An Apple Television set this year? I hope not…

The new year brings new chatter in the pundit world about what Apple has in store for us. Hot off the news of cuts in iPhone 5 components (some harken this as a sign of Apple finally losing consumer’s hearts, while others point out that its more likely product of adapting to production constraints and normal product demand fluctuation) some bloggers have argued the point that Apple has lost its innovative edge. There have been no new category-defining product releases now since the iPad, only revisions of existing product lines. With no new exciting innovations Apple will surely slide into oblivion.
The most hotly anticipated new product category being bandied about is an Apple branded television. Tim Cook has stated that the Apple TV has indeed been elevated from hobby status and sales figures of the diminutive set top box would support this new focus. I’ve written before how surprisingly useful the device is; it’s actually taken the place of my old media center Mac Mini with no loss of functionality (partially thanks to AirPlay Mirroring from my various iOS devices). The commonly held pundit position is that the natural next step in development would be for Apple to move away from the set top box to creating a smart television of their own. Google has partnered with some TV manufacturers, and others have created smart TVs of their own that provide access to streaming content providers and some limited app libraries. So far smart TVs haven’t been a hit, as they really don’t provide much unique value to consumers; most already have access to streaming media thanks to the proliferation of game consoles and multimedia devices like TiVo or BluRay disc players.
The belief is that Apple would trump all of these competitors with their superior content and design. Cupertino has been in the mutimedia business for some time now, thanks to iTunes. If Apple could leverage their libraries to broaden access to media they could finally reach the tipping point for consumers to move en mass from cable/satellite to internet-based television. Apple’s device engineering could create some sort of value to make their device stand out from the crowd; iTunes streaming from any device on your home network (like all current Apple devices can) would just be a start. Why not a video version of iTunes Match? A paid subscription to streaming channels from traditional cable/satellite providers like Comedy Central or ESPN? For US consumers they could aim for the sky and gain access to NFL Season Ticket. The contracts wouldn’t be easy to work out, but early access to the new wave of consumer entertainment and a growing market of Apple devices energized by a new branded smart television would be enticing to content providers. So what’s holding Apple back?
One major factor is likely profitability. Televisions are a low margin industry, with numerous manufacturers but little real differentiation. New technology has failed dramatically in the recent past- anyone remember when 3D tvs were the next big thing? Apple typically enters the high end of any market with a strong emphasis on profit margin; this would be difficult to do in televisions while remaining competitive. Secondly, just as other smart tvs would an Apple branded set really offer consumers enough to warrant the investment over a standard HD tv and current media providers? Would this new tv work to supplant or attempt to augment current cable and satellite providers (and if so would they be willing to let Apple into their market)? I have no answers, but these accumulated questions would likely deter me away from entering the television set market without some overwhelming research data to spark the (likely significant) investment.
I for one hope Apple chooses to develop their current Apple TV set top box. Televisions come in a remarkably wide range of features and sizes, and I’d prefer to be able to use the tight competition in the market to keep prices low while being able to tailor the specs of a set to my particular needs. Should Apple start manufacturing smart TVs instead of the set top box they’d likely have a limited product lineup; two, maybe three sizes that would likely be considerably more expensive than the standard HD set. There’s no reason that all of the consumer value arguments for an Apple television set couldn’t be equally applied to an expanded and improved Apple TV, while still offering the value of being easily paired with the set of the customer’s choosing.
I’d agree that Apple would benefit from a new product that creates its own industry as the iPhone and iPad have, but I don’t think a television would necessarily do this. I think we have another year of incremental improvements to existing product lines to look forward to this year- and that’s not a a bad thing.

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A tale of Apple strategy and its implications

Apple has developed the reputation for being a trend setter in technology over it’s existence: it was the first to widely employ the mouse, first mass market graphical user interface, and the first to discontinue the floppy drive. While some have argued that Apple’s control over it’s product line diminishes customer satisfaction by restricting personalization and configurability, I believe it provides an advantage through being able to more effectively follow their strategic plans and following (or even creating) trends in consumer devices. Apple was the first to routinely offer webcams in their laptops; now practically all portable computers (including most tablets) have them. Conversely, Apple has shied away from technology they don’t consider fully developed yet, such as LTE/4G connectivity in the iPhone. While it is considerably faster than 3G, it’s use is very battery intensive (as many Android 4G handset owners can attest to) and not yet as widespread as the older 3G technology. The new iPad is the first Apple device to offer it, but it sports batteries larger than the entire iPhone.
With the introduction of the MacBook Air, Apple again was at the forefront of sending a popular feature of PCs into retirement. Just as with the floppy drive, the lack of an optical drive was panned as a serious shortcoming of the Air by numerous pundits. Rather than being held back by the lack of an optical drive, the Air has gone on to be Apple’s best selling laptop model. Now it’s rumored that the refreshed line of MacBook Pros will follow the lead of the Air and omit the optical drive. As Apple moves away from internal optical drives, the PC world has embraced it further by adopting the next step in optical drives- the BluRay disk. While they offer more data capacity for storage, the selling point for BluRay disk drives has been HD movies. BluRay won out over HD DVD as the industry’s preferred HD movie format in the not too distant past, but still isn’t as widespread as SD DVDs (although it’s been embraced far more widely than consumer 3D TV).
So is Apple failing it’s customers by ditching optical media? Are Mac users dwelling in virtual digital entertainment ghettos thanks to Apple’s refusal to adopt the industry’s choice of HD video? A closer look at Apple’s wider product line reveals not only is this not the case, they once again may be blazing a technological trail for the rest of the industry to follow.
While it’s true Macs aren’t BluRay friendly (there are some external BluRay drives, but performance is allegedly spotty) they do have a source of true HD video content- the iTunes store. With the introduction of the second generation Apple TV and third generation iPad, Apple has created a foundation of nontraditional media devices that are capable of rendering true 1080p HD video. The Retina Display first appeared in the iPhone 4, and is rumored to be featured in all of Apple’s devices including the refreshed MacBook Pro line. This strategy may create a synergistic payoff for Apple- their portable devices are already the hottest selling electronics in the computing world, and those that want to get the most out of their Retina Display screens have ready access to true HD content now wherever they are through the iTunes store. The inclusion of higher resolution displays in the MacBook lineup allows Apple to legitimately claim that optical drives no longer have a purpose- vetted, malware-free software is provided by the App Store, video content from iTunes or other online services like Hulu and Netflix, and sharing of content is easily done via network solutions like Dropbox or Apple’s new AirDrop feature in OSX Lion. Should you need a physical medium for your data USB drives or SD cards offer far more capacity, a more sturdy physical form, and better overall cost per gigabyte. The lack of the optical drive means laptops can be lighter, thinner, or offer other features such as swappable solid state hard drives, larger batteries, or other internal devices.
While there will be a consumer demand for optical drives for the foreseeable future (Apple still offers the external USB Superdrive for those that need one) I’ve noticed that even when I was still toting a Dell around my alma mater’s campus I never really used my DVD drive. The only use my iMac and Mac Mini’s DVD drives have had has been to rip movies with Handbrake (and for those of you that don’t understand what that means, stay tuned- I’ll cover it in a future post). What’s your opinion? Is Apple on to something here, or is this the first major misstep they’ve taken since the release of the iPhone?

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