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Apple TV –– And THEN Some! Apple Has BIG Plans For TV Space
Apple may disrupt the television industry without making a telly at all.
Rumors of a true Apple television set–as opposed to the company’s Apple TV digital media streaming set top box–go all the way back to at least 2009. The main proponent of these rumors have been Apple analyst Gene Munster who, ever year, says an Apple television set will debut “this year”.
Of course this hasn’t happened yet, to the disappointment of Munster and all the Apple super fans out there who want to see the company turn their boring television sets into the entertainment center of the future–whatever that may be. But there are a number of factors going against Apple making a television set, and if the latest rumors–which seem more logical than the rest–are any indication, Apple may be getting ready to change the television industry but not our tellies at all.
What is the latest rumor?
Television industry executives have revealed to re/code that Apple is in active discussions with TV programmers about its own Web TV service:
“The theory is that Apple would put together bundles of programming — but not the entire TV lineup that pay-TV providers generally offer — and sell it directly to consumers, over the Web. That means Apple wouldn’t be reinventing the way TV works today, but offering its own version of it, with its own interface and user experience.”
Under this plan Apple would deliver content to devices–probably iTunes on Mac and PCs, iPhones, iPads, and Apple TVs–via the Internet.
How is this different than previous rumors?
Apple’s previous television initiatives reportedly involved striking deals with cable providers–the companies that own the pipes that get the shows TV programmers make to your television set. But the cable providers were leery about allowing Apple to use their infrastructure and business model, fearing the company could upend their business just like Apple’s iTunes Store did to the music industry in 2003.
Under this new plan Apple would be able to skip the cable providers entirely and make content deals with just the TV programmers themselves. And by delivering the content over the Internet instead of the cable providers’ infrastructure, Apple eliminates one link in the chain.
So what would this version of Apple’s television product look like?
You’re already familiar with the hardware: it’s your Mac or PC, iPhone and iPad, and Apple TV. As for the software interface it would probably be something based on the UI of the Apple TV–only much more advanced, possibly with built-in Siri voice search.
So if this goes through it means no Apple television set?
Well, that’s a big “IF” for now, but yes, if Apple goes down this route it’s likely not going to make television hardware.
Why not?
Because creating a new line of hardware is expensive and requires a lot of expertise Apple doesn’t necessarily have. Sure, Apple has the cash on hand; if it wanted to it could build its own television factories, but that wouldn’t make up for experience. There are plenty of experts already that make great television sets and it’s not clear Apple could do it better than them.
Additionally, televisions are moving closer to a commodity. People are used to paying below £500 for a great set with a large screen. Because there are so many television manufacturers providing high-quality, low-cost sets the profit margins on televisions are generally very low. And we all know Apple likes selling its products for around 40% margins. To do that the price of an Apple television would need to be about 2-3 times higher than equivalent TVs. And if Apple can’t radically innovate the hardware on a television set (and there’s no signs they can), why would people pay 3x the price they’re paying now?
That’s also to say nothing of the television buying habits of people. People usually buy a new smartphone about every two years. They buy a new computer about every three to four. But televisions–people usually buy a new television set every 6-9 years. That’s not a great value proposition to Apple.
You say Apple has explored content-only television services in the past. What makes this Web TV offering any more likely to happen?
Mainly there’s now a precedent for it. Dish Networks in the US is currently offering a similar service with its Sling TV product. And Sony is about to get into the internet TV game with its own version of Web TV. As re/code points out “now there’s a model for this stuff”, which could make the TV programmers feel safer that Apple wouldn’t be the only player in town. It would give them more leverage over negotiations and content deals.
So when’s this happening and how much will it cost?
“No one knows” is the answer to both those questions. IF it happens it probably wouldn’t be until 2016. Apple has its hands full this year with the Apple Watch and it’s unlikely they’ll want to launch two new major product initiatives in the same year. That’s to say nothing of the fact that re/code says “talks seem to be in the early stages” and “several programmers say they’ve yet to start talks with Apple at all.”
As for price…it would most likely me a monthly subscription or Pay As You Go fee. Sling TV’s monthly cost is $20USD; Apple’s could be similar.
Michael Grothaus
13:45, 9 Feb 2015