Why Apple Won’t Release an HDTV

Last week, analyst Gene Munster’s prediction that there would indeed be an Apple television caused quite a stir. Despite the commotion, I’m still not convinced.

When I speculated about Apple’s living room strategy back in July, I dismissed the idea of an Apple HDTV, largely on the belief the company wouldn’t be eager to join a market where prices are dropping and overall household penetration is nearing 50 percent. Munster believes such criticism won’t phase Apple, and to make his point he brings up the mobile phone market, stating that if Apple remade one mature market, there’s no reason the company can’t do it again with TVs.

Ignoring for a moment the fact that Apple competes in the mobile market’s smartphone segment, where margins are fat and year-on-year growth continues, let’s examine the other reasons why Apple will stay away from HDTVs:

No Subsidization/High Pricing.
Part of the reason the iPhone went mass market is the high-levels of subsidization, meaning AT&T sells every one at a loss as a cost of acquisition to get a consumer under a two-year contract. TVs would not have any such subsidization, nor would they have the fairly attainable prices of the iPhone (any Apple television would likely carry a price tag of $2,000 or more), putting it out of reach for many households.

Length of Ownership is Vastly Different
People own their TVs for a long time. Part of the problem for TV manufacturers in general is that consumers who just paid a $1,000 for a nice screen aren’t going to want to buy a new one anytime soon. Sure, Apple can offer an OS X–powered TV with App Store goodness and interaction with an iPhone, but chances are the same consumer would rather connect a refashioned Apple TV to their existing HDTV.

The Future of DVR is Multi-Room
Munster says an Apple TV would be a full-featured device with a built-in DVR. This is a flawed concept from the get-go, partly due to the fact all-in-one TVs never do that well, but mostly due to the fact the future of the client-based DVR is multi-room. This likely means most DVRs in the future will be a multiple-device solution managed by a carrier, given that a managed home network will likely be needed to make the product work well.

TVs Makers Need Lots and Lots of Models
Take a trip to Costco, and you’ll see how many TV models Philips or Vizio offers. While either manufacturer would prefer the simplicity of a one-size-fits-all 50” TV for everyone, they know every consumer — and house — is different. Apple has done well with the iPhone by selling basically one device with slight variations in flash memory. With TVs it would need a lineup of five or more products, and that’s even before you consider the need for different display technologies like LCD, OLED and even 3-D TV.

These are just a few more reasons Apple won’t go into the HDTV market. Given that there’s no reason a remade Apple TV and an iPod couldn’t revolutionize the living room, jumping into the mature TV market is a road Apple will choose not to travel.

Question of the week

Do you think Apple will have its own HDTV?