The questions no one ever asks about the mythical Apple HDTV
With no shortage of iWatch rumors floating around these days -- not to mention a draining avalanche of iPhone 6 mockups -- we haven't heard much lately about one of the more longstanding Apple rumors, namely that the company, any day now!, is going to release an HDTV.
Rumors of Apple releasing an HDTV stretch all the way back to 2008 when Jason Calacanis claimed that Apple was working on such a product. In the years that followed, Wall Street analysts like Morgan Stanley's Katy Huberty jumped on board the rumor train, claiming that Apple was working on a few HDTV prototypes. And of course, no discussion of an Apple HDTV would be complete without a mention of the rumor's biggest proponent, Piper Jaffray's Gene Munster who has been predicting such a product for a solid six years now.
Just last week, Harry McCracken of TIME published an exhaustive list covering the copious number of Apple HDTV predictions that never came to pass. It's well worth a read, if only to remember that for every Apple rumor that comes true, there are many that don't.
Using McCracken's article as a jumping off point, I thought it would be a good idea to run through a slew of reasons why Apple releasing an HDTV has never made much sense. As is often the case with these types of stories, a seed of a rumor is planted and grows tall with the nourishment and eager excitement heaped upon it by the tech press. In the process, those pesky little items some folks refer to as "details" are ignored in the pursuit of sexy headlines.
The notion that Apple can come along with an HDTV, sprinkle in some of its magical innovation fairy dust, and revolutionize TV (just like that!) ignores many significant roadblocks that have long made an Apple HDTV impractical.
Here are a few.
Margins are razor thin
A company like Apple doesn't amass over $150 billion in the bank by following the Amazon model of razor thin margins. Indeed, Apple's bank account is fueled by hardware sales with hefty margins. The HDTV market, in contrast, is notorious for incredibly thin margins. Over and above that, the TV market is so unprofitable that the playing field of competitors seemingly shrinks every year or so.
In recent memory, Pioneer has left the HDTV business while even the venerable Sony has recently busied itself with restructuring its HDTV business on account of uninspiring profits. Even Panasonic, whose Plasma TVs were considered some of the best ever released, announced this past October that it would be exiting the Plasma TV business.
The TV business is brutal, and while is clearly not afraid to take on new challenges and enter new markets, it simply doesn't do slim margins.
The HDTV market may not need to be saved
Quality wise, the HDTV market doesn't leave much room for complaints. The picture quality you find on many Samsung televisions, for example, is absolutely jaw dropping. What's more, the industrial design on many Samsung's TVs are incredibly sleek and cleverly designed. I say that to point out that the HDTV business doesn't need saving in the same way that the MP3 player and smartphone markets did when Apple decided to branch out into those product categories.
Indeed, with even lower to mid-tier HDTVs offering impressive picture quality, HDTV manufacturers in recent years have resorted to gimmicky features like 3D in order to kickstart stagnant sales.
But what about 4K sets, you may be wondering. I'll be the first to admit that 4K sets are absolutely stunning, but until 4K content becomes readily available, there's not much Apple can offer in the TV space picture quality-wise that isn't already available.
Refresh cycles are long, waaay long
Every two years, throngs of iPhone users upgrade to the latest iPhone model. Even users with perfectly fine iPhones are lured in by the latest and greatest from Apple. The refresh cycle for smartphones is relatively short, and Apple leverages this to its advantage.
TV's, on the other hand, have extremely long refresh cycles. People buy HDTVs, plant them down in their living rooms, and don't even think twice about upgrading to a newer model for many years. Often times, consumers only upgrade their TV if they're moving, or perhaps, when they happen to have an extraordinarily outdated and feature-deficient model.
That doesn't really jibe with Apple's business model. And if we're dealing with a low-margin business in the first place, an elongated refresh cycle only exacerbates the problem.
À la carte programming is not the godsend people make it out to be
A lot of people think Apple can revolutionize TV by doing away with the cable box, striking deals with content providers, and allowing individuals to consume cable channels à la carte. This sounds enticing in theory, but the mechanics of the TV industry makes this a much more challenging proposition than people realize.
Content companies like Viacom, for example, often bundle cable channels together. Consequently, the existence of smaller niche stations is often subsidized by larger and more popular channels. Without such bundling, some niche stations like HGTV might not generate enough interest to stay in business. Either that, or the price for many of the less popular channels would rise to rather high levels.
Paying for only the stations you want sounds great until you realize that just paying for the 8-12 stations you watch won't be as cheap as you initially thought.
For as much ink as à la carte programming gets, the success of services like Netflix demonstrates that consumers enjoy paying a flat fee and, in exchange, enjoying access to a broad selection of content.
TV studios don't always want to sign on the dotted line with Apple
People tend to gloss over the fact that many of the innovative ideas Apple might be able to achieve require cooperation from large corporate entities. Without Steve Jobs convincing record labels to sign on the dotted line, for example, would the iPod have been anywhere near as successful as it was?
Similarly, Apple has reportedly encountered significant hurdles in securing any type of content agreements with TV studios. Not only are they understandably wary of ceding any control to Apple, they often have no financial incentive to enter into such deals in the first place.
A 2010 Businessweek article highlighted this roadblock:
Many studios, nervous about angering the cable companies that pay billions for their content, refused Apple's efforts late last year to put together a subscription service, say three media executives involved in the talks, who requested anonymity because they did not have approval to discuss the negotiations. Consumers would have been able to purchase only those shows they want in an a la carte model, rather than pay for hundreds of channels they never watch.
Apple only enters markets if it can offer a best-in-class experience
Apple unabashedly enters markets only if it can offer a best-in-class experience. Apple executive Greg Joswiak once emphasized this in an interview:
If you can't enter the market and try and be the best in it, don't enter it. You need that differentiation. At Apple if we can't be the best then we are not interested in it.
So where does that leave Apple? Again, there's not a whole lot of room right now for TV quality differentiation. There is, of course, 4K Ultra HD (which again, is amazing), but those sets are expensive, and more importantly, there isn't a whole lot of 4K content right now to make such a product attractive on a massive scale.
How many Apple retail stores right now have the capacity to showcase, stock, and sell big screen HDTVs meant for a broad audience? Even if space wasn't a concern, big TVs cannot easily be picked up by one person and taken home. Will Apple use retail stores as a showroom and have these mythical TVs shipped? Will Apple rely on retailers like Amazon and Best Buy to handle most of the logistical dirty work?
And what happens when a TV malfunctions, either hardware or software wise? It's not like the average person wants or even has the ability to take one in to an Apple retail store for fixing. Releasing an Apple HDTV only makes sense if done on a massive scale, but that scale necessitates a completely new facet to Apple's current business model. That's not to say that it can't be done, but logistics matter and shouldn't be glossed over so quickly.
IF Apple ever produces an HDTV, what features might it have?
Looking ahead, Apple would only release an HDTV if it can account for all of the hurdles listed above. But first and foremost, an Apple HDTV would have to offer a value proposition simply unmatched by rivals.
To that end, one might envision an Apple HDTV with built-in Apple TV functionality, complete with access to Netflix, HBO Go, Amazon Prime Video, Pandora, YouTube, and more. Of course, many smart TVs these days already include such features.
But Apple could take things a step further and add support for apps, Siri support via a remote control, and maybe, just maybe, built in Kinect-style functionality. After all, remember that Apple this past November did acquire Primesense.
All in all, Apple does seem to be taking television more seriously these days. It's hard to consider Apple TV just a hobby anymore, and every month or so it seems the Apple TV lineup keeps growing. To that end, and have some people have opined before, perhaps Apple's HDTV play is really just an Apple TV on steroids.
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