Piper Jaffray analyst Gene Munster has gone all out in forecasting that Apple will enter the digital video recording net-connected television market by 2011. It’s a bold assertion, with research behind the claims, and it seems to make sense–or does it?
Munster’s main idea is that Apple lacks a device that will make the company a permanent fixture in the core of future “digital homes.” With this in mind, he sees an evolution of the existing Apple TV with a yet-more powerful iTunes as the perfect device to fill that capability gap.
That would certainly represent a fabulous piece of convergence: The Apple TV already connects over HDMI to HDTVs, and streams video, music and photos to the screen from its own drive, or wirelessly over Wi-Fi. Apple already makes large screen monitors, and although they’re at much higher resolution than needed for television, the company has inked a 5-year deal with LG to provide LCD screens worth $500 million, and that could easily expand to television-resolution displays. Marrying those two pieces of technology into a single unit would create a very interesting home-theater PC: Let’s call it the Apple Television
But Munster also suggests that the device would go all the way to being a net-connected DVR too: He points at patents that Apple filed over the previous years that reference an updated Apple TV with recording capability. The only hardware the current device lacks to enable this is a TV-in system, or possibly a satellite-in cablecard-like system.
The analysis also agrees that while the TV market is “a bad business,” with unit prices falling steeply over the previous years, and TV-makers struggling to make profits (with rumors that Pioneer is leaving the TV game,) that only holds true for “dumb TV” designs. If Apple performed one of its characteristic “rules of the game”-changing maneuvers, then a fully-connected “smart” Apple Television may have a shot at capturing the high end of the market, in exactly the way the iPhone did for cellphones.
Munster also points to the ability of both the iPhone and iPod Touch to act as remote controls for iTunes, and he highlights the fact that iTunes has a huge install user base and holds the number one music retailer spot in the U.S. Extending iTunes functionality into recording incoming video signals seems like a natural progression.
So, his thinking is compelling. But it only slightly makes sense: Apple maintains the TV is a “hobby” project, and hasn’t tweaked the hardware of the device in a long while. This would lend credence to Munster’s claims of Apple Television being the next upgrade, or it may simply be a hint that the next update will be along the lines of the “unibody” aluminum styling that much of the rest of Apple’s hardware now features. Or it may simply be a symptom of the “hobby” status of the device in Apple’s management thinking.
Also, bear in mind that the connected TV market is in its infancy, and the average consumer is incredibly accustomed to thinking of TV as coming in via cable or satellite via a separate box that, in some cases, has its own DVR function.
Apple hardware historically is set at a premium price point: It’s fair to assume the an Apple Television would follow a similar model. Would the consumer even want to shill out extra for a TV with in-built computer hardware? That is, hardware that will most likely be out of date even sooner than the rest of the electronics inside of the TV. In my own home an iMac powers my HDTV directly, and the television isn’t even connected to a TV source. My set up is basically a separated version of what Munster proposes for Apple Television. But if my iMac gets old, or I switch TV suppliers to an IPTV solution, I can just swap out part of the system–a flexibility that an Apple Television would most likely lack.
Essentially this would be a convergence device that would be “nice to have.” It could potentially, with some Apple magic, pull off an iPhone-like success in the TV market.
You can bet that Apple is looking at this idea, along with many other potential products. But I seriously doubt its viability on several levels, including the current economic crisis and the downturn in consumer spending. Is Munster simply trying to goad Apple into making a device he’d love to own himself?