Will Apple make its own TV?
An analyst’s report has the Apple world abuzz with rumors of a television coming from Apple, adding one of the last devices necessary to have total Apple entertainment direct from the manufacturer.
Gene Munster, an analyst at Piper Jaffrey, has floated an interesting idea. He feels that one of the next big directions for Apple should be television. Specifically, Munster feels that Apple should get into the television business, but not just with television hardware. He foresees a day when Apple will manufacture and market a television, complete with a subscription service and a Digital Video Recorder (DVR). All of this will be connected together by iTunes, which will make many connections possible, including those with your iPod and iPhone, according to a ZDNet story.
There is a certain amount of sense to these future possibilities, and there are some ways in which they may not ever get off the ground. On the one hand, the possibilities are just too juicy. Think of a television set that is also a local streaming video server, able to broadcast video directly to other Apple devices, like iPhones, iPods, and Macs within range. Augment this with an iTunes-based video subscription service allowing you to watch unlimited television for a rate of perhaps $40 per month, about half the price of cable, and you have a possibly irresistible combination.
That does make it all seem a little to easy, though. Externally, Apple would have to cut deals with a wide variety of entertainment providers to make such a system work, just like the cable companies do, and that can be a hard bunch to deal with. Internally, Apple CEO Steve Jobs has always been negative about any sort of subscription deal involving the iTunes store.
Part of what Munster said in his analysis brings a lot of this into perspective:
Yes, TV hardware is a challenging business if you don’t change the rules of the game, but we see potential for Apple to offer best-in-class software and hardware and charge a premium. As of November 2008, 40 million US homes (35% of households) owned an HDTV, and the Leichtman Research Group estimates the number will double in the next four years. This equates to a US addressable market of 10 million units a year. The argument that Apple will not enter the television market because prices have declined by 70 percent in the past three years is a similar argument used to conclude Apple would not enter the cell phone market, given phones had seen similar price declines. The bottom line, 10 million HDTV’s sold in the U.S. a year is a real market, and if history repeats itself, Apple will find a way to compete in a commoditized market with a premium priced product.
It would be interesting indeed to see Apple put all of these pieces together. The combination of all the right video devices and subscription pieces, together with a very smart television, might be too much for people to resist. Add gaming to the mix, and it could be enough to push these projections over the top and into reality.
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August 25th, 2009
I would love to buy an Apple television set myself, even at a premium price, but I have my doubts Apple needs to do that: in the near future I can see a fusion of AppleTV and the Mac Mini into the ultimate set-top streaming/gaming/Web TV device. Certainly there are tons of people who use Mac Minis already in this way: you cancel cable, and stream free content on Hulu, etc., and watch rentals or downloads via iTunes. The actual television itself doesn’t particularly matter.
I could also see ultra-large screen sizes on iMacs meant to be used as home theater screens in the same way: imagine if you could get a 37, 40, 42-inch iMac? No need for a TV at all.