Why Apple will make an iTV - the case for an Apple television set

In a previous post I made the case against an Apple iTV.  Since then, a rumor has surfaced stating that Apple has delayed its iTV product until at least 2015 due to trouble negotiating TV rights.  Despite repeated trouble securing content deals, it seems Apple refuses to throw in the towel.  In this post I'll give my thoughts on why they keep trying despite repeated failures.

Note: throughout the article I’ll refer to an Apple television set as the ‘iTV’ to differentiate it from their current set-top box, the Apple TV.

Why Apple wants to make an iTV:

Televisions are a very competitive business with low profit margins and stagnant growth.  So why the heck would Apple want to make one?  People watch a lot of TV.  Perhaps Apple sees that as lost screen time they could be capturing and monetizing.  An iTV could be the 4th pillar of their ecosystem (in addition to phones, tablets, and computers) that connects with your other Apple devices and services.

Americans love their television:

People loooove television.  Americans watch about 5 hours of television per day according to Nielsen.  That's an incredible amount of time.  Currently, Apple's involvement in the TV-watching experience is limited to people checking their iPhones and iPads while watching their favorite television shows.  The current $100 Apple TV set top box has some great streaming services, but it is somewhat of a niche product for heavy Apple users.  It has only sold a few million units per year for the past few years, which is a small percentage of the number of TV's sold.

If the Apple TV's streaming services were integrated into a television with an iCloud DVR, simple and intuitive operating system, and a great screen it could be a compelling product.  If I were Apple I'd try to reinvent the TV guide in such a product.  It would show you relevant live TV, DVR'd shows, and Netflix/Hulu/HBO Go listings along with iTunes movies and TV shows all personalized to your subscriptions and preferences.  They could do something similar in the Apple TV set-top box, but then it wouldn't include live broadcasts and a DVR, at least not without a dramatic redesign and price increase.

Wrap-up - the iTV extends the ecosystem:

If Apple is able to design an iTV that integrates compelling proprietary services like iCloud DVR, iTunes, the App Store, podcasts, FaceTime, and iPhoto it may be enough to keep people in the Apple ecosystem (and not convert to Android or Windows.)  Given the money at stake in the smartphone and tablet markets, that may be reason enough to make an iTV.