The case against an Apple HDTV

Tue, Sep 1, 2009

Analysis, News, Rumors

This past February, analyst Gene Munster predicted that an Apple branded HDTV was on the horizon.

We expect Apple to design a connected television over the next two years (launching in 2011) with DVR functionality built in. These recorded shows could then sync with Macs, iPhones and iPods over a wireless network. The device would push Apple further into the digital living room with interactive TV, music, movie, and gaming features. With its iTunes ecosystem, Apple could develop a unique TV without any set-top-boxes or devices attached.

Recently, Munster reiterated his prediction in a note to investors and wrote that an Apple HDTV would “command a premium among a competitive field of budget TVs” and that Apple would be able to “differentiate itself with software that makes home entertainment simple and solves a pain point for consumers (complicated TV and component systems).”

The ability to record TV shows and sync them, wirelessly perhaps, to iPods and iPhones is undoubtedly a compelling feature, but an Apple branded TV seems like an awfully risky move for Apple for a variety of reasons.

To that end, Erik Sherman of BNET lays out a number of pretty good reasons explaining why an Apple HDTV might not make a whole lot of sense.

Apple likes markets that are largely unexplored. Management wants to be able to create a product that doesn’t have ready competitors. But unlike the MP3 player and the smartphone, televisions have been around a long time, and multiple vendors are including capability for online streaming HD video rental, to say nothing of incorporating Internet-delivered video.

Apple likes premium pricing. You can do that when you are creating a category (and I’d argue that the multi-touch interface smartphone is a new category). But when you’re entering a pre-existing and well-established mature market which has become heavily price driven, that’s tough to achieve.

Pretty spot on.  The margins for HDTV’s are dwindling as competitors are engaging in price wars with increasing frequency.  Even the price of high-end Samsung and Sony HDTV models have gone down in price by a few hundred dollars over the past few months.  Apple’s bread and butter is selling premium products at premium prices.  The problem here, and as outlined above, is that Apple will have a hard time establishing itself as a premium HDTV brand when sets like the Sony Bravia XBR series are lurking about.  Of course, Apple could differentiate it’s TV with easy to use software that integrates seamlessly with iTunes and the iPhone/iPod, but that doesn’t quite seem enough to cut it.  People buy TV’s primarily for superior quality, not iTunes compatibility.


, ,

1 Comments For This Post

  1. MacPredictions Says:

    I agree that Apple is unlikely to make a TV set, but I’m not sure I agree with the rationale for why.

    Apple *does* enter existing markets (phones, MP3 players, etc). It just reinvents them in the process, with a product that differentiates – as you say, like a multitouch phone, or an MP3 player with high-speed Firewire sync (back in the day).

    If Apple made a TV set, there’s no doubt it would differentiate – not just through software, but through functionality: Munster’s proposed TV recording system. And it’s true that Apple have patented UI concepts in this area.

    The reasons I don’t see it happening are twofold:

    1. Apple is too wedded to the idea of selling TV shows as downloads to encourage them to be “pirated” off the TV.

    2. Apple already has a product in this area – it’s called Apple TV. If they can’t add value to the screen itself (and they can’t), then they’re more likely to stick to a separate set top box strategy. The smart move would be to see how they can get their box distributed by some of the larger cable networks instead.

eXTReMe Tracker