The chief executive of Apple is continuing to call Apple TV a hobby and says the company needs something that could go more main market to be as significant as its other products. For some, this is the clearest indication yet that Apple has its eyes on the television screen. Samsung, the market leader in flat screen televisions, claims it is not concerned by any threat from Apple. However Apple is continuing to improve the integration of its products with Apple TV. A new version of the Apple TV box could be the precursor to integration in the television screen.
Tim Cook told analyst Bill Shope at the annual Goldman Sachs Technology Conference that Apple had sold just short of 3 million Apple TV devices in the past year, with 1.4 million sold in the last quarter, compared to 37 million iPhones, 15.4 million iPads and 5.3 million Macs.
“It’s clearly ramping, but the reality — the reason we call it a hobby — we don’t want to send a message to our shareholders that we think the market for it is the size of our other businesses: the Mac, the iPad, the iPod, the iPhone.”
“Apple doesn’t do hobbies as a general rule. We believe in focus and only working on a few things. So, with Apple TV however, despite the barriers in that market, for those of us who use it, we’ve always thought there was something there. If we kept following our intuition and kept pulling the string, we might find something that was larger,” he said. “We need something that could go more main market for it to be a serious category.”
A new version of the Apple TV is expected, with indications that Apple is running down stocks on the current product, which typically signals a new release or announcement.
Apple has also released a developer preview of the latest upgrade to its OS X operating system, due to arrive in the summer. Known as Mountain Lion, it brings many features and applications from its iOS operating system, as used by the iPad, iPhone and iPod Touch, to the desktop and laptop.
Among the new features will be the ability to stream a computer screen to a high-definition television connected through an Apple TV using AirPlay Mirroring.
That means any video that can be viewed on a Mac, including sites that use Flash, could be shown on a television screen over a wired or wireless network connection. Media companies will not necessarily be able to detect this or block it, any more than they can currently stop people connecting a laptop to a television screen with a video cable.
Apple TV now has a whole new set of use cases, from enabling corporate presentations to sharing a web page on the living room screen, using the most appropriate device and user interface available, without having to fiddle with cables or change video inputs.
It is a small step to imagine a television screen with this facility built in. That could be a television from any manufacturer that chooses to licence the Apple AirPlay technology.
If Apple is going to launch a television, Samsung seems unworried by the threat. Speaking to reporters a their European Forum in Prague, AV product manager Chris Moseley said: “TVs are ultimately about picture quality. How smart they are, great, but let’s face it that’s a secondary consideration.”
“The ultimate is about picture quality and there is no way anyone, new or old, can come along this year or next year and beat us on picture quality,” he said. “So from that perspective, it’s not a great concern but it remains to be seen what they’re going to come out with, if anything.”
Samsung has 10,000 people working in research and development in the vision applications. The Korean company has a 32% share of the total European television market and a 60% share of the premium market for screens over €1,500, Michael Zoeller, the European marketing director for television and audiovisual at Samsung Europe, told the conference.
However, that would not preclude Samsung, LG or Sharp, producing flat screen panels for a company like Apple, or the possibility that Apple could buy out some of their production capacity.
One might imagine that they are making healthy profits out of selling large flat screen televisions. In fact all three are making losses on their screens.
Samsung produces key components for the Apple iPhone and the iPad, although both companies are involved in patent litigation over their rival products.
Samsung is apparently looking to move its focus from LCD to OLED screens, which are seen as the next generation of technology.
The reality is that picture quality is only one consideration for many consumers and manufacturers increasingly differentiate on design elements, such as how thin they can make the screen and bezel.
The user interface remains a key area in which manufacturers can compete. While the latest television screens may be smart, many have user interfaces that look like they have been designed by engineers.
If Apple, now the largest public company in the world, can bring its legendary design elegance and user interface expertise to the television, and build on its learning with Apple TV, it could well produce something that is more “main market”.