Why Apple Doesn’t Make TVsPosted on .
Have you ever wondered why a cable box, Roku, and PC are not embedded into your television set? On the surface it seems like a logical next step – hardware is cheap, devices are small, and convergence has been a buzzword for a decade. Apple has even been rumored to have an iTV in the works for four years. So what gives?
I hate to be the bearer of bad news, but there is a reasonable chance that a unified TV/PC will not happen.
I sat down last week with the head of Global Business Development for Samsung to get a sense of where things stand. As it turns out, Samsung first tried to embed basic WiFi in television sets ten years ago. Many consumers weren’t able to get it to work with their home network, and in the end they returned the TVs for another model.
Seems like a small issue, but it was a disaster for Samsung. Every returned television set cancelled out the profit of six TVs sold at full price.
All television companies have learned this lesson at one point or another. They now hold back technical advances until they are foolproof. Good luck getting a feature approved if it risks confusing the customer.
In January I had a chance to meet Steve Ballmer, who spent 15 minutes discussing Microsoft’s television strategy. Microsoft purchased Perceptive Pixel in 2012, which makes giant touchscreen displays, and many people assumed MSFT would go into the television business too.
Instead Steve Ballmer rattled off the problems with television manufacturing: seven year replacement cycles, low margins, expensive returns, high shipping costs. He said that TVs are furniture, and Microsoft has no intention of going into the furniture business.
So my belief is that we will always have devices attached to TV sets, which bodes well if you are an investor in Roku or Fan TV (in our portfolio). I also expect a lot of new entrants in this area over the next five years, particularly from Android-based devices. Companies like Comigo out of Israel are lowering the bar for carriers and operators to get into the hardware business.
The only hope of reversing this trend is if Apple can convince consumers to pay twice as much for a truly converged TV set. Apple has done it before, but not under the current leadership. And the likelihood is that they would not accept returns.
Ian is a co-founder and partner at Greycroft Partners in New York City. He has been a venture capitalist since 2001.