With Apple you sort of know what they are going to do but we’re still surprised when they go ahead and do it. It also seems like well-established competitors can’t seem to be able to do anything to stop them.
Apple launched their phone in 2007 and many people wondered about this move into one of the largest but also one of the most specialized markets out there. By the last quarter of 2011 their share of the US smartphone market was a staggering 43% by units shipped and much larger in terms of revenues and profits.
Apple launched their iPad in 2010 and many industry commentators doubted that there was even a need for this new category of tablet device. David Pogue wrote in the New York Times:
‘The bottom line is that you can get a laptop for much less money — with a full keyboard, DVD drive, U.S.B. jacks, camera-card slot, camera, the works. Besides: If you’ve already got a laptop and a smartphone, who’s going to carry around a third machine?’
In the last quarter of 2011 Apple sold more than 15m iPads, generating nearly $7bn in sales, and selling more units than any of the PC vendors. To put this in perspective Google’s total revenues were only $10bn for the same period.
My prediction is that Apple will launch a TV set within the next 12 months and it will become their next blockbuster product. I know people question the margins in the TV market and how Apple will be able to really differentiate but haven’t we heard all this before?
I believe Apple will be a top three player in the TV market by 2015. I’m not talking about units (as this would be impossible even for Apple in such a low margin, cut price market) but in terms of revenues and profits. Apple has consistently shown they can charge far more than anyone else in the market and get away with it.
So let’s imagine what it will be like. Clearly the Apple TV will look fantastic. It will be clean, sleek and most likely have some kind of brushed aluminum casing. The screen will be better quality than anything else on the market producing a breathtaking picture. It will be easy to use through the integration of Siri, their voice activated assistant. There will also be other ways to control the TV through an app on any iOS device and also through a sleek remote control. It will come with the current Apple TV software fully integrated. It will be running a version of iOS and be fully integrated with Apple’s ecosystem – including iTunes, iCloud and the App Store, providing access to a wide range of content and services.
Put simply it will set new standards in the market and will lead to us having a different kind of relationship with our TV – something that only Apple can do. We are used to a pretty one-way relationship with our TV, seeing it as something that sits on the wall and delivers content at a timetable of someone else’s choosing and controlled by a device that we often find frustrating. I believe we will have a more interactive and more intuitive relationship with Apple’s TV, and that this will be in essence how they set themselves apart in the market.
The challenge will be having enough content available to enable most customers to ‘cut the cord’ away from their cable or satellite providers (and also meaning the TV could stand alone unencumbered by connections to other boxes). However, I don’t think even Apple will be able to pull this off. Not yet anyway. The big TV networks and cable channels just have too much invested in the cable/satellite companies to do anything to really blunt their competitiveness. Apple will be persuasive, as they were with the record labels, but this is a different situation. They may come up with a few side deals with the TV networks but will not be able to get anywhere near their full roster of programming. So the new TV will need to connect to cable and satellite boxes. But I don’t think this will hold back the success of the product.
So how the hell do Apple consistently upend one huge market after the next? I think there are a few good reasons:
1. They are the most powerful brand in the world turning electronic devices into must have fashion accessories.
2. Their distribution is now flawless in terms of their retail stores and on-line operations.
3. The strength of the Apple brand means they can charge more than their competitors allowing them to offer a higher spec than anyone else and still make money.
4. Their complete control of all hardware, software and content produces a world beating customer experience that no other company can match.
5. With every Apple product you get more immersed in the brand and more tied in to the eco-system.
6. Their huge buying power puts them in a strong position with suppliers meaning lower costs to Apple and higher specs to customers.
7. There is an ever increasing familiarity with Apple’s iOS devices making them more and more attractive to customers.
If anything you could argue that it’s getting easier for them.
So this is my argument for why Apple will be a leading TV supplier within 3 years. In 2015 we will be marveling at the sales being generated by their TV sets and how they have been able to, once again, turn an industry on its head.