... with reports suggesting that content providers have been hesitant to exclude some of their channels from a "skinny" bundle costing less than $30 per month. ...
For me, a better viewing experience is more important than lower cost. I'd gladly pay Apple what I'm currently paying for DirecTV, but only without the channel-clutter and horrendous UI. Not to mention the annoying software glitches (can't record favorite teams' games automatically any more, etc.)
I keep reading blogs and forum posts about "lower costs" from unbundling. But that's not the point IMHO. It's about convenience and a streamlined UI across all Apple devices.
These are the stories that scare me. If Apple ever buys a media giant, this long term shareholder will sell out. If Apple leadership loses focus and forgets what Apple does best, great experiences with consumer electronics, then it's time to move on.
Sony did exactly the same move, they bought Columbia Pictures/Columbia Music. They went from being an advocate for users of consumer electronics to a jealous guardian of their precious content. The result: they made a terrible mp3 player and opened the door for a new company laser focused on consumer electronics to come in and destroy them.
Apple Music is a toe in the water of content and every time I see Apple spending time on content instead of making great hardware and software, I am worried that the end has already begun.
Apple sells great experiences with consumer electronics. When they forget that, they are finished as the cutting edge company they have been for the past 18 years.
man, if only the long-time execs at Apple knew how they got the company to be so great and were aware of the popular wisdom found only deep within niche rumor sites....i pray for these guys!! email them, now!
Is this really your way of contributing to the conversation?
These are the stories that scare me. If Apple ever buys a media giant, this long term shareholder will sell out. If Apple leadership loses focus and forgets what Apple does best, great experiences with consumer electronics, then it's time to move on.
Sony did exactly the same move, they bought Columbia Pictures/Columbia Music. They went from being an advocate for users of consumer electronics to a jealous guardian of their precious content. The result: they made a terrible mp3 player and opened the door for a new company laser focused on consumer electronics to come in and destroy them.
Apple Music is a toe in the water of content and every time I see Apple spending time on content instead of making great hardware and software, I am worried that the end has already begun.
Apple sells great experiences with consumer electronics. When they forget that, they are finished as the cutting edge company they have been for the past 18 years.
Totally agree but I don't believe Cook has the vision to keep extending Consumer electronics.
As much as we fans would like to see iOS device sales continue to grow exponentially common sense tells us that that cannot happen. The problem is determining what the next big thing is going to be in order to diversify. Artificial Intelligence? Maybe. Virtual Reality? Blathering nonsense. Autonomous automobiles? Could be. Software and services? Probably. Personally I see the hardware business becoming less and less profitable as miniaturization and automation lower production costs and margins greatly. When everybody can produce the same great hardware for the same cost there goes profit. I think Apple’s executive team is feeling more and more pressure every day to use that cash hoard for something.
Your last sentence is what concerns me. Apple shouldn't make big acquisitions because Cook is feeling pressure to spend some of Apple's cash.
It's better not to think of acquisitions with the term 'spend' as it's not a depreciating asset like a consumable, it's expected to be an appreciating asset like any investment. You exchange cash for ownership shares and you then own the profit the company continues to make. If you, for example, exchange $3b for a headphone company and it generates a profit of $300m/year for 10 years, you have spent nothing. If it continues to earn that and leads to increased sales of other products then it has actually grown the company's income.
Apple has put over $100 billion into their buybacks and dissolved the shares. Dissolving shares isn't investing in themselves, it's buying out existing shareholders and giving remaining shareholders a larger ownership share of Apple's income. This doesn't do anything to grow the company income.
Apple's value is heavily dependent on the iPhone. Around half the world's population (3.5 billion people) can afford a smartphone. Apple is in the premium segment so worldwide they aren't going to get over 50% marketshare. People don't all upgrade their phones every year. Apple has 1 billion active devices and sold 230m iPhones last year. Apple logs full device sales but end users spread the costs over contracts. Say that people spend $300/year on an iPhone and upgrade every 2 years. If Apple aims for 30% marketshare, this peak would generate 3.5b people x 30% marketshare x $300/year = $315b/year. Last year they made $155b from the iPhone.
They can probably get some of the way closer to that amount but the larger volumes are at lower price points, which makes it harder to keep the revenue up. The hardware has reached a point where S-model upgrades aren't growing the units. They are at least sustaining the volumes though and Apple's upgrade program will help here. There are a few big features they can adopt to grow the sales over another couple of iPhone iterations but there's an inherent growth limit to any market.
To grow the company long-term, it needs investment in other categories. The big growths for Apple have come from tackling new product categories with single products. By revenue, one of the next biggest categories is in the automobile industry and we know that's being worked on.
Apple's service revenue just now is 8.5% of their overall revenue vs 91.5% product. Growing hardware alone would only grow services by 1/10th if it's only an extension of the hardware. Standalone service revenue that is multi-platform can bring in more as long as it doesn't encourage users to migrate platform. It doesn't matter if new acquisitions remain multi-platform as they already are.
Time Warner made $28b revenue last year ($10.5b Turner, $5.6b HBO, $12.9b Warner Bros) Turner = $5.3b subscription, $4.6b advertising, income $4b HBO = $4.7b subscription, income $1.8b Warner Bros = $5.1b movies, $5.6b TV, $2.2b games (Batman, Harry Potter, Mortal Kombat, LEGO, Shadow of Mordor), income $1.4b
$60b is a lot to pay but it's a profitable company. One thing that looks odd is the $27b goodwill they record in their assets. That's half their company valuation and it can lead to very large and sudden recorded losses:
I don't think this kind of acquisition would be something unmanageable, it's not as if people like Eddy Cue have to micromanage everything that happens. It's a business full of managers that can run it just as they do right now. It means Apple can do things like offer content subscriptions that work worldwide on the Apple TV box and they can do merged subscriptions like music plus TV/movies and they can make sure that decent games get made for their platform.
Apple is going to burn massive amounts of cash one way or another. Right now they are using it to dissolve shares. I don't think acquisitions like this would be worse and it would add value to their hardware.
Although Disney seems like a better fit for Apple, they have a much higher market cap. One thing for certain is that the movie/games/TV industry is here to stay for the long term and I think it makes sense for a digital platform company to be into digital content in some way.
Eddy Cue, Apple's head of internet software and services, raised the idea of his company buying Time Warner in talks with the media giant late last year, a report said on Thursday.
Unwise. You do not want a money-sucking content generator mixed in with your money-making services. This has never worked once. What would happen is that Apple would buy Time Warner, and then Time Warner would find ways to suck away all of Apple's value with garbage films. Generating content is a risk, it's always a risk.
It would make far more sense to Apple to build a new Pixar if they really wanted to generate content, but then again it would make more sense for Apple to buy Nintendo if they really wanted to acquire content properties that have yet to be turned into films and cartoons. See where I'm going there? Apple buy Nintendo, create a new "Pixar" and create new 2D/3D films based on Nintendo properties, leaving Nintendo alone to continue to produce software for it's own Nintendo hardware and Apple hardware.
If anything, Apple would be better off buying out HBO's entire content library and making it exclusive to iTunes/AppleTV globally just to give it negotiation leverage over other global cable networks for their content while keeping HBO Now as a stand-alone service. Without content as leverage, all the cable companies who also own content can just refuse to negotiate at all.
- Push to solve the H.265 codec issue (which despite claims here by many is likely the reason for not having 4K support on Apple TV). Then get all of the iTunes content encoded in this for both lower BW HD and to support 4K for many more homes.
The reason H.265 isn't used has more to do with no encoding hardware exists. a 4K H.264 video can be played back on all existing high-end hardware, and can also be encoded by all existing high-end hardware in real time in software. H.265 can not, and the licencing is prohibitive "0.5% of content owner revenue" prohibitive. It's better to just wait out the patents for 20 years or use something else. The only people who benefit from H.265 right now are traditional OTA, satellite, cable broadcasts that broadcast channels instead of VOD streams (Eg netflix) and multicast streams (eg Microsoft/Ericsson MediaRoom) which can still be pushed as H264
The reason this did not go anywhere is the simple fact if Apple bought Time Warner they would not have been able to do any deals with any of the other content owners like Comcast. Other content owner would have saw Apple as treat in this sandbox and most likely they could not have stop the buy from going through like Comcast being blocked from buying Time Warner.
When the rumors of Apple and Time Warner working together, it was believe in the industry that Apple was trying work a deal with Time Warner to stream their license content via a ATV box, this would have given Time Warner immediate access to consumer who they could not reach via their traditional cable operations, they could sell content to people all over the US as long as they had an ATV and broadband access. It was also believe Comcast decide to buy them to stop the conversation between Time Warner and Apple, which it did shut it down. I worked in the Cable TV industry and Time Warner was trying to figure out how to stream content to customer at the time this was all going down.
When everybody can produce the same great hardware for the same cost there goes profit.
Aren't you forgetting its Apple's integration of software & services with the great hardware is why they can charge the premium $$$? Can anyone make great hardware? Sure. Will they? There will always be cheap junk. I think Apple will be able to bring that same integration and sophistication to any market they enter. Just because hardware gets easier and cheaper to make, doesn't make it great.
funny, Time Warner buys AOL and destroys it, now Apple considers buying Time Warner. For the billions it would cost Apple to do this, they might be more successful putting that money into standing up their own studio and/or creating their own original content.
AOL bought Time Warner, not the other way around. Also, I'm not gonna say the merger wasn't a terrible idea, but it wasn't solely responsible for destroying AOL; the writing was pretty much on the wall for them. AOL's business plan was based on selling dial-up subscriptions just as broadband was starting to take off. Plus, the dot-com bubble was about to burst. They were screwed no matter what they did at that point.
Of course, buying TW certainly didn't help, and probably made things a lot worse, but it's not like AOL would have been peachy if they hadn't done it.
These are the stories that scare me. If Apple ever buys a media giant, this long term shareholder will sell out. If Apple leadership loses focus and forgets what Apple does best, great experiences with consumer electronics, then it's time to move on.
Sony did exactly the same move, they bought Columbia Pictures/Columbia Music. They went from being an advocate for users of consumer electronics to a jealous guardian of their precious content. The result: they made a terrible mp3 player and opened the door for a new company laser focused on consumer electronics to come in and destroy them.
Apple Music is a toe in the water of content and every time I see Apple spending time on content instead of making great hardware and software, I am worried that the end has already begun.
Apple sells great experiences with consumer electronics. When they forget that, they are finished as the cutting edge company they have been for the past 18 years.
You can't have a great experience with consumer electronics without content. And as people realize that they don't need to upgrade every year as the hardware matures (I'm writing this on a late-2008 MBP), Apple needs other revenue streams and content subscriptions could be one of them.
Besides, are you then stating that Apple should absolutely not produce an Apple Car? Because an Apple car is definitely not something I would classify as consumer electronics.
I'm not saying I would support a buy of TW by Apple or even that I think Apple should produce a car. But Apple has to evolve just as it evolved from being primarily a computer company to a smartphone company. In 20 years, I believe Apple is going to be an AI and robotics company.
Easier to buy the whole thing and spin off what Apple doesn't want.
The spinning off would be impossible. Who would buy the bits Apple didn't want?
No it wouldn't. TW has already spun off TW Cable, publishing and some other units. Ted Turner bought MGM (more than once I think), sold it but kept the library. There are lots of pieces that Apple could sell if they didn't want. As per my previous post, CBS would probably be happy to buy TW's share of the CW network. Disney would probably kill to get D.C. Comics as long as it came with all the ancillary rights to produce future movies. If Apple didn't want the cable networks (although I think they'd want to keep them to stream them), I'm sure they would find buyers, except for TCM, which is a great channel, but there's virtually no revenue model since there's no advertising and it gets a very small fee from the MSOs. TW has studios in both Burbank and Atlanta and Apple could sell one or both. In fact, in Atlanta, there's a downtown building where CNN is and a campus a bit north. And there's probably lots of other stuff of which I'm unaware. They also have substantial office space in NYC, but I don't know if they own it or lease it. Etc. In fact, with most companies, the pieces are usually worth more than the whole. That's why investors come in and break companies up.
Your last sentence is what concerns me. Apple shouldn't make big acquisitions because Cook is feeling pressure to spend some of Apple's cash.
how on earth do either of you know what Cook feels pressured to do? are you his therapist? a confidant? you're just a guy from MN on a rumor site, right?? so confused....
Apple sells great experiences with consumer electronics. When they forget that, they are finished as the cutting edge company they have been for the past 18 years.
You can't have a great experience with consumer electronics without content. And as people realize that they don't need to upgrade every year as the hardware matures (I'm writing this on a late-2008 MBP), Apple needs other revenue streams and content subscriptions could be one of them.
Besides, are you then stating that Apple should absolutely not produce an Apple Car? Because an Apple car is definitely not something I would classify as consumer electronics.
I'm not saying I would support a buy of TW by Apple or even that I think Apple should produce a car. But Apple has to evolve just as it evolved from being primarily a computer company to a smartphone company. In 20 years, I believe Apple is going to be an AI and robotics company.
I agree that content is needed. My point is that if Apple ever starts to produce it, they will have lost their focus and it will be time to move on.
I certainly do agree that Apple must continue to evolve. I think that an Apple Car is a good idea. It is a move that both keeps them in an area of their strength, manufacturing and customer experience with electronics. An iPhone wasn't exactly a computer and a car isn't exactly consumer electronics but many of the skills and strengths of Apple would be extremely applicable there. AI and robotics would also make sense to me as long as they don't invent Skynet.
Comments
Which would make it much harder to cut deals with other media companies now and forever.
For me, a better viewing experience is more important than lower cost.
I'd gladly pay Apple what I'm currently paying for DirecTV, but only without the channel-clutter and horrendous UI.
Not to mention the annoying software glitches (can't record favorite teams' games automatically any more, etc.)
I keep reading blogs and forum posts about "lower costs" from unbundling.
But that's not the point IMHO. It's about convenience and a streamlined UI across all Apple devices.
Apple has put over $100 billion into their buybacks and dissolved the shares. Dissolving shares isn't investing in themselves, it's buying out existing shareholders and giving remaining shareholders a larger ownership share of Apple's income. This doesn't do anything to grow the company income.
Apple's value is heavily dependent on the iPhone. Around half the world's population (3.5 billion people) can afford a smartphone. Apple is in the premium segment so worldwide they aren't going to get over 50% marketshare. People don't all upgrade their phones every year. Apple has 1 billion active devices and sold 230m iPhones last year. Apple logs full device sales but end users spread the costs over contracts. Say that people spend $300/year on an iPhone and upgrade every 2 years. If Apple aims for 30% marketshare, this peak would generate 3.5b people x 30% marketshare x $300/year = $315b/year. Last year they made $155b from the iPhone.
They can probably get some of the way closer to that amount but the larger volumes are at lower price points, which makes it harder to keep the revenue up. The hardware has reached a point where S-model upgrades aren't growing the units. They are at least sustaining the volumes though and Apple's upgrade program will help here. There are a few big features they can adopt to grow the sales over another couple of iPhone iterations but there's an inherent growth limit to any market.
To grow the company long-term, it needs investment in other categories. The big growths for Apple have come from tackling new product categories with single products. By revenue, one of the next biggest categories is in the automobile industry and we know that's being worked on.
Apple's service revenue just now is 8.5% of their overall revenue vs 91.5% product. Growing hardware alone would only grow services by 1/10th if it's only an extension of the hardware. Standalone service revenue that is multi-platform can bring in more as long as it doesn't encourage users to migrate platform. It doesn't matter if new acquisitions remain multi-platform as they already are.
Time Warner made $28b revenue last year ($10.5b Turner, $5.6b HBO, $12.9b Warner Bros)
Turner = $5.3b subscription, $4.6b advertising, income $4b
HBO = $4.7b subscription, income $1.8b
Warner Bros = $5.1b movies, $5.6b TV, $2.2b games (Batman, Harry Potter, Mortal Kombat, LEGO, Shadow of Mordor), income $1.4b
http://www.bloomberg.com/news/articles/2015-09-21/how-warner-bros-battled-its-way-to-no-1-in-video-games
Net income was ~$3.8b/year for the last 3 years.
$60b is a lot to pay but it's a profitable company. One thing that looks odd is the $27b goodwill they record in their assets. That's half their company valuation and it can lead to very large and sudden recorded losses:
http://www.wsj.com/articles/SB1043702683178461304
I don't think this kind of acquisition would be something unmanageable, it's not as if people like Eddy Cue have to micromanage everything that happens. It's a business full of managers that can run it just as they do right now. It means Apple can do things like offer content subscriptions that work worldwide on the Apple TV box and they can do merged subscriptions like music plus TV/movies and they can make sure that decent games get made for their platform.
Apple is going to burn massive amounts of cash one way or another. Right now they are using it to dissolve shares. I don't think acquisitions like this would be worse and it would add value to their hardware.
Although Disney seems like a better fit for Apple, they have a much higher market cap. One thing for certain is that the movie/games/TV industry is here to stay for the long term and I think it makes sense for a digital platform company to be into digital content in some way.
Unwise. You do not want a money-sucking content generator mixed in with your money-making services. This has never worked once. What would happen is that Apple would buy Time Warner, and then Time Warner would find ways to suck away all of Apple's value with garbage films. Generating content is a risk, it's always a risk.
It would make far more sense to Apple to build a new Pixar if they really wanted to generate content, but then again it would make more sense for Apple to buy Nintendo if they really wanted to acquire content properties that have yet to be turned into films and cartoons. See where I'm going there? Apple buy Nintendo, create a new "Pixar" and create new 2D/3D films based on Nintendo properties, leaving Nintendo alone to continue to produce software for it's own Nintendo hardware and Apple hardware.
If anything, Apple would be better off buying out HBO's entire content library and making it exclusive to iTunes/AppleTV globally just to give it negotiation leverage over other global cable networks for their content while keeping HBO Now as a stand-alone service. Without content as leverage, all the cable companies who also own content can just refuse to negotiate at all.
The reason H.265 isn't used has more to do with no encoding hardware exists. a 4K H.264 video can be played back on all existing high-end hardware, and can also be encoded by all existing high-end hardware in real time in software. H.265 can not, and the licencing is prohibitive "0.5% of content owner revenue" prohibitive. It's better to just wait out the patents for 20 years or use something else. The only people who benefit from H.265 right now are traditional OTA, satellite, cable broadcasts that broadcast channels instead of VOD streams (Eg netflix) and multicast streams (eg Microsoft/Ericsson MediaRoom) which can still be pushed as H264
What is going to happen is sometime in the next few years is that the h264 codec holders will squeeze out every last penny they can as the patents expire and the hardware manufacturers will not want to pay twice (once for h264 and again for h265.)
http://www.guru3d.com/news-story/licenses-for-the-hevc-videcodec-become-cheaper-yet-its-too-late.html
The reason this did not go anywhere is the simple fact if Apple bought Time Warner they would not have been able to do any deals with any of the other content owners like Comcast. Other content owner would have saw Apple as treat in this sandbox and most likely they could not have stop the buy from going through like Comcast being blocked from buying Time Warner.
When the rumors of Apple and Time Warner working together, it was believe in the industry that Apple was trying work a deal with Time Warner to stream their license content via a ATV box, this would have given Time Warner immediate access to consumer who they could not reach via their traditional cable operations, they could sell content to people all over the US as long as they had an ATV and broadband access. It was also believe Comcast decide to buy them to stop the conversation between Time Warner and Apple, which it did shut it down. I worked in the Cable TV industry and Time Warner was trying to figure out how to stream content to customer at the time this was all going down.
Of course, buying TW certainly didn't help, and probably made things a lot worse, but it's not like AOL would have been peachy if they hadn't done it.
Besides, are you then stating that Apple should absolutely not produce an Apple Car? Because an Apple car is definitely not something I would classify as consumer electronics.
I'm not saying I would support a buy of TW by Apple or even that I think Apple should produce a car. But Apple has to evolve just as it evolved from being primarily a computer company to a smartphone company. In 20 years, I believe Apple is going to be an AI and robotics company.
No it wouldn't. TW has already spun off TW Cable, publishing and some other units. Ted Turner bought MGM (more than once I think), sold it but kept the library. There are lots of pieces that Apple could sell if they didn't want. As per my previous post, CBS would probably be happy to buy TW's share of the CW network. Disney would probably kill to get D.C. Comics as long as it came with all the ancillary rights to produce future movies. If Apple didn't want the cable networks (although I think they'd want to keep them to stream them), I'm sure they would find buyers, except for TCM, which is a great channel, but there's virtually no revenue model since there's no advertising and it gets a very small fee from the MSOs. TW has studios in both Burbank and Atlanta and Apple could sell one or both. In fact, in Atlanta, there's a downtown building where CNN is and a campus a bit north. And there's probably lots of other stuff of which I'm unaware. They also have substantial office space in NYC, but I don't know if they own it or lease it. Etc. In fact, with most companies, the pieces are usually worth more than the whole. That's why investors come in and break companies up.
Isn't rogifan a girl/ woman/ lady?
I certainly do agree that Apple must continue to evolve. I think that an Apple Car is a good idea. It is a move that both keeps them in an area of their strength, manufacturing and customer experience with electronics. An iPhone wasn't exactly a computer and a car isn't exactly consumer electronics but many of the skills and strengths of Apple would be extremely applicable there. AI and robotics would also make sense to me as long as they don't invent Skynet.