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1/With apologies for another long thread (feel free to mute!), I found myself asking myself more questions about Apple this morning. Here are my thoughts on “Should Apple Make a TV?” (1-23)
2/There was a time when Steve Jobs flirted with building a TV. Not an add-on device (a la the current Apple TV add-on), but an actual television. Eventually, the company abandoned the idea.
3/This was the right decision for that era. 10 years ago, Apple was a luxury device maker – selling highly differentiated, beautifully designed products at a premium price. Televisions, meanwhile, were low-margin commodities – “dumb boxes.”
4/Today, as they make the hard lean into services, perhaps Apple should reevaluate. First, televisions aren’t so dumb anymore; increasingly Samsung/Sony/etc are shipping “smart tvs” with Android/Tizen/etc operating systems.
5/I’ve tried a variety of these machines and the user experience is extremely clunky and navigating all of the various apps (Hulu, Youtube, HBO) is a bit of nightmare. Another hassle: you have to plug other devices into them—cable box, Fire TV stick, etc.
6/Also: An entire generation is desperate to cut the cord from their cable co’s if they haven't done so already.
7/This creates an opportunity for Apple to ship a fully integrated TV that assumes no cable box and requires no other add-on devices—no roku, no amazon TV stick, no nothing. Just plug it in and you’re ready to go.
8/It should be: (1) drop dead gorgeous; (2) w magnificent interface/ease of use; (3) remote controlled by your iPhone; (4) and doubling as a full mirroring device for your iPhone – meaning it becomes a fun 2nd screen when you’re browsing your phone while sitting on the couch.
9/Of course it should offer access to Apple produced content, but also make it super easy to manage your subscriptions to HBO and other services. But that's just the beginning.
10/It could have all kinds of neat settings. You could watch a movie in “Do Not Disturb” mode. Alternatively, you could set it to automatically pause a movie when you get text, pop the text onto the big screen so you can quickly respond (using your phone).
11/It could sync with your Airpods, so you could watch your shows with the volume up without disturbing your neighbors (or your spouse:))
12/It could enable an easy way to split the screen so you could watch a movie on the left, while scrolling through Twitter on the right.
13/In other words, it would be a magnificent TV platform that is fully integrated with the television itself. This is what Apple historically has done best: integrate hardware + platform in a beautiful user experience.
14/Yes, I realize this is not rocket science, nor is it a particularly original idea. But I for one am hungry for someone to reimagine the consumer viewing XP. Right now, navigating all of those video apps/boxes is a real pain. Managing multiple subscriptions is even more so.
15/What Apple presented last week was so half-hearted. Are they moving away from developing great products? Are they competing against Netflix/Disney now? From a user experience perspective, Apple’s half-hearted solution seemed to create as many new problems as it solved.
16/Apple should be all-in on the premise that it (1) develops amazing hardware (2) with fully integrated consumer platforms packed “wow” features (3) that give you access to the best list of partners in the world—including netflix, disney, etc.
17/Now let’s talk economics. How much would you pay for a TV with a drop-dead gorgeous Jonathan Ive-created aesthetic, wow features, something that looks like a piece of art on your wall and doesn’t require any add-on dongles/boxes? Would you pay a premium? I know I would.
18/The average American household has 2.8 televisions. Most upper-middle income households splurge on at least one (if not 2) big flatscreen televisions at a price point close to a thousand bucks.
19/The avg profit margin on a tv is ~10% for supplier, plus 5-10% for retailer. Apple could sell at 20-30% premium, all direct (no retailer cut). Imagine a $1200 price pt w a $200 profit cut for Apple, not unrealistic. If they sold 50m of these-> $60b in rev, $10b in profit.
20/Also, the lifecycle of TVs is much longer than it is for smartphones. Most households keeps their TVs for 5 years. The real profit opportunity is from the lock-in on service revenue.
21/Apple has already shown that is capable of using premium, highly-differentiated products to create lock in on service. (This is the Peloton model.)
22/The key is Apple would have to create a drool-worthy, stunningly beautiful product, one that inspires its customer base to treat this is a “must-have” piece of their household ecosystem. They’ve done this before; can they do it again?
23/Maybe this is all a bad idea. I’ve had many bad ideas in my life. But as I watched a movie with my husband last night, this was what was running through my head. /END
