November 29, 2012

Apple Television - Real Deal or Fake-Out?


For several years Piper Jeffrey's Apple analyst Gene Munster has gotten a chance to get up at Business Insider's fall Ignition conference on Digital Media to tell us all about what Apple is going to do next year and maybe beyond. It's easy enough to make predictions on these things, and easy enough to get some of them wrong - last year he was adamant that 2012 was going to bring us a real Apple Television.

By this we mean an actual television (as distinguished from Apple's existing Apple TV product) - one of those things Sony was once the king of and that - at least as far as we are concerned - Samsung now delivers the best of. Is there anyone who wouldn't want the ridiculously slim Samsung UN75ES9000 (75", 1080p, 3D LED-LCD HDTV with Wi-Fi and voice/gesture control) shown below? It's only $8,999 and worth every penny, and at 75 inches it's only seven inches shy of what we're waiting for to pull the trigger on buying one (well, that and an enormous price drop).

Of course, as everyone now knows, there is certainly not going to be an Apple Television this year. But Munster is now adamant that Apple will bring one out in 2013, though he wasn't as adamant about when exactly in 2013 this might happen.

Munster does note as well that there is some debate amongst the professional speculators as to whether the ultimate delivery will be an actual television or a set top box. Munster himself strongly believes - and we totally concur - that a set top box is simply too inconsequential for a design powerhouse such as Apple to deal with. He cites a number of quotes - in particular from Tim Cook ("TV is an area of intense interest.") - that all point to a much bigger play on the TV front, and that play can only be an actual television. He also noted that Asian OEMs have mentioned to him that there are large 42 to 55 inch TV screens in Apple's supply chain as another reason to keep the faith on a television showing up in 2013.

Apple's 2013 Events

Before continuing down the television path, let's step back and consider, per Munster, what next year's Apple announcement schedule of events will very probably look like and what Apple might announce at each of them (bolded items are those we ourselves also believe will show up):

  • March 2013 - What has become the "traditional" iPad event: We should expect to see a retina quality iPad mini; Apple Radio service (and possibly a related new product); an upgrade to Apple TV ahead of a television announcement; an Apple TV App Store. We anticipate an update to the iPad mini processor as well, from the A5 to the A6 series.
  • June 2013 - Historically the time frame for Apple's World Wide Developers' Conference (WWDC): iOS 7, along with the much anticipated new interface that fully reflects Jonny Ive's design impact; enhanced Passbook with more overt wallet capabilities; Apple Maps improvements (a no brainer!); commerce integration with the likes of LivingSocial and Groupon; retina quality Macbook Air (we believe we may see this in March 2013). It will be interesting to see if iOS 7 and updates to MacOS begin to merge visually in terms of design cues.
  • September 2013 - Historically what has evolved into the major iPhone announcements event: iPhone 5S, with A7 processor, more memory, camera improvements, and NFC (we lean toward a newer and bolder iPhone 6 upgrade ourselves, with the iPhone 5 or 5S becoming Apple's lower cost phone). 5th generation iPad with iPhone 5 design cues, A7X processor and more memory; minor iPad mini updates with upgrade to A7 (we don't see such a processor upgrade).

Will September now become the official new iPad event, with March becoming the new iPhone next generation event? Munster thinks so.

So where is the Apple Television in all of the above? It's not there - this is an event that, should it happen, would require one of Apple's floating special events. Below is Munster's actual slide from his presentation, and as can be noted, he anticipates the event will take place in November 2013:

Don't let the TV mockup fool you - if the best Jonny Ive can come up with is anything that looks like the photo above, Apple Television will be - let's channel Steve Jobs - dead on arrival.

Over the Top Innovation Required

Quite honestly, based on the above slide we aren't seeing much in the way of "over the top innovation" or an otherwise compelling buy here. Will it have 3D? Will that 3D require passive or active eyewear? We assume active - will that active eyewear be iOS-based and provide all sorts of additional cool features? How will such a package tie together from a design perspective? Will we begin to see larger scale user interface (UI) integration in look, feel and experience across such a device, iPhones, iPads and Macs?

And, though Munster doesn't believe there is a set top box coming, will Apple leave that space to…Microsoft? What about an Xbox/Kinect - where Microsoft continues its own innovation strategies and will soon deliver its own eyewear? Surely Apple cannot claim any real television innovation without also delivering its own toys in these market segments can it? We absolutely do not believe it can.

In fact, if there is one reason we believe Apple continues to not deliver an actual television it's that it is also working on a suite of related set top and gaming devices to offer with the television - a suite of toys complete with an iOS-based and fully integrated design and UI. Is anything less than this worthy of Ive and Apple? No!

The ultimate issue here is that these are not trivial issues to solve - in fact they are highly complex, and Apple cannot afford to deliver anything that might even remotely be construed as lacking in innovation here or that fails to work in a way that is anything less than magical. If it does, we can mark that moment in time as when Apple began the path down where Microsoft has been the last 10 years.

For these reasons we believe that Apple is not about to rush things out the door, and November 2013 (the holiday buying season timeframe) may not be enough of a timeframe to deliver on it. We're thinking March 2014.

The Television Market is Already Innovative

Finally, we provided the Samsung reference above to suggest that the television market hasn't been standing still - by any stretch of the imagination. And with the Consumer Electronics Show just around the corner in early January 2013, there is a lot more innovation to be unveiled.

If you've seen or touched one of Samsung's ultra-thin 8000 or 9000 series TVs they are simply quite amazing. This isn't going to be a staid mobile phone market or otherwise non-existent tablet market Apple will be diving into. It's an entirely different ballgame, and both Samsung and Microsoft are true innovators here (other TV players such as Sharp and LG have their own innovations as well).

We can already begin to anticipate how many patent infringement lawsuits Samsung and others will throw Apple's way on the television front, when - or if - it finally happens.

It should all be good sport.

And Apple had better be able to innovate the hell out of the whole thing!




Edited by Brooke Neuman



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