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I would be stunned if Apple released an actual "Apple TV" display. It's a super-low margin, commodity business, with very low turnover (how often does someone s

by jfb 14y ago

I would be stunned if Apple released an actual "Apple TV" display. It's a super-low margin, commodity business, with very low turnover (how often does someone shell out a grand for a TV?) It's not at all clear to me that there's a strong argument for Apple even to get into set-top boxes; where's the revenue? Rents from the cable companies? Ick. Maybe they'll get in bed with the devil as they did with the iPhone, but a) none of the mooted ideas for an expanded Apple TV are anywhere near as disruptive as the original iPhone was and b) they can't divide and conquer with the cable companies the way the could with the cell providers -- they're still fundamentally regional monopolies, and so a big part of Apple's advantage in the phone world just won't exist. That seems like a loser to me.

Flenser 14y ago
If it was an 8k tv (8000 pixel wide display) and I had access to all of pixar/disney's back catalogue in that resolution I'd be interested.
- jfb 14y ago
  Well, sure, we'd all like a pony. EDIT: But the problem here isn't even getting hi-res re-renders of Pixar movies (do-able, if insane), it's getting you to buy a new 8K TV every eighteen months or so. Unless and until someone figures out how to utterly destroy existing TV business models, nobody is going to try and build value-add TV sets. It's a fool's errand.
  - gnaffle 14y ago
    Most Apple customers don't buy new devices every 18 months. Apple only needs to make customers happy enough (and locked into their ecosystem) so that when they upgrade at some point, they still buy Apple.
  - Flenser 14y ago
    Once you have an Apple TV you're locked into the Apple ecosystem for as long as you have it. You'll buy lots of tablets and phones during that time that act as interfaces to it. Also: http://i-want-a-pony.com/ http://i-want-a-pony.com/ Edit: Apple are probably the only company that could make an 8k TV and have content ready to watch on it, or at least they are in a position to have have a product ready before anyone else. They could manufacture them at scale to make a decent margin selling them at a premium whilst locking consumers into their ecosystem for years to come.
- jws 14y ago
  Who sits 5 feet from a 42" TV set? That would roughly be a retina display 8000 pixels wide. You are also looking at something like a 400mbps data rates to feed it.
  - jfb 14y ago
    Well, it's 16 times the picture resolution at the same temporal resolution, and you can do a damn fine job with 10Mb/s high profile H.264 at 2K, so … yeah, I guess that's about the right order of magnitude. But holy diminishing returns, Batman.
  - Flenser 14y ago
    not sure if these are accessible outside the uk: http://news.bbc.co.uk/1/hi/programmes/click_online/9774380.stm http://news.bbc.co.uk/1/hi/programmes/click_online/9774380.s... "But when the screens are even larger you get a sense of being there - it's like looking through a window." - http://www.bbc.co.uk/news/technology-19370582 http://www.bbc.co.uk/news/technology-19370582
mikeash 14y ago
It just fundamentally makes no sense to me. The TV business is just too small. Even if Apple magically took over 100% of the market, it would still be small potatoes for them, and there's appears to be little room to grow the market as a whole. It's saturated. I could well be wrong, and I'll happily admit it if it turns out that way, but for the moment I just don't get why so many people insist that Apple is going to get into the TV business.
- gnaffle 14y ago
  There are a few things wrong with this assumption: 1) Apple exclusively looks at potential revenue when introducing a new product. That they introduced and still sell the Apple TV even though it's still just a "hobby" pretty much negates this assumption. 2) You look at the _current_ TV market and conclude that it's too small. You could have looked at the smartphone market in 2007 and made the same argument against launching the iPhone. What happened instead was that the iPhone had mass market appeal, and smartphone market share exploded. If Apple is somehow able to do to the TV market what they have done to the smartphone and tablet markets, they don't need to worry so much how the existing TV market looks like and whether that market is saturated. They only need to worry about whether the product is something enough people want to buy.
  - mikeash 14y ago
    1) Well, I'm really addressing the idea that an Apple TV would be Apple's "next big thing", which is almost always how it's presented. People aren't talking about Apple selling TVs as a hobby, they're talking about Apple selling TVs as their next huge product line. If Apple comes out with a "hobby" TV product that has no significant influence on their balance sheet, I'll consider myself correct on this one. 2) I addressed that in my comment with "appears to be little room to grow". Unlike the smartphone market, everybody, and I do mean everybody, already owns a TV. Maybe there's some secret sauce that can make a lot of those people buy new TVs, but it seems unlikely. Keep in mind that while Apple massively grew the smartphone market, they're still minuscule compared to the overall mobile phone market. It looks amazing at first blush that Apple is selling ~100 million smartphones a year when that was the size of the entire market in 2007. But it's substantially less amazing, IMO, when you consider that the mobile phone market overall was over a billion units/year in 2007. Apple really just nibbled a small portion of the larger market. I'm having trouble finding decent figures for the global TV market, but it looks to be vastly smaller than the mobile phone market was in 2007, let alone in 2012. Unlike smartphones, there's no larger market to convert people from, and people mostly already own enough TVs.
jws 14y ago
The reason to make an Apple TV display is to eliminate the multiple remote control hell. You can't get to the best user experience with the TV knuckleheads in the loop.
graeme 14y ago
I'd consider buying an Apple Display once I moved to a bigger house. A significant portion of Apple's customer base doesn't have cable, or any interest in cable. But they still watch TV shows and movies, mostly on computer screens at the moment. Getting a Cinema Display isn't quite the same thing. I think a lot of people would buy an Apple display if it did the following: * Had a beautiful display * Seamlessly plays movies and TV shows from computer * Was good enough, without obvious flaws, that it eliminates * the anguishing 'which HD TV do I buy?' decision. * Can be put in a part of the house separate from the computer, for social events * Can also easily play music, for social gatherings.
- jfb 14y ago
  Oh, I'd buy one in a hot second. A consumer focused consumer electronics device? Yes, please. But it makes no sense that I can see for Apple to get into the business. I wish there was a venue for me to bet against this cockamamie idea.
- smackfu 14y ago
  >A significant portion of Apple's customer base doesn't have cable, or any interest in cable. I think this is just internet confirmation basis. Most of Apple's customer base is iPhone users, and most of them are just normal people with typical cable service.
  - graeme 14y ago
    Actually, I just meant young, college educated people. Very few people in that demographic have cable subscriptions, compared to the population as a whole. Specifically, I'm thinking of my friend's houses that I've seen in various cities around Canada. Not many televisions.
    - untog 14y ago
      Actually, I just meant young, college educated people. Very few people in that demographic have cable subscriptions, compared to the population as a whole. I'd love to see some figures on that, because I'm not sure it's true. Fewer subscribers, yes, but "very few people in that demographic"? I think that a significant majority still do.
flyinRyan 14y ago
Your post makes a lot of sense, but personally I'm not going to bet against Apple on this. No one would have predicted them having the effect on the cellular world they did either.
josephlord 14y ago
I largely agree. It is a low margin business and the current competition is better than it was in the phone market before the iPhone and the divide and conquer probably won't work in the TV market. Better controls using iPhone/iPad as the control device (with most of the UI on the small screen and just the content on the big screen) will help but I don't think that Apple could sustain the combination of margin and volume that they are use to though they probably can squeeze retailer margins. The reason Apple might do it could be to hurt Samsung more than they can with lawsuits.
inthewoods 14y ago
Seems to me the same argument to be made on Windows laptops vs. MacBooks. Windows laptops are a commodity business, whereas MacBook owners pay a premium for Apple products. Why is this different?
- jfb 14y ago
  It's a pretty good question. One, Apple entered the market for PCs a long, long time before it became a commodity business, so history plays a part -- they can play these games in a commodity business because they have been playing these games in a commodity business. But people buy TVs not to run software, but to watch movies and TV shows, so value-added TV sets are basically dead in the water. The real business Apple has to attack is the cable industry, and they have zero leverage or competitive advantage in the sickly morass of rent-seeking and quid pro quo backscratching that is regulated telecoms monopoly world. By analogy, the TV makers are Dell, Lenovo, Acer &c, and the cable industry is Microsoft. The only conceivable change is for Apple to forge direct business relationships with the production houses and rights holders, and the cable companies are buying them up as quickly as they can to prevent this sort of disintermediation.
  - inthewoods 14y ago
    "But people buy TVs not to run software" - at the moment. Maybe that's the secret. After all, people bought mobile phones for while but didn't buy a lot of content or apps because the interfaces were horrible. I'm not suggesting this will necessarily happen - but I think Apple is likely to play to strengths - app infrastructure and interface design - as much as anything else.
samstave 14y ago
Agreed. I just bought a 55" samsung smart TV on black friday. It was $1300 and was the first large scale TV purchase I have made in a decade. I already have a mac mini hooked up to the 42" in the bedroom, and I never use that. While nifty, I just don't see apple building a TV business because the revenue stream is too low.
- rymith 14y ago
  I agree, but I also said this when the rumour came out about Apple getting into phones. Cell phones were cheap crap back then with no margins. I really don't think it's a completely 1:1 comparison, but Apple does tend to surprise me occasionally.
w1ntermute 14y ago
> I would be stunned if Apple released an actual "Apple TV" display. It's a super-low margin, commodity business, with very low turnover (how often does someone shell out a grand for a TV?) You could say the exact same thing about computers, but look at what has happened.
- jfb 14y ago
  Again, though, Apple has been making computers since before computers were a commodity business. They didn't look at the HP/Dell/&c. market and decide to get into it.
roc 14y ago
If they do offer a display, it's almost certainly going to be in addition to the set-top box. A sort of "this is how it should be" offering that's tightly integrated and reasonably high quality, that competes in the segment of the display market where there are decent profits, but where most consumers simply don't shop. Not unlike the situation with Cinema Displays themselves. As for revenue: AppleTV is, up-front, a logical necessity to keep iTunes relevant as "living-room video" becomes increasingly digital. They'll likely integrate cable "packages" not unlike the way they've done Hulu/Netflix/MLB and use the thing as a "break even"-ish business to make the whole ecosystem more attractive. Which is to say: there needn't be a whole lot of revenue for this to be a necessary move for Apple. Though there's a good chance chance Apple may do an app store for the AppleTV, in which case gaming is likely to not only drive set-top upgrades on an iPod schedule ($100-200 a pop, upgrades every other year or so), but also reinforce iOS device sales for smart-controller/second-screen-style game and app functionality. This has the potential to combine (direct sales and 'halo' sales) for iPod-like device revenue.

by jfb 14y ago

Flenser 14y ago

If it was an 8k tv (8000 pixel wide display) and I had access to all of pixar/disney's back catalogue in that resolution I'd be interested.

jfb 14y ago
Well, sure, we'd all like a pony. EDIT: But the problem here isn't even getting hi-res re-renders of Pixar movies (do-able, if insane), it's getting you to buy a new 8K TV every eighteen months or so. Unless and until someone figures out how to utterly destroy existing TV business models, nobody is going to try and build value-add TV sets. It's a fool's errand.
- gnaffle 14y ago
  Most Apple customers don't buy new devices every 18 months. Apple only needs to make customers happy enough (and locked into their ecosystem) so that when they upgrade at some point, they still buy Apple.
- Flenser 14y ago
  Once you have an Apple TV you're locked into the Apple ecosystem for as long as you have it. You'll buy lots of tablets and phones during that time that act as interfaces to it. Also: http://i-want-a-pony.com/ http://i-want-a-pony.com/ Edit: Apple are probably the only company that could make an 8k TV and have content ready to watch on it, or at least they are in a position to have have a product ready before anyone else. They could manufacture them at scale to make a decent margin selling them at a premium whilst locking consumers into their ecosystem for years to come.
jws 14y ago
Who sits 5 feet from a 42" TV set? That would roughly be a retina display 8000 pixels wide. You are also looking at something like a 400mbps data rates to feed it.
- jfb 14y ago
  Well, it's 16 times the picture resolution at the same temporal resolution, and you can do a damn fine job with 10Mb/s high profile H.264 at 2K, so … yeah, I guess that's about the right order of magnitude. But holy diminishing returns, Batman.
- Flenser 14y ago
  not sure if these are accessible outside the uk: http://news.bbc.co.uk/1/hi/programmes/click_online/9774380.stm http://news.bbc.co.uk/1/hi/programmes/click_online/9774380.s... "But when the screens are even larger you get a sense of being there - it's like looking through a window." - http://www.bbc.co.uk/news/technology-19370582 http://www.bbc.co.uk/news/technology-19370582

mikeash 14y ago

It just fundamentally makes no sense to me. The TV business is just too small. Even if Apple magically took over 100% of the market, it would still be small potatoes for them, and there's appears to be little room to grow the market as a whole. It's saturated. I could well be wrong, and I'll happily admit it if it turns out that way, but for the moment I just don't get why so many people insist that Apple is going to get into the TV business.

gnaffle 14y ago
There are a few things wrong with this assumption: 1) Apple exclusively looks at potential revenue when introducing a new product. That they introduced and still sell the Apple TV even though it's still just a "hobby" pretty much negates this assumption. 2) You look at the _current_ TV market and conclude that it's too small. You could have looked at the smartphone market in 2007 and made the same argument against launching the iPhone. What happened instead was that the iPhone had mass market appeal, and smartphone market share exploded. If Apple is somehow able to do to the TV market what they have done to the smartphone and tablet markets, they don't need to worry so much how the existing TV market looks like and whether that market is saturated. They only need to worry about whether the product is something enough people want to buy.
- mikeash 14y ago
  1) Well, I'm really addressing the idea that an Apple TV would be Apple's "next big thing", which is almost always how it's presented. People aren't talking about Apple selling TVs as a hobby, they're talking about Apple selling TVs as their next huge product line. If Apple comes out with a "hobby" TV product that has no significant influence on their balance sheet, I'll consider myself correct on this one. 2) I addressed that in my comment with "appears to be little room to grow". Unlike the smartphone market, everybody, and I do mean everybody, already owns a TV. Maybe there's some secret sauce that can make a lot of those people buy new TVs, but it seems unlikely. Keep in mind that while Apple massively grew the smartphone market, they're still minuscule compared to the overall mobile phone market. It looks amazing at first blush that Apple is selling ~100 million smartphones a year when that was the size of the entire market in 2007. But it's substantially less amazing, IMO, when you consider that the mobile phone market overall was over a billion units/year in 2007. Apple really just nibbled a small portion of the larger market. I'm having trouble finding decent figures for the global TV market, but it looks to be vastly smaller than the mobile phone market was in 2007, let alone in 2012. Unlike smartphones, there's no larger market to convert people from, and people mostly already own enough TVs.

jws 14y ago

The reason to make an Apple TV display is to eliminate the multiple remote control hell. You can't get to the best user experience with the TV knuckleheads in the loop.

graeme 14y ago

I'd consider buying an Apple Display once I moved to a bigger house. A significant portion of Apple's customer base doesn't have cable, or any interest in cable. But they still watch TV shows and movies, mostly on computer screens at the moment. Getting a Cinema Display isn't quite the same thing. I think a lot of people would buy an Apple display if it did the following: * Had a beautiful display * Seamlessly plays movies and TV shows from computer * Was good enough, without obvious flaws, that it eliminates * the anguishing 'which HD TV do I buy?' decision. * Can be put in a part of the house separate from the computer, for social events * Can also easily play music, for social gatherings.

jfb 14y ago
Oh, I'd buy one in a hot second. A consumer focused consumer electronics device? Yes, please. But it makes no sense that I can see for Apple to get into the business. I wish there was a venue for me to bet against this cockamamie idea.
smackfu 14y ago
>A significant portion of Apple's customer base doesn't have cable, or any interest in cable. I think this is just internet confirmation basis. Most of Apple's customer base is iPhone users, and most of them are just normal people with typical cable service.
- graeme 14y ago
  Actually, I just meant young, college educated people. Very few people in that demographic have cable subscriptions, compared to the population as a whole. Specifically, I'm thinking of my friend's houses that I've seen in various cities around Canada. Not many televisions.
  - untog 14y ago
    Actually, I just meant young, college educated people. Very few people in that demographic have cable subscriptions, compared to the population as a whole. I'd love to see some figures on that, because I'm not sure it's true. Fewer subscribers, yes, but "very few people in that demographic"? I think that a significant majority still do.

flyinRyan 14y ago

Your post makes a lot of sense, but personally I'm not going to bet against Apple on this. No one would have predicted them having the effect on the cellular world they did either.

josephlord 14y ago

I largely agree. It is a low margin business and the current competition is better than it was in the phone market before the iPhone and the divide and conquer probably won't work in the TV market. Better controls using iPhone/iPad as the control device (with most of the UI on the small screen and just the content on the big screen) will help but I don't think that Apple could sustain the combination of margin and volume that they are use to though they probably can squeeze retailer margins. The reason Apple might do it could be to hurt Samsung more than they can with lawsuits.

inthewoods 14y ago

Seems to me the same argument to be made on Windows laptops vs. MacBooks. Windows laptops are a commodity business, whereas MacBook owners pay a premium for Apple products. Why is this different?

jfb 14y ago
It's a pretty good question. One, Apple entered the market for PCs a long, long time before it became a commodity business, so history plays a part -- they can play these games in a commodity business because they have been playing these games in a commodity business. But people buy TVs not to run software, but to watch movies and TV shows, so value-added TV sets are basically dead in the water. The real business Apple has to attack is the cable industry, and they have zero leverage or competitive advantage in the sickly morass of rent-seeking and quid pro quo backscratching that is regulated telecoms monopoly world. By analogy, the TV makers are Dell, Lenovo, Acer &c, and the cable industry is Microsoft. The only conceivable change is for Apple to forge direct business relationships with the production houses and rights holders, and the cable companies are buying them up as quickly as they can to prevent this sort of disintermediation.
- inthewoods 14y ago
  "But people buy TVs not to run software" - at the moment. Maybe that's the secret. After all, people bought mobile phones for while but didn't buy a lot of content or apps because the interfaces were horrible. I'm not suggesting this will necessarily happen - but I think Apple is likely to play to strengths - app infrastructure and interface design - as much as anything else.

samstave 14y ago

Agreed. I just bought a 55" samsung smart TV on black friday. It was $1300 and was the first large scale TV purchase I have made in a decade. I already have a mac mini hooked up to the 42" in the bedroom, and I never use that. While nifty, I just don't see apple building a TV business because the revenue stream is too low.

rymith 14y ago
I agree, but I also said this when the rumour came out about Apple getting into phones. Cell phones were cheap crap back then with no margins. I really don't think it's a completely 1:1 comparison, but Apple does tend to surprise me occasionally.

w1ntermute 14y ago

> I would be stunned if Apple released an actual "Apple TV" display. It's a super-low margin, commodity business, with very low turnover (how often does someone shell out a grand for a TV?) You could say the exact same thing about computers, but look at what has happened.

jfb 14y ago
Again, though, Apple has been making computers since before computers were a commodity business. They didn't look at the HP/Dell/&c. market and decide to get into it.

roc 14y ago

If they do offer a display, it's almost certainly going to be in addition to the set-top box. A sort of "this is how it should be" offering that's tightly integrated and reasonably high quality, that competes in the segment of the display market where there are decent profits, but where most consumers simply don't shop. Not unlike the situation with Cinema Displays themselves. As for revenue: AppleTV is, up-front, a logical necessity to keep iTunes relevant as "living-room video" becomes increasingly digital. They'll likely integrate cable "packages" not unlike the way they've done Hulu/Netflix/MLB and use the thing as a "break even"-ish business to make the whole ecosystem more attractive. Which is to say: there needn't be a whole lot of revenue for this to be a necessary move for Apple. Though there's a good chance chance Apple may do an app store for the AppleTV, in which case gaming is likely to not only drive set-top upgrades on an iPod schedule ($100-200 a pop, upgrades every other year or so), but also reinforce iOS device sales for smart-controller/second-screen-style game and app functionality. This has the potential to combine (direct sales and 'halo' sales) for iPod-like device revenue.