No TV Set for Apple? No Problem!

– There’s a Bigger Opportunity Elsewhere and with Bigger Margins
– TV’s Problem Is Not the TV Set; It’s the User Interface — the TV’s Brains

So — word has leaked out that Apple will not make UHD TV sets and instead focus on a new Apple TV NTB with major changes and improvements over the current Apple TV NTB.

Why would it do that?

Pick some:
1. Prices for quality UHD sets have dropped so quickly that Apple might have a hard time keeping up (down?).
2. Apple would have to buy UHD displays from rivals Samsung, LG or Sharp.
3. UHD and display technologies are changing too fast to make a long-term, high-quantity commitment to one technology — HDR, upconversion, ultra-thin displays like the one LG is showing off this week, etc.
4. Apple’s value-add can be put entirely in the Apple TV box, which requires a much lower and safer commitment. Look at how long that basically same Apple TV has been around.
5. LG, Samsung and others seem to be moving display technology along quite nicely. Apple did not find any significant value it could add to the display panel.

AppleTV_Main Menu_Movies_US ONLY_PRINT copy

Are Apple engineers working on an 8K TV set project?

 

Let’s also point out that Apple is a very big company and very big companies often have two or more development projects under way simultaneously to see which can come up with the best product. Apple may have another group of engineers working on a TV set; maybe they are even considering an 8K model or a super-thin display.

Had Apple been one of the first with a UHD TV set, it could have set the pace. But, not now because Samsung, LG and, in the States, Vizio have a big lead. That situation has not deterred Apple previously in such markets as portable media players, smartphones and tablets but even then no one competitor totally dominated the market, much less the bevy of Samsung, LG and Vizio.

We omit Sony because we expect its share of the UHD TV market to decline because it can’t keep up with the drops in prices of UHD sets. We expect Sony will only compete in the UHD TV market at the high end — but then that’s where Apple would have aimed its TV set.

One thing that should be worrisome to Apple is that Samsung, LG and Vizio have developed such intuitive and powerful smart TV interfaces for their UHD TV sets that users rarely need to use their Apple TV box — except when they want to access iTunes online or their locally-stored iTunes library — something no one else can do.

Also, media companies are not giving Apple long-term exclusives. Even the much-ballyhooed Apple-HBO deal was exclusive only for a few months. TV set makers have moved into the content distribution market with a vengeance, especially prompted by their need for 4K content. Like many others, Apple underestimated the sudden success of the 4K/UHD market. A year ago almost every major analyst except for The Online Reporter was dismissing the rise of 4K — and some still are — but buyers aren’t.

Samsung, LG and Sony, looking for every reason to entice consumers into buying their UHD sets, went looking for 4K content. All were quick to add icons for apps that stream 4K over an ordinary broadband connection — . As a result they, and 4K latecomer Vizio, have a major lead over Apple in 4K content, which is not available at all on the current Apple TV NTB — although we expect it to be on a future Apple TV NTB. Those apps also a) make it easy for users to stream from OTT services and b) serve up an enormous quantity of 1080p content including some stunning new shows such as Netflix with its “House of Cards” and the new “Bloodline” series with 13 “keep-on-watching” episodes.

One final point: We have been calling for Apple to totally overhaul the Apple TV user interface. Its serial nature — forward, forward, forward and back, back, back — has become tedious to frequent users. The Apple TV now has too many content sources for that old-fashioned linear approach.

Speaking of linear, Apple could use some deals with pay TV channels to offer linear TV although the lack of a DVR function in the Apple TV negates that to some extent. TiVo has, to the best of our knowledge, done the best job of integrating pay TV/DVR/OTT. Its search function even looks at all there sources. TiVo also has models that function with OTA local TV stations, something that appeals to cord cutters who still want to watch/record the national TV networks NBC, ABC, Fox and CBS.

Perhaps Apple will add an “in-the-cloud” DVR function, which would also make it easy for users of Apple’s mobile devices to watch their recorded shows anytime, anywhere.

No TV set for Apple? No problem! Integrating linear TV, OTT and DVR functions into an easy-to-use interface that also supports mobile delivery — that’s right up Apple’s alley — the brains of TV sets and able to work with every TV set, not just its own. It will be an immediate hit with consumers who are tired of manually switching sources on the TV to view content and of using multiple remotes. The market for a TV’s brains are much larger that the market for TV sets and the market for selling and renting content has much, much better margins than the TV sets, especially these days when TV set makers and retailers are in a cutthroat war for dominance in UHD TVs…

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The Online Reporter is the weekly subscription-based strategy bulletin about the enabling technologies of broadband, Wi-Fi, HDR, home networks, UHD 4K TV & OTT services; identifying trends in the Digital Media space. Only a fraction of our material here is published here. To see 4 free copies, follow the links above or go to www.onlinereporter.com/trial-subscription/

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