Comments on: What’s Next for Apple’s Living Room Strategy?

By: Daniel Taylor

Daniel Taylor — Mon, 03 Aug 2009 12:53:30 +0000

Apple has a difficult set of constraints when it comes to television. The company makes money selling high-margin consumer electronics with a value prop built around strong integration between Apple-branded applications, computing and devices.

This has worked in the music market where paid media has been a high proportion of market revenues. Television is a different animal, and most of the revenues are buried in bundles or advertising…and not in paid media such as rentals and VoD. The ratings bear this out, with ad-supported Internet streams several orders of magnitude larger than paid distribution from the likes of Apple or Microsoft.

Which raises the question of Microsoft/360. Michael may be right about the near term outcome, but I don’t think either company has made much progress breaking into television.

By: Michael Wolf

Michael Wolf — Wed, 22 Jul 2009 20:54:22 +0000

@Neil – if Apple does do a TV, I owe you and Scott a beer

But, overall, it seems we’re all in agreement the need for Apple to continue to evolve their living room strategy. The surprise for me in the last day was they didn’t mention Apple TV once on their quarterly earnings call, so that tells me they are either building something they are very quiet on or are not sure what exactly they are going to do. It seems they are getting further behind while Microsoft is seeming like the innovator of the moment for the converged living room device with the 360, so Apple needs to do something here in the next six months.

By: Neil Golding

Neil Golding — Wed, 22 Jul 2009 12:34:04 +0000

It wouldn’t surprise me either in all honesty and I would tend to agree with Scott.

I would however agree the economics don’t necessarily make sense but Apple are going to continue to push their way into the living room. If they don’t opt for the TV route, I’m sure they’re going to be looking to make some fairly significant modifications to Apple TV. I’d hazard a guess they’d incorporate a range of updates to integrate additional functionality – look at Boxee – that will help drive sub volumes and ARPU, whilst combating the threat of the new up-and-coming bread of ‘intelligent’ TVs. There’s still lots of scope for them to push the VoD angle as this market is only going to grow – one key thing they are missing from Apple TV though is the content deals to air mainstream programming.

Apple are becoming all about convergence and simplicity of access. I can’t see them not developing this aspect of their portfolio with the strength of the iPhone/iMac to provide a seamless, integrated service. Store once, access anywhere, anyhow.

By: Michael Wolf

Michael Wolf — Fri, 10 Jul 2009 13:17:42 +0000

@Scott – I think that quite a few people would buy an Apple television, but the TV market is changing very quickly, with OLED coming online, people talking about super HD and even 3DTV, that its a market you really need a full lineup with many sizes of screen, etc. Its one you need either a serious manufacturing capability or align with someone who has one. Apple likely wouldn’t own the manufacturing and would have to align with either a Chinese or Taiwanese manufacturer, and I doubt they’d do that. And I doubt any serious CE brand like Panasonic, Sony, Samsung, etc would work with Apple at this point. Some sources in Silicon Valley have told me Apple has talked with all of these guys – I haven’t confirmed this so take that for what it is – and all of them have turned Apple away.

By: Scott Blitstein

Scott Blitstein — Fri, 10 Jul 2009 01:09:47 +0000

I wouldn’t necessarily dismiss an Apple branded Television. They have shown again and again that people will pay a premium for the Apple aesthetics and feature set. Sure you can buy a cheaper TV, but you can also buy cheaper mobile phones, computers and music players. The crumbling prices in those areas hasn’t kept them away.