As we start to think about the Television, I would like to firstly make a few base-line assumptions and outside-in observations about Apple's guiding principles when it comes to developing new products:
- Target to remain extremely focused on a few products only (unlike Google for example) I see a maximum of 1 new product category every 2-3 years and the Television/Apple TV is most likely to be the next big product category.
- Target to remain in price range that will help them gain volumes - e.g. the iPad wasn't launched for $1,500 but for $500 and the visible cost of iPhone to the customer was much lower due to Telecom tie-ups and resulting subsidies
- Maintain extremely high margins irrespective of the product - they will target 40-50% gross margins for all products - e.g. when iPad 2 was recently priced down to $399 with the launch of the new iPad, many analysts projected a significant "margin dilution" - but from their latest quarterly results, I see no margin dilution at all. In my view, Apple tracks the margins very closely and maintains the high margins by bringing in new versions every year and letting the ASP decline of components help keep margins of the old products high, despite decline in their overall pricing
- Offer everything that one would want from Apple TV minus the HD screen.
- In other words, a significantly hyper-enhanced version of the current Apple TV that could be placed right next to your existing TV in the living room
- It would offer all great features with high degree of interactivity - Siri, Konnect-like movement detection, built-in camera for facetime and video-conference, enhanced Video Airplay and similar capabilities (e.g. screen mirroring, etc) from iPad and iPhone, Internet video streaming, remote control being a smart phone/ tablet, etc
- Further, this Apple TV box would probably have all the elements of a basic PC less the monitor - including storage, games, great Apps and access to App Store.
- My sense is that Apple will offer the enhanced Apple TV for about $300-$500
- Offer all the above features under Option-1 PLUS the HD TV screen to make it a "one-product" TV
- Pricing - 45 inch for $2,000 or so, 55 inch for $3,000 or so, but to the customer it will cost a fraction of this cost while making the purchase
- Instead, make this TV available by signing up for a 2-year "Cable Television" contract with existing Cable TV Players (e.g. Starhub in Singapore). This would be very similar to the way we all buy iPhones and how telecoms are made to pay the subsidy instead.
- With the above subscription, all channels that you subscribe to would be on-Demand. You can watch, what you want, when you want and you do not need to stick to the broad-casting schedule of the channels
- These channels could be "Apps" that one would pay a monthly subscription for
- As another completely different alternative within this, Apple could offer specific television "Programmes" and Series as Apps, as opposed to specific channels. This would completely kill the television broad-casting industry - instead our favorite programmes would be free or paid Apps and Apple will earn the advertising and subscription revenue on these over the life-time of the television set.