Apple Inc. (NASDAQ:AAPL) often cloaks its operations in mystery, which provides analysts both amateur and professional with ample room to make sweeping predictions that seldom come true in reality. In the case of Apple’s involvement with television manufacture, however, rumors cut both ways just as strongly. Some analysts firmly declare that the Cupertino enterprise will never produce a full-sized television set, while others are just as convinced that such a device is on the brink of a dramatic and triumphant release.
Steve Jobs was opposed to any effort on Apple Inc.’s (AAPL) part to manufacture a television, according to the recent book “Haunted Empire: Apple After Steve Jobs” by Yukari Kane. Mr. Jobs maintained that television sets were a very poor business for an electronics company to get into, due to their low turnover. Televisions, he said, are replaced at intervals four times longer than smartphones, meaning that the typical buyer of a hypothetical iTelevision would not purchase another for eight years on average. This was too long to generate the steady, high profits Mr. Jobs envisioned for his firm.
Nevertheless, Mr. Jobs backpedaled shortly before his death, and stated to his biographer that he would like to make a television. Since then, “imminent” iTelevision releases have been predicted, often with great enthusiasm, by some of the best analytical minds in the business today. Nevertheless, the device has stubbornly refused to materialize, and each new prediction withers and is forgotten as the months continue to pass with no full-sized Apple television announced.
The Apple TV remains as part of the California company’s product lineup, of course, though this is a compact digital media player which enables play of iTunes, Netflix, YouTube, and various other services through an Apple interface. Currently in its third generation, the device generates a total of around $1 billion in sales out of Apple Inc.’s (AAPL) annual haul of approximately $171 billion, or slightly less than 0.6 percent of revenue. Since this means 99.4 percent of Apple’s profit comes from non-television related products, the current volume generated by Apple TV is scant incentive to boldly launch into this new potential market.
Ideas such as a touchscreen remote for the 4th generation Apple TV might boost sales a bit, but they would be unlikely to even double earnings from the device, meaning that 1.2 percent of Apple’s overall sales would be an extremely optimistic figure to result from such a move.
Figures from the Consumer Electronics Association show a television market that is hardly tempting to a new entrant, no matter how powerful. Prices are steadily declining, falling to an average $495 over the five years ending in 2013, from $904 at the start of the period. Additionally, Samsung, LG, and other firms are already well established in the television world and have made it their fief. Apple would be the interloper, attempting to gain a foothold in a market where it lacks experience and allied companies alike.
In light of all these considerations, it seems likely that Apple Inc. (AAPL) will opt for a cautious policy of “wait and see.” The firm can maintain a presence in television-related products by continuing to upgrade and update the Apple TV device. Then, if a perfect confluence of circumstances ever comes together which suggests the market will reward them amply When or if that day will ever arrive remains unclear, however, and as a result it seems likely that Apple will continue to wait, leaving development of a full-sized television to an indeterminate point in the future. Such a project may be in the cards someday, but it probably is not today.
