Originally, I didn't see an argument for Apple getting into the TV set business, when they could just continue to ship the stand-alone box. [1] But the longer

Originally, I didn't see an argument for Apple getting into the TV set business, when they could just continue to ship the stand-alone box. [1] But the longer they go, being able to deliver eye-popping margins while simultaneously being untouchable on price-performance with competing tablets and PMP devices, the more it makes sense. The AppleTV as-is, is price-bound by willingness to pay for add-on set-top boxes. There's not much room for Apple-style profit there. [2] But consumer willingness to spend on TVs themselves is much higher. If Apple brings their supply chain magic direct to displays, there's far more profit to be had. And given the longer upgrade cycle on living-room gadgets, the larger up-front margin is almost necessary to make it worth Apple's time in the long run. [3] It just falls into place when you think about it in terms of Apple doing to the TV market, what it did to mobile devices: they define a new set of expectations at the mid-to-high price points that their competitors just can't compete with. Their competitors still dominate the lower price-points with notably lesser offerings, but there's not much profit there, so Apple just won't care. In short: it wouldn't be able Apple selling $1000 sets to compete with Samsung's $400 sets. It'll be about Apple redefining the $1000 segment with quality, integration and services that Samsung and Sony will be unable to match for $1000, even on thinner margins. [1] People don't upgrade their TVs like they do mobile devices or other gadgets. It was possible they might upgrade a set-top box that way though. [2] You can make Apple-level money selling $100 MP3 players with a 30% margin because they get lost/damaged/upgraded/given as gifts/etc. But $100 set-top boxes? Normal people (Apple's target market) barely buy them. And if they do get one and it works, they go out of their way to not change things to avoid angering the vengeful spirits of living room electronics. [3] The opportunity cost for Apple to pursue any middling business would be massive. And at this point I'm sure they have plenty of evidence on whether people buy and upgrade set-top boxes. If the early adopters aren't really doing it, there's no hope the normals would.