I’m so tired of the arguments from pundits saying that Apple needs to make a television.
There is little to no profit in television sets; they’re commodities. Let’s take some of the Japanese companies as examples. Sharp, Panasonic and Sony lost a combined $20 billion dollars in 2012. If Sony hadn’t sold off a chemical unit and didn’t have the PlayStation and content, it might be dead. Sharp is unlikely to survive much longer without a merger/acquisition. Panasonic… dunno.
I won’t go into the details, but I’ll be the first to admit that these 3 companies have made many missteps in the last several years that made them bleed a lot more than they should have. Panasonic made some major losing bets like building new plasma panel factories starting in 2003 and dumping a lot of cash into their purchase of Sanyo for what are now struggling businesses (solar panels and batteries). Sharp completely missed out on smartphones (their phone sales have been halved from 2007 to 2012) and outsourcing, and like Panasonic made missteps in solar. Sony’s television business has been losing money for 8 years running.
The problems here are many. For starters, the competition from China and Korea is difficult to overcome. Large LCD panels (regardless of backlighting technology) are now a commodity. LG and Samsung will continue to make TVs with near-slave labor. And despite what some would like you to believe, people are not starting to change their TV sets every 2 to 3 years. Or even every 4 years. The reality is that the recent trend has been to replace aging non-HD sets with HD sets. I hate to break it to the idiots masquerading as experts, but HD has been with us for more than 10 years. It has taken that long for the average consumer to adopt a single HD set. Once the swing is over, the buying will stop again. Sure, they’ll eventually replace each set in the home. But they’ll then stop for a long time, unless the sets fail. And it would never have happened in the first place if the prices hadn’t dropped dramatically in the last 5 years.
Look at the trend for PCs. It’s not significantly different than televisions. Apple is a publically traded company and they’re making their money in mobile (phones and tablets, plus their content stores). The money they’re making from iMac, Mac Mini and the nearly-dead Mac Pro is a very small piece of their profits today.
The fools who equate the HD screen buying to people buying smartphones every 2 to 3 years should be fired from their writing positions. Tip for the ignoranti: phones are an order of magnitude less costly than 55″ HD televisions. They’re also with us 24 hours a day, and your average smartphone is an order of magnitude more useful than a 55″ television simply due to the fact that it fits in your pocket. They’re also an order of magnitude easier to recycle. But more importantly… most people aren’t buying phones every 2 years just to get a new display. They’re buying a new phone to get new features, often only software features or software features supported by a small bit of updated hardware (say LTE or accelerometer or GPS). And of course to replace the phone they’ve beat up by dropping it, spilling their McDonalds on it, and using it. And to get a new battery.
I should also point out that for many of us, the television is no longer our main consumption device. We’re consuming much or most of our content on tablets and our phones. In part, this is just due to convenience. It’s also in no small part due to being busier than ever. And nearly all of us are using our televisions as simple HDMI targets (often only HDMI video with the audio going to a home theater receiver). What makes the big difference in our experience is the HDMI source, not the HDMI target. Most, if not all of us don’t want to replace a $1000 to $3000 device every few years just to get a decent bump in the source and maybe a small bump in the display. The people who think we’d like to do this are probably the same people that thought refrigerators with built-in smart displays would be a game-changer in the kitchen. Why would I want a smart refrigerator if I can’t put it in my pocket to take it with me to the grocery store? How was that ever a better idea than putting Grocery iQ and Red Laser on my iPhone?
And of course Apple understands these issues. It’s part of the reason that the MacBook Pro has no ethernet port and no built-in CD/DVD player, but instead has USB 3.0 ports and a Thunderbolt port. All the smarts inside, but none of the non-essential parts that would take up space and weight. Of course, I consider an ethernet port essential, but not a built-in CD/DVD player. It’s part of the reason Apple has AirPlay… I don’t need or even want my TV to manage content; I want the device that’s in my hands or pocket or bag all day to be the device that manages my content. Even better if it can hold a lot of it too. I don’t care to have to use my TV to manage content. I want to be able to do it anywhere, anytime.
The difficult battle for a game-changing event in the TV world isn’t over the TV. It’s over the content and the delivery and the contracts that bind the two together. The same reason that the game-changing event in the music world wasn’t the iPod or any other mp3 player, it was content in the iTunes store and other stores like Amazon.
The cable companies are not going to hand over their bandwidth to any company that directly competes with their offerings. And most of the content delivery companies, who also own nearly all of the last mile and then some for residential Internet service, move like snails. And make much of their money with bundled content packages. Anything that disrupts their cash flow is going to be met with loads of resistance. They’re already using caps in many places, and if it weren’t for the net neutrality laws, they’d be blocking all streaming and downloads that they viewed as competing with their offerings.
In fact they’ve done that before (Comcast P2P fiasco, for example) and would still be doing it if there had not been an uproar with some legal footing.
I don’t need or want a TV with a lot of built-in obsolescence. Maybe some people do, but those people represent a tiny piece of the market (those with tons of disposable income for home electronics). What I want is a better content management device and a screen that’s about as dumb as possible that will last 10 years. Keep the screen for a long time, and update the content management device frequently at a much lower cost. The existing Apple TV is a pretty good device at $99. Replace it with something about halfway to a Mac Mini, and you’d have a device more than capable of receiving, storing, managing and delivering content in just about any form. But it’s a problem that doesn’t exist until that content is readily available in a form that such a device could use. In real time as it’s broadcasted, not a week later. And Apple isn’t currently in a position to fix the entire problem. Even if they spent tons of money to acquire the rights to the content, they won’t be able to deliver it if it competes with the last mile provider’s services. And there isn’t a snowball’s chance in hell that they themselves can deliver a significant live event, say the Superbowl. Even if they could, it would never fly past the last-mile providers who’ve paid big money to be the providers of such content.
I’m all for a better home entertainment experience. But an Apple TV with a screen, in and of itself, isn’t going to change the game. And it’s unlikely to make money. It also won’t be significantly better than sets from the established television set producers. 4K display? Who cares at this point given that there’s essentially no 4K content to consume and 4K sets start above $10,000 at this point? 4K will get here eventually, but its audience will be limited for a long time. Most of us don’t need an 84″ or 110″ screen, and many of us would never get it past a significant other even if it was cheap. Well, there’s an argument in Apple’s favor… if you’re going to have a 110″ screen, it’d be easier to get spousal approval if it looked like a piece of art. The problem is that it’ll cost more than $20,000 at this point, and it’ll likely depreciate to $1000 in 5 to 10 years.
In my opinion, anyone that argues that we’ll all be replacing our big screens in our family rooms every few years is a shill or just clueless.
If Apple really wants to change the TV game within the next 5 to 10 years… make a set-top box that has all the capabilities of the Apple TV and more, plus the ability to replace the DVR or cable box that we’re using now (including handling encrypted channels, not just clear QCAM). I know they’ve explored this arena, but haven’t broken the barriers yet. Maybe they will, maybe they won’t. I think our best hope is that the cable companies eventually provide all content over IP (presumably IPv6) and back out of the set-top box business. Don’t hold your breath; those rentals are a source of income for them. One could argue that they could just increase the price of their service and ditch the set top box rentals, but… today they do both (price increases on their service and continued reliance on set-top box rentals).
