26th
An Apple TV?
A few times a year for the last 15 years someone writes an article about Apple going to start making a TV set. The most recent article is here. I am quite sure that there has been a team at Apple working on TV projects for literally the last 20 years. I am also quite confident that they are not going to release a TV in the near future.
Here are the issues I see:
Margins: TVs are historically a very low margin product whose sales are driven by pricing. TVs usually sell at gross margins well under 5%. Apple historically likes products with very high gross margins (over 40%)
Replacement Cycle: TVs have a very long replacement cycle. People only buy TVs every six or seven years. People buy new phones every 18 months or so. Laptops too have short replacement cycles. There has been a drop in the replacement cycle of TVs from ~10 years to ~7 years but a lot of that was HDTV adoption and even then, 7 years is much longer that Apple wants to wait to sell you a newer version of something you own.
Logistics: TVs are big and fragile. They take up a lot of room to store. Apple’s packaging has been shrinking over the years. Packaging for a 55 inch TV is likely to have nearly 8 times the volume of a 27 inch iMac (their current largest product).
Integration: This is the biggie. Unless this is going to be strictly an OTT box and not have the capability to show broadcast TV (which I think will hugely limit the audience of the product) then it will either need Cablecard capability or set top box capability and that requires working with the MSOs. There are a lot of MSOs and consumers don’t have a lot of choice on who their MSO is. Without integration the user experience will still be controlled by the MSO. Might they do a deal with the satellite providers (like the DirectTV/Tivo box)? Maybe. But this is not like the cell phone business where people who wanted an iPhone switched to AT&T. If Comcast owns my street I can’t switch to TimeWarner Cable. Steve Jobs MIGHT have been able to close these kinds of deals out of sheer force of personality. Can Tim Cook?
If Apple was raking in the money selling media at high margins it might make sense to ship a TV as a moat for the media business, but media sales via iTunes is a low margin moat to defend Apple’s high margin hardware business.
So the real question is could Apple sell a TV for $1500 when the comparable Vizio set costs $500?
