Much has been written about the mythical device. Whether it is even a good idea in the first place is almost never asked.
Apple’s television: never has more been written about a product almost nobody really knows anything about.
So much, in fact, that many now take the Apple TV as a fait accompli. Piper Jaffray analyst Gene Munster certainly does. He has been one of the most outspoken prognosticators, saying earlier this year that “the question is now ‘when’” the set will finally launch. (Among other things, Munster believes Apple AAPL will offer models ranging in size from 42 to 55 inches and cost $1,500 to $2,000.)
Rarely asked: is this mythical product even a good idea?
The television market is by no means an easy nut to crack. The business model that goes along with making and selling TVs, meanwhile, doesn’t match up with Apple’s. Over the last decade, Apple’s most successful products — the devices that have driven its success — have been those people buy early and often. That’s precisely why the iPod — not the Macintosh — was the centerpiece of Apple’s resurgence, and why the iPhone and iPad are now its most important products.
Last October, Apple announced that it has sold 300 million iPods worldwide since the first of those devices hit store shelves in 2001. Some of those sales went to folks who owned two, three, and sometimes, four of the iconic little music players. The Nano or Shuffle are great for a run, but the iPod Classic is ideal for long trips. The iPod Touch is the next-best option for little kids who aren’t old enough for iPhones, but want an iOS device. The justifications practically multiply themselves.
The iPhone is a similar story. According to a June survey conducted by Consumer Intelligence Research Partners, just 38% of those who bought an iPhone 4S in the last year were previously running devices from competing vendors. Nearly all of the others already owned an iPhone, in other words. Spending a few hundred dollars (at most) every couple of years on an iPod or iPhone is not greatly significant. Apple’s genius, in part, has been in maintaining a comparatively short upgrade cycle.
That won’t fly as far TVs are concerned. Television makers such as Sony SNE and Samsung have gotten accustomed to throwing as much into each device as possible, rather than fine-tuning the feature balance every year as Apple so studiously does. Why? People hang onto their TVs much longer. According to research firm DisplaySearch, the average life span of a TV is nearly 7 years. (That figure has been dropping from a previous high of 15 years.)
To make matters worse, margins are not nearly as high in the television market as they are in smartphones or tablets. DisplaySearch reported earlier this year most LCD TV makers are facing lousy margins that push most of them to losses. Sony, for example, has watched its television business lose money for years. Panasonic and Sharp are also having trouble staying afloat.
Of course, true believers point to Apple’s uncanny ability to upend stodgy markets — cellphones, clunky mainframes — over and over. But not even the most ardent Apple watchers can ignore the significant headwinds it might face if it enters the TV business. For better or worse, the television market is a different beast — one Apple won’t be able to slay so easily.