Is Apple set to launch an iTV?
Now that Apple Inc.'s chief visionary is gone, the company is facing a billion-dollar question: Will it be able to conjure another pioneering product without Steve Jobs?
Perhaps fittingly, a possible answer came posthumously from Jobs himself.
The television set, the quintessential squawk box of the 20th century, is ripe for a reinvention, the Apple co-founder said before he died Oct. 5.
“I’d like to create an integrated television set that is completely easy to use,” Jobs told biographer Walter Isaacson in the new book “Steve Jobs,” which hit shelves this week. “It would be seamlessly synched with all of your devices and ... will have the simplest user interface you could imagine. I finally cracked it.”
His remarks in the book have set off a flurry of speculation that Apple will roll out a television set that could remake the $100-billion industry, much as the company altered personal computers, music players and cellphones.
Apple and Jobs have a record of taking existing technologies and redesigning them with an emphasis on visual simplicity, allowing users to play songs, open applications and make calls with the click of a mouse or the swipe of a finger -- with little technical knowledge required.
But over the last decade, television systems have gone in the other direction, with remote controls sprouting dozens of buttons, many for obscure functions that consumers don’t use. Meanwhile, cable TV’s grid of hundreds of shows and channels has become overgrown and difficult to navigate.
“My parents come to my house and there are three remotes to work the TV,” said Peter Misek, an analyst at Jefferies & Co. “I literally have to change the station for them because they’re freaked out to try it themselves. That’s a disaster.”
For some analysts, Jobs’ declaration to Isaacson has confirmed what they already suspected. Brian White of Ticonderoga Securities wrote to investors Tuesday that he had seen “concrete evidence that an Apple Smart TV was already flowing through factories over in China in early stage pilot and prototype production.”
White said Apple was well positioned to take advantage of the global television market. Television manufacturing is generally considered a cutthroat business with narrow profit margins, in which competitors like Samsung Electronics, Sony and Panasonic Corp. vie for customers by offering ever lower prices on their TV sets.
But White believes that Apple will be able to charge twice or even three times the going rate for TVs because of what he called Apple’s “unmatched aesthetics, expansive digital ecosystem and overall quality.”
Apple has been able to build highly profitable businesses with its iPhone and Mac computers, both of which have been priced at the high end of the market.
Industry watchers believe that Apple has been laying the groundwork for a television set for years, intensifying its focus recently on developing high-resolution, TV-like screen technology for its iPhones and iPad tablet computers, and on software that works across all of its devices and allows users to manage and store broad swaths of their digital lives.
Apple this month also introduced a sophisticated voice-control system for the new model of its iPhone. Called Siri, the software is able to understand free-form spoken commands, including scheduling meetings, writing emails, checking the weather and finding restaurants. If built into a television, that system could help users find shows and information without having to make a long series of button pushes.
At the same time, Apple has been expanding the size of its iTunes digital store, which now allows consumers to quickly purchase and download millions of songs, games, movies and television shows through the Internet.
The missing piece, many analysts believe, is Apple’s ability to offer traditional broadcast television, a business long dominated by cable giants like Comcast Corp. and Time Warner Cable Inc.
That could be partially resolved with a broadcast partnership with AT&T; Inc., which offers a TV service called U-verse, Misek said. AT&T; is a longtime Apple ally and the iPhone’s first wireless carrier beginning in 2007.
But Shaw Wu, an analyst at Sterne Agee, said Apple might have a more ambitious and disruptive plan in store, one that could upend the business model that TV networks have relied on since the rise of cable in the 1980s.
Citing industry sources, Wu said Apple “would love to offer users the ability to choose their own customized programming” -- paying for channels individually rather than buying dozens together in “tiers,” as is typical today for cable subscribers. “This would change the game for television and give [Apple] a big leg up against the competition,” Wu wrote in a note to investors.
Such a move would be difficult to achieve without the support of Hollywood media companies, which have long opposed efforts to “unbundle” television subscriptions out of fear that would decimate a multibillion-dollar revenue stream.
But Apple watchers are fond of pointing out that the company has managed to upend established business models before, including the record industry’s now largely dissipated network of retail stores and their racks of CDs.
Apple may be arriving to the television business at just the right time, when mobile devices, personal computers and television sets are able to communicate with one another much more effectively.
“Five years ago everything [in TV manufacturing] was centralized and individualized,” said Dan Muratta, who runs the broadband division of Broadcom Corp., which supplies wireless networking chips to Apple’s iPhones and iPads.
But with new technology, “I may be watching a program on my TV and I want to watch it on the tablet or smartphone, and voila,” he said. “The more forward-thinking companies are taking advantage of that.”