Apple television not expected to 'break the bundle' from cable

Posted:
in iPod + iTunes + AppleTV edited January 2014
With opposition from content providers likely, Apple's rumored television set will not be able to cut out existing cable operators, and Apple will instead be forced to work with them, a new analysis predicts.

J.P. Morgan does not believe that Apple's anticipated television will arrive this year, nor do its analysts believe the debut of such a device will cause a major shake-up in how video content is delivered. The investment bank's position on a possible Apple television was expanded on in a second research note issued Thursday from analyst Phil Cusick, who does not think Apple will be able to "break the bundle" and push out cable operators.

An attempt to cut out pay TV operators, by relying on over-the-air television broadcasts in addition to iTunes and services like Netflix and Hulu, would be the most aggressive move Apple could make, Cusick said. But he doesn't think it's likely Apple will go down that road.

"We believe that media content owners have no incentive to allow this scenario to materialize and will block it," Cusick wrote in a note to investors provided to AppleInsider.

The analyst sees two other possible scenarios that Apple could use going forward with its Apple TV set-top box and the possibility of a full-fledged television set. First, he said Apple could attempt to become the set-top box option for cable companies, bringing together the broadcast content that customers already pay for with Web-based content like iTunes and Netflix.

"Apple would differentiate by adding a really nice guide to make the experience better, while the carrier could differentiate as the first (for some time, anyway) to have an Apple device," Cusick wrote.

In the other scenario offered, Cusick thinks it's most likely that Apple will slowly expand its current Apple TV "hobby," rather than attempt to make it a full-featured set-top box like TiVo.

HDTV


J.P. Morgan has advised investors that if Apple does make a television set, such a device is unlikely to arrive before 2014 at the earliest. But analyst Mark Moskowitz added that Apple's preference for double-digit operating margins on hardware could pose a problem in the cutthroat HDTV business, where margins are razor-thin.

Moskowitz said that if Apple did release its own television set, the company would differentiate its product through its attention to design, as well as picture quality that would be first-in-class.

Apple became widely believed to be working on its own full-fledged television set after company co-founder Steve Jobs told biographer Walter Isaacson that he felt he had "cracked" the secret to a simple and elegant television set. "It will have the simplest user interface you could imagine," he said. "I finally cracked it."
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Comments

  • Reply 1 of 35

    Quote:

    Originally Posted by AppleInsider View Post



    Moskowitz said that if Apple did release its own television set, the company would differentiate its product through its attention to design, as well as picture quality that would be first-in-class.

     


     


     


    Apple customers don't care about picture quality.   Picture and sound quality have never been big sellers.


     


    Its the UX, Stupid.  The UX.


     


    And if anybody has cracked the UX it is Apple.   


     


     


    I don't think that reliance on picture quality could possibly make up for the headache induced by most people's current setups. Mom can't figure out the dozen buttons that you need to push to get the sound of a DVD to actually come out of the Home Theater System.  Nobody knows which remote control to use to adjust the volume.


     


    Better picture quality don't fix it.  Its the UX, and there's no room for complex input choices.


     


    Apple will make it as simple to watch TV as they make it to buy a song on iTunes.

  • Reply 2 of 35
    tallest skiltallest skil Posts: 43,388member


    Ugh, this tripe.

  • Reply 3 of 35
    maecvsmaecvs Posts: 129member
    Then this product is dead on arrival. As I keep saying, without non-cable provider content, it's just another fancy monitor....
  • Reply 4 of 35
    tallest skiltallest skil Posts: 43,388member

    Quote:

    Originally Posted by Maecvs View Post

    Then this product is dead on arrival. As I keep saying, without non-cable provider content, it's just another fancy monitor....


     


    You just said what I was planning to go back and edit into my own post. Absolutely.

  • Reply 5 of 35
    applecationapplecation Posts: 147member
    They just don't get it. This will be just a television set like the iPhone is just a phone.

    People will pay a premium because it will do so many things beyond television, but is easy to use.
  • Reply 6 of 35
    pt123pt123 Posts: 696member


    No hurry. We all have TV's that will last for a while. Maybe by 2014, they will have changed the law to no longer require an ATSC tuner be built into each television set.

     

  • Reply 7 of 35
    physguyphysguy Posts: 920member


    This all sounds exactly analogous to all the arguments as to why Apple could never succeed in the mobile phone market and we all know how that turned out.  This type of analysis bodes very well for the success of an iPanel IMO.

  • Reply 8 of 35
    jeremymc7jeremymc7 Posts: 14member


    There is an option for Apple is to go out and buy their own content and with their hoards of money buy some of the popular content out from under the networks.


     


    Apple has a huge install base of iOS hand helds, AppleTV, and MAC OS devices.


     


    People will be driven to watch this content on Apple devices, this will not sit well with Advertisers or the Cable / Sat  provider's.


     


    Apple can then use the exclusive, in demand programming, and large install base as leverage to get access to the contracts, programming, and bundles to break up this bundle requirement.

  • Reply 9 of 35
    dasanman69dasanman69 Posts: 13,002member
    physguy wrote: »
    This all sounds exactly analogous to all the arguments as to why Apple could never succeed in the mobile phone market and we all know how that turned out.  This type of analysis bodes very well for the success of an iPanel IMO.

    Actually the arguments were correct, Apple made a bad phone, it was highly prone to dropping calls. Being a handheld computer is what got it going and something that SJ himself couldn't even see which is apps that propelled it where it is today. Here's the difference, while I own one phone, I own 4 TV sets, all of which have a cable box attached to. I never use the TVs UI but the cable box's. Unless Apple makes set top boxes or Cable Card TVs I can't see how a Apple can do well. As far as programming goes with Netflix, HULU, and on demand I'm good.
  • Reply 10 of 35
    gprovidagprovida Posts: 252member
    By the mystic powers of grey skull or astrology or. Yet another prediction on Apples plans. What a waste of space.
  • Reply 11 of 35
    applezillaapplezilla Posts: 941member


    Ugh. We're moving and leaving the 65" rear-projection Sony HDTV behind with a charity. 


     


    Looks like we'll have to buy a sub-$500 cheapo to use with our AppleTV for a while.


     


    I'm ignoring these rumors from now on.

  • Reply 12 of 35

    Quote:

    Originally Posted by JeremyMc7 View Post


    There is an option for Apple is to go out and buy their own content and with their hoards of money buy some of the popular content out from under the networks.



    Buy content?  They could afford to buy a network, eg. ABC, and they should.  And they should use it to leverage the hell out of the cable operators.

  • Reply 13 of 35
    emoelleremoeller Posts: 551member


    People are expecting a TV from Apple.   I don't believe that will happen.  The current AppleTV (v3) is about 50% of the way towards my vision of what an AppleTV should be.   Using Airplay it wirelessly streams content from my iPad/iPhone (iDevice) to my TV and I can also get content through iTunes via my WiFi network.   BUT it also allows anything on my iDevice to be mirrored onto the TV.  HBOGo is a perfect example of the future - this app has all of HBO's content online and available on demand (along with some special features that are not available on a cable service).  It wirelessly streams from the iDevice onto the TV in full HD with surround sound.  That kind of content combined with the content in iTunes makes the current AppleTV a very compelling internet TV experience now.   But what is it missing?


     


    1)  More content, particularly local TV stations, sports, specials, network TV and more movie channels.   Solution:   Apple provides a service to have all of this content converted and available on Apple's iCloud servers to anyone authorized by the content provider to see it worldwide..   For those content providers that want complete control (like HBO does now), then they can develop and distribute apps like HBOGo, which would provide the content over the internet.  But in this case the costs of hosting and providing all of that content falls on the content provider.  My bet is that Apple will figure out the economics and make such a iCloud service very cost effective.


     


    2)  User experience with multiple devices is fragmented.   Having a home stereo, TV, DVD, etc. all hooked up to the TV is cumbersome and difficult - most people don't ever use even 2% of the options that their "entertainment equipment" provides.   Solution:  Apple consolidates the various devices (remotes) and integrates them into a voice controlled master interface.  Think Siri for your entertainment center.  Talk to your iDevice and your entertainment system will obey.


     


    3)  Anywhere, anytime.   The current AppleTV works fine (as described above) if you have a WiFi setup.  But if you want to use Airplay and its mirroring functionality outside of a WiFi environment you are stuck (you can do it with an Airport Express to set up a WiFi hotspot but its cumbersome, as you have to download and run the Airport Utility on your iDevice - I know because I am in the process of doing this for a board of directors I work with who want to display their presentations from their iPad to a plasma TV in the boardroom).   Solution:   Build the router into the AppleTV and allow all devices (laptops, iDevices, cameras, etc.) to mirror to any TV/Display with an AppleTV attached.  A nice addition would be to allow the Apple TV router to be cellular compatible so that it could perform in remote locations.  This keeps the costs down (only an inexpensive AppleTV is needed to make any entertainment system or TV/display anywhere an instant portal to all digital content), but folks will flock to the Apple ecosystem and purchase all of the connecting devices.


     


    4)  Apps, apps, apps.   Going forward your entertainment system with an AppleTV will be both your office and your entertainment area.  With a laptop/iDevice and the WiFi enabled ad hoc network everything else can be wirelessly connected - printers (3d printers by that time), communications (think telephone, video conferencing, texting,, social media and all other forms of communications short of face to face meetings), all home or surrounding systems (think security systems, heating and air conditioning, lighting, "follow me" controls )whereby the user's iDevice will remember what is displaying in one room and automatically turn it on when traveling to another room), the TV/monitor will provide not only mirroring but a second screen when working on connected devices (think video editing and multi-program tasking).  Apps to answer questions (think Wolfram Alpha through Siri but with video and audio playback), stream content (both to and from your attached devices) 


     


     


    When Steve was quoted as saying he "cracked it" he was referring to both Siri and Airplay - together they provide the core technology going forward.  Those are both available now.   Once the above is completed then Apple's TV experience will be complete.  But as you see, none of that requires Apple to manufacture a TV!

  • Reply 14 of 35
    macinthe408macinthe408 Posts: 1,050member


    Replace 'TV' with 'cell phone' in this article and I will swear that I have already read it.


     


    I wouldn't believe an analyst even if he pointed at a circle and told me it was round. 

  • Reply 15 of 35


    Here's hoping they use liquid metal to create this behemoth so we don't end up having to buy industrial strength cranes to mount tvs to the wall. 

  • Reply 16 of 35

    Quote:

    Originally Posted by AppleZilla View Post


    Ugh. We're moving and leaving the 65" rear-projection Sony HDTV behind with a charity. 


     


    Looks like we'll have to buy a sub-$500 cheapo to use with our AppleTV for a while.


     


    I'm ignoring these rumors from now on.



     


     


    I don't see how any one of these three sentences makes any sense at all.


     


    Why a rear projection?  They are dim and don't work well off-axis.


     


    Why get a crappy TV when for just a little more you can get a great TV?


     


    Why ignore rumors of an Apple TV when you need a TV?

  • Reply 17 of 35
    anomeanome Posts: 1,487member


    So the point of this article (and the analyst's report) is that if the hypothetical Apple Television Set, which won't be out this year, was to come out, Apple would, hypothetically, have to strike a deal with the TV distributors.


     


    So, in other words "Nothing to see here, move along."


     


    So everyone talks about the new Apple product that they haven't even suggested they might announce, based on wild speculation. Usually vapourware requires unsubstantiated claims made by the manufacturer, but Apple doesn't have to bother with that.


     


    Next will be the release of a study by analysts that if Apple don't announce the mythical Apple Television soon, their stock price will collapse under its own gravity, heralding a new dark age.

  • Reply 18 of 35
    herbapouherbapou Posts: 2,227member

    Quote:

    Originally Posted by JeremyMc7 View Post


    There is an option for Apple is to go out and buy their own content and with their hoards of money buy some of the popular content out from under the networks.


     


    Apple has a huge install base of iOS hand helds, AppleTV, and MAC OS devices.


     


    People will be driven to watch this content on Apple devices, this will not sit well with Advertisers or the Cable / Sat  provider's.


     


    Apple can then use the exclusive, in demand programming, and large install base as leverage to get access to the contracts, programming, and bundles to break up this bundle requirement.



     


     


    Beside the content war, Apple absolutely must secure either cable providers or ISP'S to deliver the feeds. The problem is every major ISP's also offer TV bundles.   Apple is trying to get partners to deliver IPTV but you can't do it without the ISP's.  So the negotiations are raging over VOD. Apple has given up live TV and is trying to share video on demand revenue with the ISP's. The last info I have on this is comcast turn them down, either AT&T and Verizon are onboard because it will give them an edge to steal subscribers from cable to IPTV. The negotiations are far from over, but its looking like Apple is going to side with the land lines telephone companies and they will try to steal the cable co. subscribers with a better offer both on TV bundle and on hardware, resulting in a better user experience.


     


    Apple is also trying to use the subsidies business model for TV's, just like in the iPhone maker.

  • Reply 19 of 35
    dasanman69dasanman69 Posts: 13,002member
    herbapou wrote: »

    Beside the content war, Apple absolutely must secure either cable providers or ISP'S to deliver the feeds. The problem is every major ISP's also offer TV bundles.   Apple is trying to get partners to deliver IPTV but you can't do it without the ISP's.  So the negotiations are raging over VOD. Apple has given up live TV and is trying to share video on demand revenue with the ISP's. The last info I have on this is comcast turn them down, either AT&T and Verizon are onboard because it will give them an edge to steal subscribers from cable to IPTV. The negotiations are far from over, but its looking like Apple is going to side with the land lines telephone companies and they will try to steal the cable co. subscribers with a better offer both on TV bundle and on hardware, resulting in a better user experience.

    Apple is also trying to use the subsidies business model for TV's, just like in the iPhone maker.

    With FiOS, Verizon is doing a perfectly good job of stealing customers from cable companies.
  • Reply 20 of 35
    herbapouherbapou Posts: 2,227member

    Quote:

    Originally Posted by dasanman69 View Post





    With FiOS, Verizon is doing a perfectly good job of stealing customers from cable companies.


     


    FiOS and U-verse are great compare to cable indeed.  But using iOS which is a broader OS would enhance the experience, especially regarding apps and things like airplay.  I don't know about VZ, but I can tell you that other DSL companies are trying to make both iOS and there current OS run with the IPTV architecture on the same network. Its doable and that will allow to offer multiple OS ecosystems so that ISP'S are not committed to a single ecosystem. That will also allow to deploy Apple Tv's without impacting existing customers. Apple wants to close down the network to be exclusive, but the ISP's don't want that. Maybe some will do it for a limited time, negotiating with Apple is no picnic. 


     


    The cellular and TV distribution business models are about to merge into something more like the wireless world, with subsidies and everything.  In that world the companies that already have both wireless and landlines will have an hedge. Apple is going to invade that market and turn it upside down, but not like most people expects it. I know everyone wants Apple to become a live TV provider over the net and bypass the ISP's, but it will never happen.

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