This is not a prediction by any means, but let's imagine Tim Cook wakes up tomorrow and thinks to him self "we should make a TV." No, not a new iteration of the Apple TV, but a big 55 inch sheet of glass with tvOS running the whole thing.
"It just doesn't make sense in 2017" he says to his execs that morning. "Why do we make this TV box that gets plugged in and then forgotten about? We do all the work and Samsung, Samsung is the brand people are looking at all day when they use it?" Eddy and Craig are sitting back, gears turning. Johny isn't there, but you know, he'll get caught up later. It's something people have been talking about forever, and Apple has maintained that making the box and letting others make the TV sets makes sense for them.
But now the CEO is asking them to change that thinking and make the whole damn TV. What would it cost? What would it look like? Do we give it USB-C or Lightning?! These are the questions running through their minds, all of which they've considered before and decided the answer was no, it isn't worth it, but today they need to reassess.
12 months ago I would have told you that Apple shouldn't make their own TV. The boxes have better margins and have better upgrade cycles since they don't cost a ton. Sure, they're getting some pressure from the low end with Amazon selling a boatload of cheap Fire TV Sticks, but the Apple TV seems to be doing alright for them. If you're still upset with Apple for not competing on price with low end competitors in 2017, I don't think you're ever going to be happy with Apple.
I'm thinking about my past experience selling TVs over the years and in my experience there were 2 distinct types of people buying TVs. Thinking back on these groups makes me think Apple might have an angle into the full TV market.
First are people who want to get a TV that costs the least and has the most HDMI ports on the back so that they can plug in all of their Chromecasts, Apple TVs, Rokus, and cable boxes into the thing. They want a dumb screen that they can turn into whatever they want.
These people were easy to sell to because they were very logical about their purchase. They bought based on the numbers. What's the screen resolution? How many inputs are there? What's the contrast ratio? They would weigh the numbers with the prices and make a decision. Easy.
The second group of people were those who don't ask about inputs because they're just going to plug their cable box into the thing and be done with it. Maybe they have a BluRay or DVD player too, but any TV worth a damn has at least 2 inputs for these. Some would ask about the smart features of one model verses another, and they would almost always spend the extra money to get the "smart" version of the TV they wanted so they could watch Netflix and Facebook videos just as easily as cable.
To generalize, the first group of people are more tech savvy and the second group is more "mainstream." Put another way, the first group has a project planned for their TV when they get it home, and the second group just wants to plug it in and watch their content. It's a subtle difference, but an important one.
Us nerds sometimes think that things that are "open" are always better. We think that more options equals a better experience. We think that a lower price for the same "specs" means the cheaper option is more desirable. In some cases, and for some people these things are true. There are people who build their own PCs even though they could easily buy an all-in-one PC that they just plug into the wall and it works, but they don't want that. Part of the fun is that they get to play with things, break stuff, and make everything just the way they like it.
But there is another group, a larger group of people who don't enjoy technology that way. It's not a hobby for them, it's just something that's supposed to make their lives better. For them, the all-in-on computer is more desirable.
From that perspective, I could definitely see how these TV boxes we plug into our TVs are not a particularly elegant solution. They're fundamentally hacks, aren't they? A lot of people have smart TVs already and use their Roku box to stream Netflix because the software is better on the Roku. We obviously want these smart features, but the smart features built into most TVs is just not good, so we buy these $35-150 boxes to get something decent.
There's a story out of CES this week that Amazon is working with a few partners to get their Fire TV software built into their TVs this year. That's a huge get for Amazon because the Fire TV software really pushes Amazon's content first, but it's a bit win for consumers as well because Amazon's software (despite my problems with it) is a jump up from what most people have on their smart TVs today. I don't see Apple licensing out their software to third party manufacturers, so they would have to make their own sets if they wanted to make do this same thing.
But I can hear you saying now, why does this make more sense than the box they have today? If you're asking that, you're probably in that first group of people I talked about before. You have a plan when you buy a TV and you want the flexibility to upgrade your TV and streaming box separately, or completely change the streaming box you use whenever you want without trashing your TV. Those are all legitimate complaints, but they fall on deaf ears for people in that second group.
Some people have mentioned "the battle for HDMI 1" before, but I think you might be getting too in the weeds by even bringing up HDMI ports at all. I'm not saying Apple should remove HDMI ports, although you know they would be the ones to do it first, but they want users to turn on the TV and have the Apple UI presented to them immediately. I think Apple's vision of the TV has ports for your other stuff, but the UI you see every time you turn on the TV is tvOS.
tvOS has your streaming content right there, and it could have "apps" on the screen for any device you have plugged into it. You don't cycle through inputs, trying to remember which one if the cable and which is the DVD player, you just select that device as if it were another app installed on the TV. They could integrate with your cable box and display the channel guide in tvOS and let you avoid the terrible UI your cable company had cobbled together. The Xbox One already does this and I would love to see Apple give this a go.
And what if they took the idea of a TV even further? What if it had microphones and had Siri built in so you could call out "hey Siri" and get answer to questions like you can with the Amazon Echo or Google Home? What if it could mirror your iOS notifications on the screen and you could talk to it to manage those notifications? There's much more Apple could do in this space, and controlling all of the hardware and software (which we know they love to do) is really the only way they get there.
I ultimately don't think Apple has this on their roadmap right now. The downsides you already know about, like razor-thin margins, price-sensitive customers, and long upgrade cycles are all hurdles. That's not even mentioning the fact that TVs are not a major pain point in most peoples' lives. But despite all that, I think Apple would be able to make something very compelling to their fans.
I wouldn't pay a 2x markup for an Apple-made TV, but I have quite a bit of faith in them being able to make something better than just about anyone else in this space.
Now if they could just figure out a good remote for the thing...