Did Apple "Crack" The Television Code?
Apple was an unseen presence at the Consumer Electronics Show, which opened in the Las Vegas Convention Center on Monday, January 10. But never has its shadow cast a broader swath over the estimated 140,000 attendees milling about 1.6 million square feet filled with over 2,700 exhibitors than it does this year, David Sarno suggests in the Los Angeles Times this morning.
It’s all about rumors that Apple has “cracked the code” on TV, as Steve Jobs told biographer Walter Issacson, and will be disrupting the cable and broadcast landscape soon with its typical disregard for the way people currently consume information. The likes of Samsung, LG and Sony are scrambling “to come up with the next big thing in home entertainment,” Sarno says, but the analysts he talks to seem to be on the same wave length as Jefferies & Co.’s Peter Misek.
Misek says.
"They're just throwing spaghetti up against the wall right now. I think Apple's going to force a big change in the industry --and it's hard for the companies to respond when they don't know what iTV looks like yet."
Apple Will Go BIG As Television Rumors Abound
Apple did not attend the International CES 2012 show, but USA Today notes that all eyes are on Apple jumping into the TV race.
The story originated from an unnamed source who worked at Apple, and told USA Today that
"Apple is said to be looking at a 42-inch or larger LCD TV with built-in Wi-Fi,"
and that recently knighted Apple VP of industrial design Jony Ive has "a slick 50-inch TV" in the company's design studio.
Even Apple co-founder Steve Wozniak had this to say about a new Apple TV,
"I do expect Apple to make an attempt, since I expect the living room to remain a center for family entertainment, and that touches on all areas of consumer products that Apple is already making."
Naturally, Apple declined to comment.
In a recent report from Taiwanese news site DigiTimes, Apple is not as far along with its TV set plans as has been rumored. Last week the outlet claimed Apple was in the process of ordering components to build 32-inch and 37-inch TV sets, which would go on sale in the second half of this year. Without acknowledging that report, USA Today adds a mention from DisplaySearch analyst Paul Gagnon that there's "no evidence" of Apple ordering LCD panels for the set, which "is at least a year away."
This is not the first mention of an Apple TV set in the 50-inch range. Early last month Australian technology site Smarthouse reported that Apple was planning to offer three screen sizes ranging from 32 inches up to 55 inches. That's the same outlet in July that claimed Apple was setting its sights on a 55-inch OLED TV for its first sets.
Size aside, interest in Apple's TV efforts remain in the software and content offerings. Apple is expected to make full use of its existing content deals, while possibly introducing new ones that would give would-be cord cutters a way to ditch their existing cable service to watch TV programming. Eyes are also on the company to find a way to bridge its App Store to the living room, where it's found growing success on portable devices like the iPhone and iPad.
New Study Shows Growing Demand For Web-Enabled TVs
The Parks study — “Consumer Decision Process: Holiday Intentions” — found that
- Middle-class households with annual incomes from $50,000 to $75,000 are seeking Internet-connected TVs.
- 20% of middle-class homes intend to purchase a smart TV, compared with 12% of households with incomes above $75,000.
- One in five broadband households in the United States intend to buy a new television by the end of the year, with 73% of those buyers opting for an Internet-connected “smart” TV, according to a new Parks Associates report.
- Demand for Web-enabled television is nearly twice that for 3DTV, underscoring the appeal for lower-cost video entertainment derived from the Internet, compared wth 3D.
Principal analyst Kurt Scherf said.
“Smart TVs are now pushing into the mainstream, whereas previously smart-TV buyers were largely early adopters and those from high-income households. The combination of a maturing product ecosystem with great holiday deals is putting smart TVs within the reach of the American middle class.”
Apple Dominates Web-Enabled TV Market
According to research from Strategy Analytics, the web-enabled TV market is growing rapidly, and here are some interesting facts from their research.
- Apple will own a 32% share of the connected TV player market by the end of 2011, with the company’s Apple TV device accounting for nearly 4 million of the nearly 12 million Internet TV set-top devices shipped globally by year’s end.
- Web-enabled set-top devices have nearly doubled since 2010 (12 million vs 6 million).
- Apple TV users spend more money on movies and TV shows than owners of other devices (30%, compared with 20%).
- 8% of U.S. households now own a connected TV player, compared with 7% of European households.
Jia Wu, senior analyst at Strategy Analytics says.
“Apple is leading this nascent market, which it still considers a ‘hobby'. As Apple prepares for its expected launch of smart TVs in 2012, rival platforms must accelerate their development plans to keep Apple from running away with the connected TV business, as it has done in smartphones and digital music.”
Smart Televisions Showcased At CES 2012
Smart TV's were showcased at the International CES 2012 in Las Vegas and are expected to go on sale sometime later in the 1st quarter.
Smart TVs are televisions that allow users to download apps, movies and surf the Internet. Unlike the mobile industry, there are no dominant software platforms for web-connected TVs. Samsung defines a smart TV as having built-in computer-style processors and a software platform that allows for custom-made applications.
The Wall Street Journal’s Don Clark and Jessica E. Vascellaro take a look at some of the new smart television's at International CES 2012 in Las Vegas and this is what she discovered.
- Samsung has a set that responds to voice commands, à la Siri, as well as gestures, à la Xbox 360 and others. Samsung is also launching a new smart TV incorporating Google TV's operating system controls and search engine for accessing content "anywhere, anytime" from TV programming to online digital content.
- LG unveiled smart TV's incorporating the Android OS for its new Google TV that uses LG’s 3D and Smart TV technologies. LG also unveiled a voice-and gesture-activated remote control.
- Panasonic has hired speech-recognition specialist Novauris Technologies to work on its next smart TV.
Samsung Smart TV's To Incorporate Google TV Operating System
Samsung Electronics Co., the world's largest flat-screen TV maker by revenue, plans to launch a Web-connected TV using Google Inc.'s operating system in the second half of this year targeting high-end customers in the U.S. first, an executive said in an interview, in a move that will likely help broaden the appeal of its line-up and help combat falling set prices.
Samsung shows off its new Smart TV and Smart Hub at CES 2012 (Click Image To Enlarge)
The head of Samsung's consumer electronics division that oversees businesses across the company's television, home appliance and other consumers goods, told the Wall Street Journal in a recent interview Samsung will also start selling Smart TVs that have voice recognition and motion sensing capabilities, which will allow users to search for programs without having to use their remote controls.
Yoon Boo-keun, president of Samsung's consumer electronics division said.
"Last year, brisk sales of mobile devices, such as smartphones and tablet computers, adversely affected TV demand, but this year, those products will create synergies with smart TVs."
Mr. Yoon, who was promoted late last year to head the company's consumer electronics division, said he expects the unit's 2011 operating profit will likely double from 2010, when Samsung posted a 500 billion won profit from the business.
From 2013, Samsung plans to also offer a kit for Smart TVs that users can buy to automatically upgrade their TVs with new software content and services.
With various TV offerings, Yoon said Samsung targets to sell a total of 50 million flat-screen TVs this year, up 16% from around 43 million units sold last year. Of the total, Samsung aims to double the shipment of its smart TVs in 2012 after selling around 11 million units in 2011.
Smart TV's Spell Trouble For Pay-TV Services
While wider consumer interest in smart TVs may be good news for equipment manufacturers, increasing consumer access to over-the-top, or OTT, video content via Netflix, Hulu Plus, Amazon Prime and YouTube is worrisome for pay-TV providers. That’s because consumers who purchase a smart TV this holiday season also are more likely than average pay-TV subscribers to cancel or downgrade their pay-TV service within the next 12 months, according to Parks.
Indeed, No. 1 and 2 cable operators Comcast and Time Warner Cable reported a combined loss of nearly 300,000 video subscribers in their most recent fiscal quarters — losses the companies attributed to the economy and not necessarily OTT services.
Scherf said.
“Smart TVs expand a household's available content choices without raising content costs. Consumers pay a premium for the device now, but our research indicates these purchases could be part of a long-term plan for many budget-conscious households to reduce their overall [content] expenditures.”
COMMENTARY: My big question: Where are all these consumers getting the money to pay for these new fling-flanged smart TV's? Do people really care that much for web-enabled TV's, voice recognition, face recognition, motion sensitivity? I just can't see myself saying, "Siri, turn on my TV, and set it to CNN." If you already own a HDTV, wouldn't it just be simpler and a whole lot cheaper to get the Google TV or Apple TV set-top box? They cost about $100 versus having to spend thousands for a new TV that is internally wired to be web-enabled.
BTW, here's a cheap option to make your HDTV "smart." Ram Electronics provides several solutions to make your HDTV "smart" with several add-on accessories that allow you to hookup your laptop or PC desktop computer with your existing "non-smart" HDTV through its HDMI port, that could save you thousands on having to buy one of these new fling-flanged smart TV's.
The other issue that companies like Google and Apple still have not conquered yet is high-end television programming content. The television networks and cable TV companies don't want to lose control of their content. Neither Google or Apple have been able to negotiate deals with the networks. They are afraid that Google and Apple will slap their own TV commercials, and that's the crux of the problem. It comes down to the advertising dollars which the new content flowing through those smart TV's that Google and Apple are after, and the networks and cable companies know it.
So how big will the market for Smart TV's really be? It's anybody's guess, since there are so many other ways to make your TV "smart," as noted above. In an article dated October 28, 2011 appearing in Asymco, Horace Dediu tried to assess the size of the smart TV market. Here's what Mr. Dediu says:
"When considering the opportunity, the Smart TV volumes are small relative to either tablets or smartphones. 2011 shipments are expected to be around 25 million Smart TVs, vs. 454 million smartphones and 51 million tablets. Looking forward, it seems that even by 2014, smart TVs will be smaller volumes relative to either (projected) smartphones or tablets.
A reason for this is that the TV market is not that big. It barely reaches 280 million units in 2014. Having reached saturation, the rate of growth is never assumed to be greater than 5%. The growth in the Smart TV business is assumed to be much higher however, being at least 100% in 2012, though off a low base.
But the concept of what “smart” means in this forecast is troubling. Christina Bonnington at Wired highlights many of the failings of Smart TV.
“In most cases consumers are buying a television with Internet connectivity as insurance. In other words, they are buying them just in case they need it in the future,” says Van Baker, a vice-president at the research firm Gartner. “Less than half of Internet connected televisions actually get connected to the Internet so clearly consumers don’t yet see this capability as a must have feature.”
There is vast under-consumption even if the devices are being purchased. This looks eerily familiar to the smartphone market before they became usable by the vast majority through the transformative touch input method.
So this market seems to be ripe for some serious re-definition. It may not be large today because there is nothing worth buying. Absent any innovation the forecasts can only foresee more of the same. If there is a breakthrough which “cracks” this puzzle then we might indeed witness unforeseen opportunity."
Mr. Dediu even put together this very impressive chart showing estimates of smart TV unit sales for 2011 through 2014.
Click Image To Enlarge
I don't pretend to be an expert on smart TV's, but they appear to be overkill in my opinion, and a costly one, if I may say so. Let's not forget that I got it wrong when I predicted that the iPad would fail.
In the meantime, Apple is watching eagerly and taking careful notes as to the smart TV's that Samsung, LG, Sony, Panasonic and the other major TV producers are introducing into the market in 2012. If I were Apple CEO Tim Cook, I would be asking myself, "What would Steve do?"
Courtesy of an article dated January 10, 2012 appearing in MediaPost Publications Marketing Daily, an article dated January 4, 2012 appearing in C|NET CES 2012, an article dated January 9, 2011 appearing in The Wall Street Journal, an dated an article dated December 20, 2011 appearing in Home Media Magazine and an article dated December 14, 2011 appearing in Home Media Magazine
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