Apple’s World Wide Developers Conference begins today. Investors and analysts look to the conference for tidbits regarding developers’ toolkits, which foreshadows product introductions six to twelve months out. Remember, Apple develops superb software and then makes compelling hardware to showcase it. Much has been written on anticipated features of an expected iOS6, updated MacProBook, Facebook integration, enhanced Mountain Lion compatibility with mobile, ousting of Google Maps and possibly introducing Siri on the iPad. Should these come to pass, these features will all serve to enhance Apple’s current product line-up and delightful user experience. However, the greater impact to Apple’s long-term road map will be any indication that Apple will be providing the software heads-up for a television-like device expected in 2013.
A television-like device would serve as the next step-function up in Apple’s growth trajectory, and a catalyst for the next 5-7 year product cycle. Here are four reasons why Apple could revolutionize “television.”
User Experience. Apple is the Chief Architect of the Delightful User Experience. Current television watching is anything but a delightful user experience. It takes at least three remotes to turn on a television, the cable/satellite and the sound system. On top of that, most providers now offer hundreds of channels of content. Scrolling through the channel guide takes as long as watching Modern Family, and is not nearly as fun.
Apple’s secret sauce is the elegance and the intuitiveness of its software. When it introduced the iPod, Apple focused on making the process of searching through one’s presumably enormous music library fast, simple, and intuitive. Apple introduced playlists so that one could organize music together in their own defined categories in which to listen and, later, Apple introduced Genius and Ping to recommend other music one may like. Searching through the options or discovering new content became seamless and innocuous.
Imagine applying the Apple User Experience framework to the television in the family room. And take it one step further; apply Siri as voice command for the television-like device. Now users can command the system either through voice, or via other Apple devices within the ecosystem. Apple has the opportunity to, yet again, change consumer behavior around media consumption.
The Mac as the “tv.” Although Apple has not yet revealed what exactly its intent is in the living room, it is unlikely that Apple will continue with the small hockey-puck like Apple TV that acts much like a set-top box. Apple is also the Master of Integration, as it has repeatedly introduced Macs that encompass the entire computer into the computer monitor. It is not hard to imagine redeploying a large screen Apple monitor and calling it (as some have already) an iPanel and incorporating cable or satellite content. In fact, over the years, Apple aficionados have attached an itv gadget and turned their Macs into “televisions.” The leap for Apple to do this would be a small step, in the scheme of things.
The more interesting integration is to combine television and Internet or app content on the screen. Again, this is an interesting software solution. Imagine the content one wants is organized on the screen like Apps on the iPhone or iPad, so getting to the content is super easy. Or, if one could take advantage of the new OS whereby the MacTV or iPanel has various desktops that are organized by different types of content, for example. And one could toggle between watching traditional content, Internet content or checking email between shows.
Many critics of an Apple television-like device contend that it would be too expensive relative to other sets on the market. However, this argument did not hold up or prove out with the introduction of iPods or iPhones. Consumers have been willing to spend more on Apple products than the other items in the category because the items are not comparable. Apple’s products have come with greater functionality, elegant features and the aforementioned Delightful User Experience. Combine Apple’s elegant styling with a user-friendly interface and, viola, the MacTV or iPanel could usurp the current device called a television, and change how consumers think about the panel hanging on their living room wall.
Business Model Disruption. When Apple introduced iTunes, the music industry changed forever. Prior to the iTunes introduction, declining sales and music piracy were already challenging the music industry. Apple offered a low-cost distribution channel and the ability to reach a broadened audience. Granted, the music industry grouses about digitalization, but the trend was upon them and Apple enabled the music industry to manage and benefit from digital distribution.
Likewise, when Apple introduced the iPhone, the entire balance of power in cellular shifted dramatically and permanently. Prior to the iPhone, service providers had all of the control in the relationship with device manufacturers and could dictate what consumers could and could not do on a cellular phone. The industry was super competitive, and service providers were looking ways to improve customer loyalty and use of higher-margin data plans. The iPhone delivered both solutions, and changed that business model forever.
One can envision a scenario where Apple could, again, disrupt the old guard of content provision. The competition between cable, satellite and telephone companies remains fierce and it is conceivable that Apple could come in and change up the playing field. Imagine if Apple partnered with a cable, satellite or telephone company as a device for some period of exclusivity on that network, much like the iPhone and AT&T Wireless. Certainly the first company to sign up with Apple will have a unique competitive advantage in the content distribution by providing a much better user experience. Cable, satellite and phone companies are notorious for high levels of customer dissatisfaction. Apple, being the game changer, could, again, emerge with a subsidy package, and disrupt the traditional business model around content distribution.
Ecosytem Expanded. Currently, most people who own one Apple device own an average of 2.6 devices. With the new OS, iCloud and Airplay, these newer devices can communicate and sync with each other seamlessly. These devices are on a spectrum from high level of interaction (i.e. iPhone and texting, for example) to more content consumption (iPad). The television-like device would round out the content consumption end of the spectrum to create a full product line up of media devices, and all of these devices would communicate and share content with each other.
Should Apple introduce the television-like device with expanded computer capabilities, with the same user interface as iPods, iPhones, iPads, and Macs, it would benefit, yet again, from the Halo Effect and expand its media influence to the living room.
With each new product introduction, Apple has fairly consistently doubled its level of revenues as the product category ramps up. Not only does Apple benefit from sales of the new product, but also new product introductions serve to bring new users into the Apple camp. And, most consumers, once introduced to Apple’s Delightful User Experience are destined to buy another Apple device. The television industry is an $117B business globally. Consumers currently replace their televisions every eight years on average. A change up like this could spur a new replacement cycle and add significantly to Apple’s future. Look for clues on an Apple television-like device. I will be.
