Two Reasons Apple Will Make A Television, Not Just A Little Apple TV Box

Apple TV

[credit provider=”Ap Image of Tim Cook, Photo illustration by Jay Yarow”]

The most recent round of reporting on Apple’s television project centered on the idea that it would just make a suped-up version of the current Apple TV.Jessica Vascellaro and Shalini Ramachandran at the Wall Street Journal reported, “Apple Inc. is in talks with some of the biggest U.S. cable operators about letting consumers use an Apple device as a set-top box for live television.”

This was an unexpected twist because most people were expecting a full blown television.

While it’s possible Apple makes a little set-top box, two analysts argue for two different, but equally compelling reasons, that Apple won’t just make a set-top box.

Heather Bellini at Goldman Sachs says in a report that Apple could use a television as an anchor to lock people into iPhones and iPads.

Televisions are expensive, and rarely replaced. TV purchases are made every eight years. If someone buys an Apple television, then they would be signing up for a eight years with iOS, the operating system that would presumably power a TV. This would lead to Apple selling more iPhones and iPads.

Incidentally, this solves one of the critiques of Apple entering the TV business. A lot of people say the television business stinks. It’s a low-margin, commodity business and people aren’t going to flip their TVs every two to three years like they do with computers. (Never mind that people made the same critiques about the phone business.)

By locking people into the Apple platform with a potentially low-margin TV, it can sell more high margin iPhones and iPads.

Selling a cheap little Apple TV box could get it more households, but because it only costs $100, people aren’t going to feel as bound to it as they would if they shelled out $1,500+ for a TV. The expensive TV is a better way to keep people locked to Apple.

There’s another reason to believe Apple is going to make a full-on television. And it’s much simpler.

Speaking at our IGNITION conference, Piper Jaffray’s Gene Munster pointed out the obvious fact that Apple is a hardware company. What differentiates Apple from its rivals is hardware more than software.

If you think Apple is just going to be content with some little box, you’re nuts. Jony Ive probably has an idea about how to make a beautiful looking TV that blows away the competition.

Click here to see Munster’s full presentation from IGNITION >