Apple TV is no More?
Apparently, the iPhone maker has decided to pull the plug on its plans of making the Apple TV. This should be helpful for investors as they can finally change the channel instead of waiting around and wondering if the years of speculation and rumors from the press and even some secretive and vague hints from the company itself were based on fact. It was reported this week that after several years of development, Apple Inc. has finally decided to shelve its plans of developing a high-definition TV set. According to rumors, the company finally decided to put a halt to its plans because the new features it had been considering, which included a video-calling function, would not be enough on the innovation scale to make it worthy of the company’s brand.
There has been a lot of change in the past four years since the late Steve Jobs informed his biographer that he had finally learned how to use a simple interphase for building an integrated TV set. Services such as Hulu and Netflix, along with streaming media devices, have led to a shift in the television experience and hasn’t created the need for innovative and expensive television sets. Apple has also played a role in this shift as it has sold more than 25 million units of its Apple TV box set have been sold since it was launched in 2007.
Likewise, the company also launched the iPad in 2010, which further contributed to this shift and the American technology giant has sold 280 million iPads since then. The iPad is used as a secondary viewing device rather frequently due to which it is considered relevant. Nonetheless, a television branded by Apple has remained a persistent rumor in the consumer electronics industry and also the investment community. The most obvious example was shown on Monday, when a report was 3,200 word report was published by activist Carl Icahn.
The report predicted that in fiscal 2016, the Cupertino, California based firm would sell about 10 million units of ultra-high definition set. He further added that the set would have an average price of $1500, which is actually double the average of what’s currently being charged for a flat-panel set. This projection helped in supporting his argument that the stock of Apple Inc. is worth $240 per share, which is an 84% increase above its current level. As far as Apple is concerned, the challenge for the company has always been more than just building a new television set with some cool features.
The business model of the firm depends on the share commanded by its products, which has to be enough to sell millions of units at a high price. Margins play an important role in the company’s model and it is expected that the current margin would remain constant at 40% until fiscal 2017. However, the margin earned by most TV set manufacturers is mostly in the single digit range or a little bit higher, but it is nowhere near Apple’s.