Is Apple TV really dead?

Recently, WSJ reported that Apple terminated its TV plan. In response, Jan Dawson wrote that Apple's TV plan itself is meaningless. So it is a "good death". The original article was published in Market Watch , with the original title: Why an Apple television (mostly) doesn't make sense, compiled by Sina Technology and proofread by Huxiu. The full text is as follows:

It seems that some Apple sources tipped off Daisuke Wakabayashi of the Wall Street Journal, who wrote the report that Apple was no longer interested in TV products.

At least, I'm not surprised by this. I've never thought this plan made sense, and I've said this more than once in articles and interviews over the past few years. This may seem like a strange time to say this, but I thought I'd better explain why I think this and give some practical reasons.

Profits are too low, motivation is insufficient

If Apple does make a TV, we can assume a few things: They will use similar high-end materials as the company's current products, and they will want to keep margins consistent with their existing products. But here comes the challenge. Apple will have a very limited production scale when it starts, and won't benefit from the economies of scale of existing TV manufacturers, but even these existing manufacturers have razor-thin margins.

Consumer electronics is a low-margin business, and it’s only going to get lower. Even for those companies that are still profitable, single-digit operating margins are the norm. If Apple wants to get involved, the cost of its products will inevitably increase significantly due to the use of more expensive raw materials and its smaller scale, and it will be difficult for Apple to give up its accustomed super-profits, which will make their TVs at least twice as expensive as ordinary TVs, or even higher. Of course, it must be admitted that we are more or less accustomed to Apple’s style in some similar products: Apple’s 27-inch Thunderbolt display retails for $999, while Dell’s similar product costs $599, Asus’s $430, and other low-end brands are even cheaper. (It should be noted that I have not mentioned the rise of 4K TVs, which will greatly amplify all of the above problems and make Apple TV pricing even more outrageous.)

So why can't Apple replicate its success in displays in the TV market? I think this brings us to the topic of differentiation. Apple's displays, at least to some extent, are different from other displays in terms of materials and appearance. Needless to say, the presence of the Apple logo is also a clear signal to the user and those around him that this is a high-end product. When customers and others see it, this itself conveys an important message about what kind of work the user does and what they use to work.

But we have to understand what television is and how it has evolved. These products are either mounted on the wall, stand next to the wall, or are hidden in the closet most of the time. The borders are reduced to the point where they can no longer be reduced, or even disappear. The logo that always appeared at the bottom of the screen is destined to disappear with the border. To a large extent, this TV is destined to become another black rectangle in our lives that are already full of black rectangles, that's all. This time, how can Apple show the difference of their hardware? Can they turn back the wheel of history and make the border appear again? Will consumers pay attention to whether the material of the border is aluminum alloy or black plastic? Even if they notice it, do they care? The evolution of TV hardware, the current trend is to make everything except the screen disappear as much as possible, which seems to be unApple's style.

So, how can Apple convince consumers not to spend half the price, or even less, on a competitor's product when the hardware differences are largely invisible? One option, of course, is to add extra features, like a camera and microphone for video calls, and a microphone that allows Siri to come to the TV. The problem is that these have been tried and failed. We use more personal devices for video calls, no problem, but who can convince their family to pay a premium for a TV just because it has the function of a video phone? From Wakabayashi's article, it seems that Apple has really tried this, but apparently, they have come to the same conclusion as me.

Since we emphasize differentiation, we might as well make a good Apple TV set-top box

Another way Apple wants to differentiate its products from ordinary TVs is through software. As we all know, many of Apple's competitors' products are not inferior in terms of hardware, but Apple's software is obviously easier to use. So, can Apple's TV stand out by relying on software?

The key point here is not that Apple can't do it, but that if all the differences are in the software, then why doesn't Apple keep it simple and just continue to make their Apple TV set-top box? Or to put it more simply, the product difference here is not between Apple's TV and other manufacturers' TVs, but between Apple's own TV and its companion box.

The biggest challenge when it comes to Apple TV and other new-generation companion boxes versus traditional pay-TV set-top boxes is that for many consumers, neither option is enough to meet all their needs. Today's TVs are equipped with more and more HDMI ports to connect to the increasing number of input signals that every person or family wants to connect: pay-TV set-top boxes, Blu-ray players, game consoles, streaming boxes or sticks, and so on. In such a world, it seems that an Apple TV can really manage all these inputs better than a regular companion box.

But why couldn't Apple choose another approach and solve this problem with just one HDMI port? Why couldn't Apple just occupy HDMI1 and convince users to give up all the cables that were once plugged into their TVs?

In fact, this is exactly the strategy I expect Apple to adopt and continue to adopt in the future, that is, to continuously improve the Apple TV companion box and the corresponding services. In this case, the difference between an Apple-made TV and a third-party TV with an upgraded Apple TV companion box will actually be very limited. If there must be a difference, it may be whether there is one or two remote controls, and whether there is a function such as Siri integration. However, even this difference can be solved sooner or later with the continuous improvement of the companion box.

Potential market size

The third important reason why Apple should focus on developing Apple TV companion boxes instead of developing TVs is the target market. If Apple wants to sell its own TVs, it must find people who are willing to give up their current TVs and pay a much higher price to buy Apple products. Obviously, there won't be many such people. However, the price of the Apple TV companion box is much lower, and the potential market is much larger - any consumer with a high-definition TV can easily understand the value of the Apple service experience. We also need to understand that the revenue potential of Apple TV services depends to a large extent on the sales of the companion box. The combination of the two is obviously much more attractive to Apple than a TV. We also need to take into account the hardware upgrade cycle of TVs. Generally speaking, we usually buy a TV every five to ten years, while the revenue of the companion box service is generated every month. Is it necessary to choose which one?

The opposing view: It’s OK to satisfy Apple fans

I have already spent quite a bit of space discussing why Apple doesn’t need to make televisions, but I am by no means a paranoid person. Below, I will briefly introduce some different viewpoints that argue that even with the aforementioned obstacles, it still makes sense for Apple to make its own televisions.

--Control and integration: Apple's standard product development model is that hardware and software go hand in hand to create a complete, end-to-end experience. The current Apple TV companion box is clearly contrary to their tradition because the TV that is combined with it is from a third party and is someone else's brand. An Apple-owned TV helps to form a more complete system, integrating hardware, software and services into one, creating a standard Apple product.

- Satisfy Apple fans: The fact is that Apple does have a group of the most loyal users. Although they may have Samsung TVs in their bedrooms, deep down, they regard Samsung as an inferior brand. For these consumers who are used to buying high-end, well-designed hardware products that connect seamlessly with each other, it really makes them crazy to have such a conspicuous and annoying thing in their homes. Providing these Apple fans with Apple's own TV hardware products is also an attractive option. There is no doubt that even if the overall sales volume will not be large, there will definitely be consumers willing to pay a high price for Apple TV.

- The need to compete: When Apple only makes companion boxes, they are essentially no different from any other box manufacturer, and have no control or bargaining power. With the increasing intelligence of pay TV set-top boxes and even TVs themselves, Apple TV does run the risk of being gradually squeezed out. However, if Apple changes the entire system from scratch and launches its own TV, it will suddenly have its own say. For example, they can bargain with pay TV content providers to change the way their programs appear on TV.

-- A noticeable difference: The Apple TV companion box has a very noticeable feature, that is, it is the only Apple product that uses black plastic instead of expensive metal materials for the shell. The reason is simple, because this box is much cheaper than other Apple products, and most of the time it will be hidden in a closet or TV cabinet, especially when not in use. However, the TV itself is another matter, which will make Apple's brand shine in the living room.

Regardless, I think these are still competing with the obstacles I listed above, but these are at least reasonable motivations. As time evolves, perhaps the above mentioned obstacles may change, disappear, and Apple will pick up the idea of ​​building its own TV again, but at least for now, I still believe that Apple gave up and made the right decision.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.