With only a few exceptions (remember the Lisa?), Apple Inc. (Nasdaq: AAPL)'s product development strategy has been "If we build it, they will come." The most recent example is the new iPad, which had iFans once again camping out in front of Apple retail stores. The scene has become so familiar that Samsung Corp. spoofs it in a commercial for its Galaxy Note, and the media covers the queuing up as a news event.
Now, Apple's largest manufacturing partner, Foxconn Electronics Inc. , has let it slip that Apple will soon be building an Apple TV. It's no surprise that this is happening: Foxconn's recent investment in Sharp Electronics Corp. 's display business had "Apple TV" written all over it. What is surprising is a seasoned executive such as Foxconn chief Terry Gou letting a customer's product strategy slip, but that's a discussion for another day.
Apple's offering in the TV business to date has been a sort of set-top box that allows users to access the Internet. Apple has all the necessary resources to get into the TV business, including a patented display technology. Why Apple hasn't made that move yet is supposedly due to former CEO Steve Jobs's desire to develop a user-friendly TV set that syncs with other household devices. Shortly before his death last year, Jobs told biographer Walter Issacson that he had "cracked the code" to integrated TV.
Experience has taught prognosticators that external market conditions have very little to do with Apple's product-development strategy. The TV market has been in the doldrums for awhile, due in large part to market saturation. LCD screen prices have steadily dropped; large-screen manufacturing barriers have been breached; and HDTV prices have hit the "very affordable" range. Efforts to reboot the TV market with offerings such as 3D haven't gained traction. HDTV technology and product offerings have reached the point where incremental improvements are not enough: Users are pretty happy with what they have.
So what is it going to take to get consumers to buy yet another TV? Reports from CNET and other outlets have suggested that Apple will integrate the SIRI voice recognition system on its TVs. The cloud has also enabled a level of functionality not available before, so downloading content across multiple devices is easier and less expensive. Other suggestions include a built-in camera and access to the App store.
The downside is that the iTV will no doubt carry a premium pricetag. iPads and iPhones are among the most-expensive items in the consumer electronics industry, and Apple's discounts on last-generation products aren't what you'd call "steep." Rumors that the global economy is turning around seem exaggerated, at least for Europe and some regions in Asia/Pacific. If Apple releases the iTV this year, as some suggest, the "Apple Effect" could go the way of the Titanic. If Apple waits until 2014, another rumored target date, the iTV could re-set the standard for television.
What do you think? For my part, if SIRI can replace remote controls, I'm willing to test drive the iTV.