Can Apple Succeed with a TV in Traditional Market?
The rumor mill is churning about Apple getting into the television business. And none other than the engineer who built iTunes is on board to help develop the new product, according to Bloomberg.
Bloomberg reports that Jeff Robbin, who also helped create the iPod, is hands-on with an Apple-branded television set. The rumors may have spawned from Steve Jobs' biographer, Walter Isaacson. Jobs apparently told him that he had "finally cracked" how to build an integrated TV that would connect content with existing Apple devices.
"It will have the simplest user interface you could imagine," Jobs told Isaacson in the biography "Steve Jobs." Simon & Schuster released the biography Monday. Apple did not return calls seeking comment on the rumors. The only TV-type product Apple currently offers is the $99 Apple TV set-top box that lets consumers tap their content from iTunes, YouTube and Netflix from an existing television.
Targeting Netflix?
With Netflix's current challenges, an Apple TV could be a home run for the iPhone-maker. However, Apple would be the first of many to make the transition successfully. Dell, Gateway, Pioneer and Hewlett-Packard all tried to introduce television sets to the market and largely failed.
"Television is a much tougher nut to crack than the iPod, the iPhone and the iPad were because we are dealing with a saturated market, and Apple's primary competitor in terms of services are cable and satellite operators who can roll trucks," said Rob Enderle, principal analyst at Enderle Group. "We saw that the old Apple TV is both the most successful in its class and the least successful Apple product, which shows how difficult the space really is."
Despite the challenges, Apple could make inroads if the company inks deals with copyright holders for unique programming. Enderle said success would also mean deploying Apple Store gurus to install the televisions for consumers, complete with a wall mount and stereo hookups.
Of course, the price would have to be competitive, and marketing is a factor. If Apple's smart TV is far and away priced above the current market leaders, the barrier to entry for consumers would be too great for the mass-market sales a new television would require.
Apple-Disney Connection
"Steve Jobs himself didn't like TV," Enderle said. "With Jobs gone, I think Apple can actually resource this better because you won't have a top cheerleader with mixed feelings.
"If you look at some of Steve Jobs' quotes on televisions, he indicated that they were at the root of the dumbing down of America. And he did best with products that he was passionate about. It was clearly very hard for him to get passionate about TV."
On the other hand, Enderle said, Jobs was famous for investing as much money into his pet products as it took to help them succeed. Traditional CEOs don't do that, he said, and newly minted Apple CEO Tim Cook is more like a traditional CEO. The success of an Apple-branded television set could be the first big hit for the post-Jobs Apple. But it could also be the first major failure in more than a decade. The stakes are high, and a failure could hurt the stock.
"I am skeptical that Apple will be willing to take the risk necessary to take this to market," Enderle said. "If they do, they are probably the only company that has the wherewithal to make it successful.
"Apple's connection with Disney could be their ace in the hole. Historically it was the 'Wonderful World of Disney' that pushed color television into the market. If Apple could get unique Disney content, that alone may be enough to push it through."
