With the release of the Steve Jobs biography by Walter Isaacson the rumor mill is suggesting that Apple's next big product will be some form of television; combining a huge display, the Apple TV and time capsule into a single device.
The more I think about it, the more it seems very un-Apple and here are my reasons:
- Everyone has a different sized living room.
When Steve came back to Apple, one of the first things he did was to simplify the product line. A sprawling range of computers and periphials were reduced to a handful of computers and configurations. To attack the television market Apple would need to have a much greater number of SKU's - the huge TV for the living room, the small compact for the kitchen, the big-but-not-too-big one for the bedroom and so-on. Microsoft found the variety of room sizes and layouts challenging when making the Kinect, and the same problem will be faced by Apple.It's not just that Apple would need to produce multiple models which presents problems here. This has knock-on effects everywhere. Specifically reasons 2 & 3. - Multiple configurations make it difficult to take advantage of economies of scale, reducing profit-margins.
- Televisions are large items. Stocking multiple configurations would put strain on the warehouses of the Apple retail stores - would they have less room for Mac, iPhone, iPad?
- Long upgrade cycles.
Most people upgrade their television maybe once over a period of 5-10 years. It is something you expect to last for a good number of years. In contrast, many upgrade their iPhones and iPads every 1-2 years. I doubt upon release Apple will have such a large market for a television. Even people who rush out and buy a new iPhone every year will be hesitant since they bought their new HDTV just 2 years ago.In addition to reducing the market forecasts, this creates a second problem - it is a device that becomes harder to upgrade and software features need to take this into account. The current Apple TV with its A4 processor can only output 720p video, its a sure bet that within a year we will see a A5 version which handles 1080p video fine - at this point Apple can just flip a switch in the iTunes store and begin offering higher resolution video. It also sets Apple up for releasing more elaborate and powerful apps on the device. Much easier ugrade for the user, much easier for Apple. - High price point.
It is hard to believe that Apple could offer a television for less than $1000, and it is likely going to be higher priced than competitors with similar sized displays. This shifts it squarely out of the impulse purchase zone to something which is a more considered and rational purchase.Contrast this with the AppleTV. The best thing Apple did for the device was taking advantage of the iPhone/iPad production lines, leveraging the same components and reducing overhead. They got the device down to $99 - a very powerful price point. Its just slightly more than the leather smart cover which you pick up when you buy an iPad and adds a ton of value. Its a very good product to bundle so lots of people take the plunge. For $99 you get a much steeper adoption curve, and most likely a decent upgrade curve. When the A5 version comes out, I wouldn't hesitate to buy a new one at that price its about what I spend for a nice meal on the weekends. - Compatibility.
In addition to their television, most people have a range of game consoles, DVD players, VCR's (?!) and other boxes connected to their TV. On one hand it would be in Apple's best interests to support these since I'm not going to buy a new gadget which will make them useless to me. On the other, it seems very un-Apple to not only voluntarily support a bunch of legacy connections and take responsibility for their compatibility, but also support devices which could compete with what they might offer on a television (apps, games, content...). - The cable company.
With an Apple TV comes iTunes, but I'm confused about that part. Is it something which could replace a cable subscription, perhaps with its own subscription fee, or something designed to augment it, offering programming and convenience in addition to your normal cable TV packages? Given how entrenched regional cable companies are in different markets, it is dificult to see how Apple can compete without making a lot of deals with a lot of content providers in order to bring their own subscription based offering. The recent iCloud integration for TV shows is fantastic, but I'm still unlikely to buy more than the odd episode if I am also getting that content on my cable DVR.The other option for Apple could be to make deals with the cable companies themselves, replacing the cable box and DVD so that you have no black boxes under the TV. That is feasible but logistically its still a bunch of deals you need to get signed in each region.There is also no doubt that internet connectivity is going to be a big selling point, but who provides most of the internet in this country? The cable companies! It is already difficult to get a decent deal on an internet connection without being pressured into also getting TV and phone lines, in fact with Verizon FiOS I think vanilla internet is only ~$20 less than the Internet + TV package. If an Apple TV encourages people to drop their TV subscriptions, what is going to happen? Will cable providers charge more for internet? Will they begin rate limiting and imposting bandwidth caps? - Decision making.
I can go out and buy a new iPad and my wife probably won't complain, however if I change our cable package and we stop getting The Real Housewives of New Jersey then I will never hear the end of it. Often there is no single decision maker when it comes to televisions and entertainment, so however Apple decides to integrate content, if they cannot get the majority of niche content providers on board then they risk alienating potential customers. - Features.
Televisions have long been an market where features are king, with manufacturers boasting about contrast ratios, ambilight, yellow pixels, solid gold cables and more in an effort to diffirentiate products. Apple tends not to compete on features, so how are they going to stand out? - Support.
Do Apple have the desire to provice post-sales support for their products? This could be a wide range of things from on-site technical support (since most customers wouldn't want to lug a heavy TV to their nearest Apple store) to installation, wall mounting and AV setup.
To finish things off, one reason why Apple should make a TV set...
- It would be awesome.
Imagine the slick UI, content, Siri and Facetime all in your living room.... mmm....
