1/24/2012 7:44 PM ET
|The electronics world is buzzing about the possibility of a TV set to match your iPod, iPhone and iPad. Here's what might be in the works -- and how it could affect your viewing habits and investments.
After Steve Jobs left the scene, he offered a tantalizing hint from the grave about the huge revolution in TV that lies just around the corner. "I finally cracked it," he says in his posthumous autobiography "Steve Jobs," alluding to the blueprint he developed for user-friendly Internet TV.
"This quote seems to offer the best evidence we have seen that such a device is actually in the works," says Goldman Sachs analyst Bill Shope.
That quote also set off rampant speculation about whether the next iteration of Apple TV will be an actual TV, a plug-in device or some kind of collaboration with a TV manufacturer (not likely). It reached a fever pitch at the huge Consumer Electronics Show in Las Vegas earlier this month, overshadowing lots of actual devices.
As is the way with Apple (AAPL, news), the details of any such device are a closely guarded secret. But the implications are clear. Apple may soon change the world of TV and movies the way it has the music industry -- leaving a host of video entertainment players wounded, from cable providers and content producers to traditional advertisers and the DVD industry.
Apple won't have this new world of TV to itself, of course. Just as Google (GOOG, news) proved itself to be a worthy Apple competitor in smartphones with the Android operating system, the search giant also wants to be a major force as TV and movies go online.
Michael Brush
Other major forces at work here are evolving consumer tastes and habits in video consumption -- including a willingness to pay a buck or two for a TV show you can get for free, or at least with a cable subscription -- and that inexorable source of change, technology itself. It's making the transition to online TV and movie consumption not only possible, but easy.
The Apple model
Except to extreme Apple fans, the exact form the Apple TV takes almost doesn't matter, because Apple's motivations are already clear. It needs a great Internet TV device to move more people onto its platform and into its cloud of online content storage services -- two key pieces of Apple's strategy, says Dave Eiswert, who manages the T. Rowe Price Global Technology (PRGTX) fund, which has beaten competitors by an annualized 8.5% over the past three years.
The model here is what's already happened to the music industry. Great devices, starting with the original iPod, combined online with Apple's easy-to-use iTunes store to change the way people buy and own music. The record store, the CD, makers of rival music players and a lot of online competitors were left in the dust. The recording industry learned to play by Apple's new rules.
The difference now is that Apple wants to move the entertainment its customers own off of their Macs and PCs and into its online cloud. This will tie more customers to Apple's ecosystem -- and make it more likely that the next device they buy will be an Apple product.
"Apple wants to move away from the Mac to the cloud as the center of your Apple experience, and Apple TV plays into that," says Eiswert. "It is a battle about platforms, and Apple TV is just one part of that platform strategy. The point of Apple TV is to hook you into their platform and sell more iPhones, iPads and Macs."
Apple TV: The device
Of course, you can already buy "Apple TV" -- a box that lets you stream video from computers to your television. And you can buy TV and movies from the iTunes store to watch on a computer or other Apple device.
But an actual Apple TV -- or a more sophisticated version of the current offering -- could be a game changer.
If history is our guide, we can guess the new Apple TV will be a cool device, probably the coolest of its kind. It will likely be voice-activated using a variation of the Siri system that already allows users to talk to the iPhone. Expect state-of-the art touch screens and intuitive controls. "They have revolutionized so many devices, it is almost inevitable that they would try with TV," says Peter Atkins, managing director of Permian Partners, an investment firm. "My guess is it is a near-term thing, within the next year, possibly."
The device could spur Apple's next growth phase. It would also to contribute to an ongoing change in how we buy and watch video -- shifting consumption online while steamrolling traditional video and TV outfits like cable and satellite companies. SNL Kagan estimates the number of people who "cut the cord" and convert to what industry experts call "over-the-top" or online TV and video will grow to 12.1 million households by 2015, about 10% of homes.
Lots of college students -- who often shape trends -- are already there, viewing just about all their TV and other video content online, points out Michael Scanlon, a tech analyst with the John Hancock Balanced A (SVBAX) fund, which has beaten competitors by an annualized 3.5% over the past five years. "Long term, over-the-top content will succeed. It will just be a slow march to get there," says Eiswert.
No comments:
Post a Comment