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Much has been written about the forthcoming Apple TV—not the current teensy box that streams Netflix (NFLX), but the real thing, an actual television set that analyst Gene Munster predicts will hit the market by year-end. Munster peruses the nitty-gritty details of Apple’s (AAPL) suppliers to try to divine what gadgets are being put into production before the official announcement.
Well, here’s a prediction from me, one formulated after many idle hours stuck on an airplane, pondering the future of the world’s most popular consumer gadget maker. (No alcohol was consumed in the making of this column.)
I doubt Apple will chase the big flat-screen market dominated by the likes of Samsung (005930) and LG (066570). Those sets are already Cupertino-thin and entrenched. Instead, Apple will sell small screens in a unique format, likely with a pure glass bezel or, if the technology permits, an entirely transparent screen—and seek to fill your entire home with secondary television/video devices. This is a relatively easy bet. Here are six reasons why.
First, big televisions are already beautiful, and an infrequent purchase decision. It will be very difficult for Apple to get you to swap out the monster screen you bought two years ago. From 2007 to 2009, sales of LCD and plasma displays shot up 20 percent a year, and then began tapering off in 2010 with only 2.9 percent growth, according to market research firm DisplaySearch. The market for big flat-panels has been satiated. TV designers tried to rebuild demand with 3D screens, but the sets requiring goofy glasses never took off.
Second, Apple’s real play will be content sales, not TV hardware profits. As I noted last September, the typical U.S. consumer still watches 5 hours and 9 minutes of television a day, but only about 18 cable channels out of the 130 received by the average home. There is huge bloat in what we subscribe to, and we pay cable companies about $74 billion annually for this privilege. Add the $70 billion in TV ad spending, and Apple could grab a slice of a $144 billion video market if it could convince us there’s a better way to stream moving images.
Third, consumers want to watch video everywhere while multitasking. Recent studies by Nielsen (NLSN) show that for most of the day, except for prime time in the evening, consumers watch TV while doing something else—texting on phones, typing on laptops, folding laundry, skimming magazines. More than 1 in 5 U.S. adults have read a book on an e-reader. Younger demographics in particular are watching video via Hulu and YouTube (GOOG) on computers. We want more screens, and we want to do other stuff while watching, so why wouldn’t Apple sell pretty little panels to spread throughout our homes?
Fourth, the television user experience still stinks. Do you have three remotes (cable, TV, sound system) on your coffee table? So do I. Apple is a genius at reinventing system interfaces, and the home entertainment control panel is certainly broken. The experience gets worse when you consider advertising: Once you manage to turn on your television, you’re exposed to 18 minutes of commercials each hour, up from 8 minutes of ads in the 1960s. The typical U.S. consumer is exposed to 166 TV commercials each day. If Apple could clean up remotes and curb ads, consumers would rejoice.
Fifth, Steve Jobs loved glass. From his boyhood home that had glass walls to his enlistment of architect I.M. Pei to design glass stairs in the marquee Apple stores, Jobs loved the simplicity of transparency. The aluminum thing has certainly been played out; it’s time Apple brought some new, radical design element to the table. The technology for pure-glass screens is here. At CES 2012, Samsung unveiled a glass window that doubles as a touchscreen video panel.
Sixth, Apple could sell the things cheap. Really. A small TV screen without the computer innards is a less-expensive MacBook Air. Rather than charging twice as much for a slightly better product (Apple’s notebook strategy), Apple could charge less for a radically redesigned TV. Apple being Apple, it will hold back some features, and then relaunch these little TVs with lots of design upgrades. What would come next? Apple collected a patent in late 2010 for holographic technology that does not require glasses, which would create images floating in the air that could even pick up shading by light coming in the window.
Apple also has patented haptic (“touch”) technology that would embed a grid of sensors into gloves and clothing to create the sensation of movement. Video games played over Apple screens could then have holographic gunfighters in your living room, and when you get hit, you’d feel the punch.
There you have it. In a few years, you might have a little 15-inch Apple TV screen in your bedroom for movies, bathroom for morning news, kitchen for cooking channels, garage for repairing your bicycle. Apple could charge $400 each for the glass panels, make a slight margin on hardware, and lock you into a wonderful new iTunes-like ecosystem that cracks open $144 billion in ad dollars and subscription fees.
Of course, those bloated cable bills and ad budgets might shrink, as Apple’s devices accelerate the consumer trend to pay for only what you care to watch. But you’re not in love with the cable company, are you?