[jfb]

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.

[jws]

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]

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.

[smackfu]

>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]

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]

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.

[graeme]

'very few people....compared to' is equivalent to 'fewer' - it's a relative term.

I'd also love to see stats, I couldn't find any.

[josephlord]

I think you are wrong about the importance of the current TV platforms to many people. TV is less important to single and certainly childless people who have more opportunity and desire to go out and socialise rather than stay at home.

I don't really see anything in the list that really needs Apple's help.

  * Had a beautiful display

Have you looked at the mid/high end Sony or Samsung TVs recently? I would be interested in how you think they could be significantly improved.

  * Seamlessly plays movies and TV shows from computer

DLNA does this pretty well these days. If you mean specifically from DRM protected iTunes videos it might be a narrower question that only Apple can really answer. Sony TVs (probably others too) can act as DLNA renderers so if you have a DLNA controller app on your phone it can push content from the PC/NAS/server to the TV without having to go through the TV UI.

  * Was good enough, without obvious flaws, that it eliminates

Not sure what this means. Most TVs (if you ignore the small size super cheap ones) handle HD very well and many especially at the mid/high end from major brands also upconvert pretty well. Certainly beyond the average viewers ability to see the problems in most cases.

  * the anguishing 'which HD TV do I buy?' decision.

That is all about you but I don't think you would go that far wrong with a mid/high Sony/Samsung.

  * Can be put in a part of the house separate from the computer, for social events  

Put it where you want it!

  * Can also easily play music, for social gatherings.

Most now support this. Either from DLNA or USB device. Having said that the capability of the speakers in slim stylish devices is distinctly limited. Apple will also have this issue. Of course if you have a separate (possibly surround) amp and speakers there is no problem but that solution lacks elegance and style.

[graeme]

Oops, my formatting got messed up. This was supposed to be one point:

'Was good enough, without obvious flaws, that it eliminates the anguishing 'which HD TV do I buy?' decision.'

Specifically I was thinking of MP3 players before the iPod, or my parents' own HD TV purchasing decision.

The 'separate part of the house' point was to counter the common cry of 'just use a computer monitor', which is the current solution.

[josephlord]

I probably should have parsed it better despite formatting.

Still the point probably stands that if you guess how much an Apple TV would cost and look at what you can get for the same money you will probably be impressed by most aspects except possibly the UI.

[graeme]

You're probably right. But I don't care enough to look. I suspect there are other people in the same boat, and that an Apple TV could open up a new market for high-end TV purchases.

I could be wrong. But one of Apple's assets is that it's trained consumers to trust it's merchandise across categories. If Apple makes it, and I have a need for it, I'm comfortable buying it.

[jfb]

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.

[Flenser]

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]

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.

[Flenser]

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/

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.

[gnaffle]

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.

[jws]

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]

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]

not sure if these are accessible outside the uk: 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

[flyinRyan]

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.

[roc]

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.

[josephlord]

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]

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]

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]

"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.

[mikeash]

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]

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]

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.

[gnaffle]

I think the point to note is that _everybody_ owned a cell phone before the iPhone as well. If you look at revenue share of the mobile market, I think Apple and Samsung now dominate the entire mobile market because smartphones have higher margins (Nokia dominated previously).

Likewise, the iPad grew independent of whether the PC market was saturated or not, in such a way that the industry now separates it into a "tablet" market. But of course, people are doing stuff on tablets that they could have been doing on laptops.

I agree that if they are to sell it as their next huge product line, it has to be more than a regular Apple TV in a frame. They have to do something similar to what they did to the PC market with the iPad, and that's not easy to do in the TV market. What it needs to be, and whether Apple will pull it off, I don't know.

[josephlord]

While I agree it isn't necessarily an obvious move I disagree on the reasoning. The volume and total value is there but margins are small and the existing products are already physically stylish and offer a lot of features (although there is room to improve on the UI).

If Apple could come in and get their usual margins and take a noticeable market share it would be worth it.

http://bgr.com/2012/07/23/samsung-lg-lcd-tv-sales-market-sha... - first useful link googling TV market size.

44M TVs in Q1 (low season in Europe and US but quite a big one in China due to New Year) of which Samsung took 19%. If we assume average price of $500 (maybe 50% of that number are small 24" and less cheap TVs) and a conservative total of 160M TVs annually it is about an $80BN market. If Apple could get 5% of that it is still $4BN annually or about what they get from iPods or 2/3 of what they get from Mac desktops. And if they go for it I'm sure they would be aiming for at least 5% of the market.

The other bonus is that maybe half of that share would come from Samsung who is not only the biggest manufacturer overall but winning at the top end too. This would hurt Samsung more than a billion dollars from a lawsuit.

[w1ntermute]

> 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]

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.

[samstave]

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]

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.