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Launch date remains unknown, but Apple is actively pursuing this new market

The persistent reoccurring rumor that Apple, Inc. (AAPL) will be making television sets has surfaced again.  The Wall Street Journal is offering up in a new report evidence of secret meetings inside of Apple planning the launch of the new television product.  The important take home message is that while the launch date appears to be uncertain, Apple is hard-targeting the product (courtesy of deep negotiations with TV content providers and its work on developing advanced user interfaces).

I. Apple Moves Towards Television With New UI, Licensing Work

We first heard about the possibility of the Apple LCD TV in an informal discussion with a former Apple Canada executive turned financial analyst.  He claimed to us that the project was already relatively advanced and would likely debut sometime in the 2011-2012 time frame.  

While that schedule now looks unlikely, numerous reports since have indicated that Apple is still chipping away at development.  

Currently Apple sells a set-top box that offers streaming media functionality, but lacks the ability to install and use third party apps, a capability which recently came to Google Inc.'s (GOOG) Android (Google TV) set-top boxes and integrated internet TVs.  Apple TV is relatively inexpensive retailing for a modest $99 USD.  While Apple announced 3 months after the device's launch that sales had hit 1 million units, it has since refused to comment on the device's sales.  Rumor has it that the device is sharing the sales difficulties of Logitech International S.A.'s (SIX:LOGN) Google TV set-top box.
The Wall Street Journal report cites private commentary at Apple's 2010 "Top 100" meeting for senior executives as cause for skepticism.  At that meeting an executive asked late Apple CEO Steve Jobs whether an Apple TV was in the works, and he responded that the profit margins were too low compared to mobile electronics and that people bought television sets too infrequently to make it worthwhile.

On the other hand, the report points to many signs since then that Apple may indeed be preparing to drop a shiny new television.

Steve Jobs challenged TV providers in a series of recent meetings, asking them how much of the world's video content they truly owned.  While the meetings were reportedly in the "exploratory" phase, the parties involved discussed the possibility of Apple becoming a licensed reseller of television content, similar to cable networks.  Such a subscription service could give Apple's next generation television product an edge over competitors like Google TV.

Google is reportedly in similar talks with content providers.

In his official licensed biography, Steve Jobs commented that after years of prototypes of smart TVs that connected to mobile devices like the iPad and iPhone that Apple had "finally cracked it".  In their most recent meetings with television content providers, this topic was raised as well, with Apple discussing a scheme in which a user could begin watching their show on their TV and then moves to another room and continue to watch it on their iPad or iPhone.

Mr. Jobs also indicated that the iPhone or iPad would be able to be used as an advanced remote control for the upcoming television.   Apple also appears to be working on other advanced interface technologies.  The WSJ report comments:

In the recent meetings with media companies, the Apple executives, including Senior Vice President Eddy Cue, have outlined new ways Apple's technology could recognize users across phones, tablets and TVs, people familiar with the talks said.

In at least one meeting, Apple described future television technology that would respond to users' voices and movements, one of the people said.

Such technologies have become mainstream in the video game console industry, thanks to pioneering innovators like Nintendo Comp., Ltd. (TYO:7974) and Microsoft Corp. (MSFT).  But the technologies have thus far only been applied minimally to actually working as a user interface to the television (Microsoft does offer Kinect control in certain select Xbox 360-accessible television programming).

II. Why an Apple Television Makes Sense in the Long Run, Financially

One reason why an Apple television product seems likely is that it would provide a new resource stream for Apple, should it exhaust its existing sales streams.  

While it's entirely possible that the iPhone and iPad could continue to thrive for decades to come, Apple's history suggests that while the company is adept -- perhaps the best -- at garnering an early sales and brand image lead, that its penchant for proprietary first-party products and core software has led to it being eventually marginalized.  

Already Apple's iPhone has fallen quite a bit behind Android in smartphone sales.  And while Android tablet sales have grown at a slower rate than expected, analysts generate are expecting them to pass iPad sales around 2015.

At this point Apple seems almost unassailable from a profitability standpoint, if not from a unit sales standpoint.  However, as other highly profitable smartphone makers like Canada's Research in Motion, Ltd. (TSE:RIM) have shown, it only takes a couple years of dropping sales to see your cash reserves and quarterly profits erode.

Steve Jobs w/ iPad
Apple's upcoming television product could be the first major new product to launch without Steve Jobs at the helm, since the late 1990s. [Image Source: AP]

Aside from business side of the equation, the launch of a "smart TV" product would be a landmark moment for Apple, as it would mark the company's first major new product introduced since the death of Steve Jobs.  Of course, by the sound of it, the finished product would draw heavily on the early prototype work of Mr. Jobs and Co., so even in his grave he could still remain Apple television's MVP.

Source: WSJ

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RE: I don't want an Apple TV
By testerguy on 12/21/2011 2:48:53 AM , Rating: 0
Maybe you should entertain the possibility that everyone else isn't the problem... This brings me to the question: why do you complain about people voting you down when you know it's going to happen? Also, what's your motivation for spreading the gospel to such an unreceptive audience?

Don't be misled by the particularly biased crowd on this website which isn't at all representative of the world at large. Remember, the people who buy Android over Apple are on average, younger, less educated, and have less money. Coincidentally, they tend to be the same misinformed loud-mouthed teenagers who are very vocal on online forums, particularly ones like this where the vast majority of respectable posters left ages ago due to the bias.

You should entertain the possibility that everyone else isn't the problem, and by everyone else, I mean the millions and millions of people (read: not a cult) who buy Apple products due to the fact that are simply better, such as the iPhone 4S right now which is totally unmatched in the smartphone market, or the iPad 2 in the tablet market.

Another example of Jason's bias in this article is how he points to Samsung selling more smartphones, but this simply isn't true, it's a classic misinterpretation of statistics and bad journalism. Samsung only sold more units in one quarter this year, and that was the quarter just before the new iPhone 4S was launched, the biggest lull Apple will see this year, yet Jason jumps all over that and tries to come to conclusions.

The 'unreceptive audience' as you describe it is probably the area where he sees the most opportunity to provide an education.

RE: I don't want an Apple TV
By Cheesew1z69 on 12/21/2011 8:39:03 AM , Rating: 3
the people who buy Android over Apple are on average, younger, less educated, and have less money
Or, we just like more choice and don't care for a company dictating to us what and what we can't use.

RE: I don't want an Apple TV
By robinthakur on 12/21/2011 9:01:43 AM , Rating: 2
That might also be true, but generally, he is correct. Nobody I know who is a young professional (20-30) owns anything but an iPhone. However, when you have other OS phones which are at least as expensive as iPhones on launch like the SGS2(though they lose their value incredibly fast, naturally) it is probably because you can get the more expensive Android phones on more favourable contract terms than iPhone contracts currently where you get the phone free, at least in the UK. To get the iPhone 4S free, you have to spend a considerable sum per month on contract. As per the usual Apple market segmentation, if it was too affordable, that would detract from its appeal.

RE: I don't want an Apple TV
By Cheesew1z69 on 12/21/2011 9:21:55 AM , Rating: 2
No, he is not correct, and key words, Nobody I know . I know plenty who have Androids.

RE: I don't want an Apple TV
By Tony Swash on 12/21/2011 9:25:20 AM , Rating: 2
the people who buy Android over Apple are on average, younger, less educated, and have less money.

Or, we just like more choice and don't care for a company dictating to us what and what we can't use.

I think you just proved his point

RE: I don't want an Apple TV
By Cheesew1z69 on 12/21/2011 9:50:00 AM , Rating: 2
I think you have no clue what you are talking about, as usual.

RE: I don't want an Apple TV
By nafhan on 12/21/2011 10:10:42 AM , Rating: 2
I like how you say "not a cult" and then write a four paragraph diatribe about why it's important to educate the uninformed (i.e. anyone who doesn't have an Apple product) about the awesomeness of the iPhone. Your last paragraph has a decidedly religious tone to it... :)

“So far we have not seen a single Android device that does not infringe on our patents." -- Microsoft General Counsel Brad Smith

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