Is the long-awaited Apple television vaporware?

May 4, 2014
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Is the long-awaited Apple television vaporware?

Apple is working on a television. That’s what the rumor mill says, at least. It’s also what analysts claim, what Steve Jobs hinted to in the Walter Isaacson biography on his life, and what everyone hopes to see. But at this point, I’m starting to wonder if all of those claims and our hopes and our dreams about an Apple television won’t ever translate to an actual device launch.

There’s no debating that Apple could be successful in the television business. The company has a keen eye for quality design, its computer monitors are outstanding, and there’s a good chance, given its brand, that whatever televisions it produces and sells would be wildly popular.

Still, I’m not convinced that Apple has any desire to launch a television right now. While the idea might be on the docket for several years from now, I’m not sure how televisions can possibly match up with the company’s own strategic vision on running its operation.

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Apple relies heavily on those of us who buy its products year after year. Whether it’s the iPhone, an iPad, or an iPod, there are many people around the globe that need to get the latest and greatest Apple products every year or two.

The television business, however, is a different beast altogether. Because of the high cost of televisions and their relatively long useful life, Apple could expect to sell sets to people initially and get them back to the register a decade later. In the meantime, the company would have no hardware revenue coming in from those initial customers.

Granted, new customers would come along each year to buy an Apple television, but as soon as they do, the decade-long clock starts. When they do the same with an iPhone or iPad, the one- or two-year clock starts. It’s a much different story.

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The Apple TV set-top box, however, is a much different device. That product can be updated each year with important upgrades, and thanks to its cheap price – just $99 – Apple could keep customers coming back for more.

And although the margins on the set-top box might not be as high as on a television, there’s a good chance that Apple could build up its app and software service revenue on the device, thus maximizing its potential to earn big on living room entertainment.

The other issue with televisions is that it’s a tough business. Yields on the latest and greatest display technology can be sub-par, to say the least, and margins are abysmal. What’s worse, Apple would be competing with companies that have their claws firmly dug into the space and a supply chain that has many of the kinks worked out. Just producing a television, in other words, is no small feat for a company even as big and powerful as Apple.

So, if I had to guess, the Apple television is, for now, vaporware. Apple might have plans of launching a TV at some point down the road, but for now, expect the company to focus on the set-top box and improving living room entertainment through software and cloud services.

That’s where the money is. And that’s what Apple cares most about.


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