Apple television: Where others failed, content could hold the key

Apple television: Where others failed, content could hold the key

Summary: Apple will likely, eventually, offer a television. But, traditional television makers have failed to keep ahead of the curve. If it falls down to television content, rather than the device, Apple could take a lead over its rivals and revitalize sales in televisions, albeit modestly.

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The television industry is in a rut. There's hope that talk of an Apple TV could revitalize interest -- albeit one-sidedly -- in the humble television, that almost everyone in the developed world has in their house.

The Wall Street Journal recently reported that Apple was in talks with "some of the biggest U.S. cable operators" about pushing content to consumers using "an Apple device as a set-top box for live television and other content."

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No mention of an Apple television. Not yet, at least.

I have two theories, based on the past few weeks. Either Apple is developing its own television but it's still in design phase in-house and yet to reach an outsourced manufacturing partner, or the long-awaited device is already in pre-production in the U.S. and Apple has a tight control (perhaps more so, considering the leaks out of Asia with the iPad mini and iPhone 5) over its manufacturing partners.

Or, there are no plans to dish out a fully-fledged television set for some time yet.

My bets are on the latter. Not because Apple can't make the television work, but nobody has yet been able to make the television work.

Sharp is in trouble and may leave the consumer television business. Toshiba also cut television production in a bid to return to some level of operating profit. Sony's television business is making a loss quarter-on-quarter and is now in crisis mode. Samsung, well, it's doing OK for the time being.

The entire television sector is falling down around itself.  

As Business Insider notes, analysts are pointing towards two ends of the same string: Apple is pushing for U.S. cable content because it only has plans to develop its Apple TV set-top box, while another analyst believes an Apple television could "lock-in" users to the iPhone and iPad.

("Lock-in?" Another device likely won't lock in users to their phones or tablets. General consensus from the street suggests the vast majority are happy with their iPhones and iPads? Except, perhaps, my parents who still call me up regularly to ask me where the "back" button is on their iPad. I digress.)

The trouble is for Apple, and every other display or television manufacturer is that they last too long, and therefore are replaced perhaps once every three-five years. My television has stuck with me for four years. To use an Apple-ism, "it just works." 

Televisions are low margin and replaced over many years, and customers don't always go back to the same manufacturer. Television and display makers don't have the same loyalty from their customers as smartphone or tablet makers, because televisions are passive devices. Without looking, can you tell me what brand your television is? (I had to check. Mine is a Sharp television.)

Unless Apple can bring an added something to the traditional television, it will find itself in the same rut as others.

Television makers so far have created devices and left the television content to others. There's no duopoly. It's two separate industries working on the same thing, but not together.

And, there's no doubt that Apple will. By working with cable operators and content providers, it's entirely possible that Apple will not only bring a television to the market but instead offer the more lucrative content offerings to the end-user.

After all, an iPhone and an iPad are just hardware devices. In spite of their consumer awe and polished aesthetics, it's the operating system and the software users want. It's what is inside that counts, rather than the 'slave'-like device that the software operates within.

As Daring Fireball's John Gruber noted: "What's the next $100 billion idea, and what would Apple need to do to set it up?" Perhaps it isn't television. Other television manufacturers have struggled to get even close to the $1 billion per quarter mark.

Apple is above all else a hardware company, Piper Jaffray analyst Gene Munster said at the Business Insider conference. The next logical step in its line-up of products is to offer a television. (It's not that Apple is running out of ideas, but there's very little that's 'new' the company can offer.)

There's no doubt in my mind that Apple could make the television "cool" again where others have failed. That said, the humble television mounted to your office wall, or sitting in your living room, or in the airport lounge flickering away with dozens of upcoming flights isn't an exciting product. Televisions just aren't exciting. 

Apple likely can't leap into the television market and expect it to be its next $100 billion cash cow. There has been enough speculation, analyst rumblings and drop-hints from Apple chief executive Tim Cook already to suggest that the Apple TV is more than just a "beloved hobby" for the company. In my mind, there's no doubt that Apple will foray into the television business, but the company won't expect it to rise in the same as its smartphone or tablet division.

By Apple's historical standards, compared to its iPhone or iPad units, its venture into the television building business will likely be a company-controlled 'failure'. 

Topic: Apple

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  • Apple television: Where others failed, content could hold the key

    Sony had done that a long long time ago. After the betamax vs. vhs debacle, sony went into a buying spree for content and the rest is history. Up until they decided to enforce drm and created one of the nastiest rootkit there was, they were flying high and mighty. And then another history came to pass... Nothing is new here. Apple made a killing in content after jobs decided that drm is bad for business and made apple store more lenient than the competition, and everything fall in place. The current heydays of apple stem from that single act of benevolence by jobs, because like sony he firmly believed that content is king ...
    • Movie?

      I don't believe movies or TV shows are drum free from Apple.
      • True, but the DRM

        Is so unrestrictive, most people will never run up against it, and that's the point.
        • Define "unrestrictive"

          You're defining it by "can't play in anything but iTunes or Quicktime, or on any device that doesn't begin with the letter 'i'"?

          Apple's video DRM prevents users from watching video content in VLC or Mplayer, or any otherwise format-compatible video player, or on any Android device, or on any Windows Phone device, or on a PS3, or on an Xbox.

          Now granted, no one else does it any better, but the least restrictive video format I've seen yet is DVD. No wonder the content industries want to kill it.

  • Here's what's wrong with today's TV

    1. Cable boxes. At one point in time, there was promise that we would do away with that ugly thing that added yet another remote, to our collection and yet more wires behind our TV furniture. Yet the companies managed to screw up the cable card.

    2. Complicated remotes multiplied by their number. One for TV, one for cable box, another for AV receiver etc.

    3. Wires everywhere. Not just for linking the various components together but also for speakers, especially those with home theater setups.

    4. Content. This may be the biggest challenge of them all. How does one offer all the possibilities out there to the clients in a package that doesn't break the bank? What about live TV? As if this weren't complicated enough, multiply all this by the number of countries you want to launch this, with different rules and regulations.

    If Apple or anyone else can solve this, then they've got a winner on their hands.
    • Apple TV may just get it right

      Yes all the TV manufacturers are suffering and getting out.... good time for someone like Apple to get in? I believe so. They have the know how, user/pay infrastructure and content relationships to make a compelling product an resolve the nasties that MG537 covered. A sleek integrated system with 3D, surround sound wireless speakers, airtime, a single remote. I would buy one and put my current LED in the bedroom.
  • Broadcast TV is awful

    Something needs to change. Right now I use my PS3 and my jailbroken Apple TV for all TV viewing. Haven't had cable in 4 years.
  • 5 years?

    We aren't talking PC replacement cycles here. For most people I know, a TV is expected to last at least 10 years and many will still be going after 20 years.

    My, then, 10 year old Sony WEGA was donated to a young couple moving into their first flat together and they couldn't afford a TV. I bought a Panasonic LCD screen, because in the new house, the WEGA was too deep to fit into the "TV" alcove. The Panasonic is coming up for 2 years old, so I won't be looking to replace it for the best part of a decade.

    As to content, I can't think of any show on TV that I try to get home for, so that I can watch it - and I haven't recorded anything since my VCR went south in 1996.
    • That's how long ours lasted

      When we replaced the living room TV last year, the prior one had lasted for about 10 years or so. We just replaced the bedroom TV a few months ago, & that one had lasted a whopping 15+ years.

      So, yeah, paying a high price just for a particular TV brand, especially a brand with a reputation for short upgrade cycles, doesn't make any sense to me.

      And as for content...most cable/satellite channels have very little of interest (which is why we cut DirecTV 4 years ago), the broadcast channels can either be watched live or within 1-7 days online (either through free Hulu or the network's own page), Netflix provides cheap access to tons of back seasons of existing shows or shows that aren't even on anymore, & Redbox provides cheap access to more recent movies. So, unless a company could simultaneously provide access to current TV shows from all non-premium networks, off-air TV shows that are worth a second viewing, near-current movie releases, and a decently sized library of older movies, for a price within the same ballpark as Netflix (i.e. under $20/month), I won't have even a smidgen of interest.
  • Smart TVs

    You know that most of the bigger companies have Smart TVs out now. They wireless connect to the internet, have apps including Netflix, Hulu, Crackle, and a huge list of others. The only revolutionary thing I can think of that anyone can put into a TV for content is for the sat and cable companies to let you just buy the individual channels you want. Yes if Apple makes a TV it is going to be successful, but that is not because it is the best thing since sliced bread, it is because of the following of fans that the product name shares. If you have a 5 or 10 year old TV now, just go out to your local Best Buy or HHgregg and see the marvels and amazement that are out now. Plus, in order for something like the author wants to see with content, your cable company would charge a fortune, because they would probably require you to rent out your Apple TV from them like they do with their wireless routers and Tivo like top boxes.
    • Technically...

      They don't require you to rent your router and set top boxes. Ever wonder why they sell cable modems/routers at Best Buy? Same applies to the set top boxes. You can simply rent the cable card (at a fraction of what the STB rental is) and use a device of your choice (e.g. Ceton). They simply don't go out of their way to make you aware of this because of the margins they make on the monthly rental fees.
      • They'll also try to sell you on the other "features"

        Having worked in tech support for one of them before, they always told us to push the boxes over the cards because the consumer wouldn't get the onscreen guide to see what was playing, or to use the guide to set up their DVR....or, more importantly, order pay-per-view movies & events without having to call in (ka-ching for the company).

        Of course, anyone who can program a VCR to record a program (or even program up to 5) should be able to figure out how to program a DVR, and anyone can look up TV listings for free online, so it didn't really provide a whole lot of extra benefit.
        • Sure they'll push the STBs...

          Even if you never rent a movie or PPV, what's the margin on those? A DVR is about $17/month, so assuming you have the same DVR STB for a couple years (guessing many are longer once they make the jump to HD), they gross about $400. Given the size of the hard drive in mine, I can't imagine it cost them more than $100 to buy from Moto or whoever they respectively get them from, and that's probably high. A HD STB is about $12/month, so that's pushing $290 over 2 years. Now, take a look at the cost of a Ceton box that accepts a cable card. With a cable card and the infiniTV from Ceton, you can watch and record up to 4 channels simultaneous with media extenders (some of which you may already have, e.g. XBOX). Plus, you have control over how much storage you have, have less monthly fees ($3.99 for a cable card vs. at least $12 PER TV with the traditional STB model. You could be easily paying over $50 a month just in STB rentals if you have a few TVs and a DVR. It doesn't take long to recover the cost of an infiniTV ($200) and a few extenders ($180 from Ceton) when you're paying that much in hardware rentals. Once you have that in place, you're only paying $4/month plus the cost of whatever cable package you have to have HD cable service on every TV in your home.

          The above may not be for the faint of heart, but it's a matter of when, not if, someone like Apple is going to get this right and make it easy for the average person to cut (or maybe more accurately "shrink") the cord with the traditional cable companies.
  • Apple TV User Interface

    It will be interesting to see if they make the User Interface more consistent. If they follow the same approach they have used with iTunes, the average user will be very frustrated. Can you imagine turning on your TV and finding the UI has completely changed because Apple decided to make it "better". Before you can watch anything you have to spend a half hour figuring out where everything is now located.
    • You mean like Fios (and other cable providers)

      do with their UIs? How about when Verizon updated their UI a few months back and not only did they shuffle things around so I had to relearn where everything was (no doubt to make rental and premium content more front and center), but my bookmarks were all gone. So basically, all the time spent searching and navigating their horrible GUI (to make accessing my family's favorite shows more painless)was thrown out the window.

      Not to mention how much lag exists on these STBs. Apple may not be perfect, but I trust them with the UI a hell of allot more than any cable company.
  • Thoughts on Apple TVs and First Principals

    Zack's articles empower creative deductive reasoning on Monday it would seem. In that context, I will repeat a speculation of mine that was posted a long time ago when AKH began his Apple TV blogs on ZDNet.

    Regarding the concept of First Principals, what is the primary reason for a television's existence? IMO, it is a device to hear audio and, MOST IMPORTANTLY, view video content. That is it's primary purpose and leads to how we interact with a television set. As a consequence of that First Principal, consumers can watch TV with the sound muted or by "closed captioning". Yet how many listen only to the audio soundtrack of a televised program? Primarily, TV is a visual medium.

    If Apple were to redefine the television concept, they would have to primarily do so by improving the visual experience. That leads to the conclusion that the TV display and how the TV set appears to the user needs to be substantially improved in order to command a premium profit margin or to validate a manufacturing business proposition.

    If an Apple TV were to come to market, I speculate it's display technology would be "state of the art". I would assume then that it's display would be capable of 4K resolution or have 3D capability minus the "glasses".

    Do television sets need 4K resolution? Well, television sets "need" 4K resolution capability in much the same way Apple's tablets and laptops need "Retina Class" displays. Consumers don't require a TV with greater resolution than HD. Non-the-less, who would argue against improving TV displays to 4K resolution nor argue against the business case to market such displays.

    Secondly, I suspect an Apple TV would have the "Sir Jonathan Ives" design touch. In other words, it would maximize the "form follows function" design philosophy. That covers quite a bit of territory but, in simple terms, Apple would market a TV that improves on how the consumer interacts and controls the TV set. I leave the details of that design exercise to Apple engineers.

    BTW, two more thoughts. It has been my TV experience that the only reason to upgrade a television set, other than to replace a malfunctioning one, is to improve the display resolution of a TV set. That fact also leads me to conclude that the Apple TV would have 4K resolution capability.

    Lastly, I view locked in video content as a very minor Apple goal in relationship to the hardware design. I didn't buy an Apple TV primarily to view Netflix or Hulu Plus content. I bought the Apple TV to improve on my home Apple ecosystem experience. In much the same way, a hypothetical Apple TV primary contribution to the consumer would be to improve "somehow" on the overall Apple home ecosystem experience.
  • I can live without it

    I haven't owned a TV for many years. I can afford one, but in order to use it, I would need to pay a hefty monthly fee to Fios (or get another internet provider.) Since I would only watch a very limited amount of programs, I won't pay for it.

    I would buy an Apple TV (or any other manufacturer) product only if the content were sold a la carte. I guess that means that I won't be owning a TV for a long time.
  • Why?

    Why would any content provider get locked into a deal with a device maker that is slowly loosing market share on its flagship devices? It would be a slow death for whatever company makes that deal. Also, I don't see people dumping thier 52" flat screens for another 52" flat screen just because it's Apple.
    • hahaha.... That's an Absolute Surety!

      Sony, Toshiba, Sharp and Samsung (as well others) have tried to spike TV sales by adding 3D, Smart TV, App Sales, Thinner, Lighter, Brighter Screens at lower prices. There are still too many manufacturers losing money with nowhere to gain profits. Apple is #1 contrary to Gene Munster's assertion that it's a hardware company, has always been predominantly a Software company (like Microsoft was and is). They have NEVERZZZZ.... own or produced any of their own parts or products.

      So where are they going be any different? Better screens or will they just be reselling screens made by Sharp or Samsung? Apple TV's (set top box) are barely selling and they say it's just a hobby. Why in the World would content providers sign on to a real Apple TV, when they have no experience and really have nothing different to offer than the present TV Makers going out business. Apple ain't stupid and to enter a field that is even now totally dominated by Samsung would be just plain stupid. That's if they could get content providers to go for it. Something only Motorola, Samsung and a few others are any good at.

      Samsung remember manufacturers and sells most of the screens, that even go into their competitor's TV, Tablets, Phones, notebooks (including Macbooks) and desktops. Samsung owns a full 30% market share of TV sales with 100's of manufacturers vying for sales. What other parts is Apple going to innovate? Tuners? haha.... more companies make tuners than screens. All they can do is re-design the Rectangular Screen. 3D is already out there going nowhere, so why would Apple even include it?

      Apple is not going to ever make their next Billions off any new Apple TV, because the margins aren't there to make any money on them. They make very little on if anything off Apple TV's and that's exactly why they term it a "Hobby"! .......and full screen'd Apple TV are doomed to the same outcome. Apple's Hobby and used as a loss leader to get consumers into the Apple's Cult Clan! .....other than that, Apple TV's will be worthless even if they ever do bring one out!
  • Yet another moronic analyst

    "Apple is above all else a hardware company, Piper Jaffray analyst Gene Munster said at the Business Insider conference".

    Apple is a marketing company with an updated 10 year old operating system and near ZERO hardware capability.
    They have not developed or manufactured a single piece of silicon in any product it markets.
    It is a technology con job that uses everybody elses technology breakthroughs to fill up their rounded rectangles.