (today, Apple still refuses to adopt the MOU regarding Harmonization of Charging Capability for Mobile Phone made in Jun2009), we can never trust Apple to give consumers what truly benefit consumers. Likewise, Apple will try to reap as much profits from its partners, hence service & content providers should always be cautious at the motives of Apple should it approaches them for business alliances. Given the lesson of iTune, nobody should be so childish to believe that Apple is treating them equally!
I tend to agree with tb1 in his observation. What can Apple TV offer that has not already been exceeded by others?
Convergence of individual devices into one "super device" is the emerging trend and Apple is still hinging their strategy on single purpose devices. Granted, they have a following that swoons over any new product which will guarantee sales whether it's good or bad. Brainwashing aside, I believe that multipurpose devices will eventually win out in the end.
The PS3 & xbox360 are trending towards the future in that their respective devices not only play games, but they also stream video & music as well as offer web browsing and social interaction. So the most common aspects of a home computer have essentially been bundled into one unit.
EDIT: after some research, I see that appletv plays games as well ... but only if streamed from another iproduct ... that's great if you already drink Kool-Aid, but I don't need to spend another $600 just to play games.
I'd be more impressed with a Sony PS3 TV with built in game and BluRay or a Microsoft XBox TV.
You could play games, either alone, or across the Internet with your friends. You could watch Netflix movies, DVDs. With the Microsoft you could even use gestures for remote control.
I'm not sure what Apple offers other than better menus.