The growing relationship between Sharp and Apple that was revealed last week put to bed conjecture whether Apple's next leap might be into television. It is. And that leaves an open question: Has Apple gone mad?
The profit margin on TV's is razor thin at best. In 2007 the average screen sold for $982; this year it's $545 and, in many cases, TVs are a loss leader for electronics retailers (you make money on the cables, you know). Apple has always been about margin and their phones, computers and tablets have had a much higher profit then just about anyone else.
While people will buy a new computer or car or phone every couple of years, they tend to stick with one TV for a long time. The Consumer Electronics Association has HDTV penetration at 87 percent, which means anyone who wants one probably already has one. Apple will have to find a way to convince buyers that they really need a new TV, and a technology bell or whistle isn't going to cut it. Sales of 3D TVs are in the toilet and that was supposed to be the next big thing.
Steve Jobs dropped a hint to his biographer when he said he had finally figured out how to change the TV market. Like all of Apple's breakthroughs it had to be in the arena of the user interface demonstrated with the release of the iPhone 4 – the voice interface Siri. The Apple TV final product may not be hardware at all, but voice recognition software. And after all the years that Apple has remained steadfastly against licensing its technology, Siri could become a standard in television and a steady stream of revenue for Apple.
In the past two years, TVs have become connected to the internet, cable systems, and telephones with multiple input ports. But that has made their use even more complex for the average user. A huge after-market industry for universal remotes relies on this complexity for their sales. In fact, the complexity of modern electronics is the final barrier to adoption for many.
But Siri could make controlling the various functions as simple as vocalizing a request. "Adjust sound for music." "Record CSI:Miami." "Show me email." Combining the technology with Facetime would make it possible for the user to say, "Call Mom" and start a video chat on the main screen. The vision of a communications hub in the home could be realized, not with new hardware and a bunch of cables, but with one app.
That's pretty big.
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