Three Surprises From The New Apple Big Top

Dave Zatz —  September 14, 2017 — 18 Comments

Due to the tremendous number of (accurate) leaks, there weren’t too many surprises from the new Steve Jobs theater located within the new Apple campus. But a couple of interesting items, that I hadn’t anticipated, caught my attention.

Apple TV Price Drop
I was convinced we’d see an Apple TV price drop of some sort, perhaps tied to a touchless-remote on the bottom-end, to bring them inline with the market leading Roku and Fire TV. However, Apple controls the supply chain like no other and is conceivably content with lower penetration but presumably larger margins. While not quite a surprise, again given those leaks, it was refreshing to see Apple will sell 4K movies for the same price as 1080P while upgrading existing purchases… for those who consume in that manner, anyway.

Expansive iPhone Lineup
While both the iPhone 8 and iPhone X were correctly predicted, in hardware if not name, I didn’t expect Apple would keep around so many former generations of phone. To meet a wide array of budgets and fend off the onslaught of solid lower-end Android handsets, the iPhone SE, 6S, 6S Plus, 7, and 7 Plus will join the 8, 8 Plus, and X on store shelves – in multiple capacities and colors. At least for now. Remember when they offered a single model? Beyond the expansive lineup, Apple is clearly committed to offering more than two years of updates (unlike the competition) — not that it’s a new m.o., but I do wonder if at some point they choose to fork the software a bit and continue to provide security patches to older OSes on hardware that cannot support the latest and greatest.

Wireless Charging
The leaks correctly indicated long overdue wireless charging would arrive, but I don’t recall seeing anything to suggest the direct iPhone 7 successor would incorporate it and I obviously didn’t envision it. But those desirable and standardized (!) Qi capabilities may be just enough to get me over the fence for an upgrade. And wouldn’t it be ironic if I charged my Apple phone from my Samsung pad.

18 responses to Three Surprises From The New Apple Big Top

  1. “I was convinced we’d see an Apple TV price drop of some sort … However, Apple … is conceivably content with lower penetration but presumably larger margins.”

    I think you are drastically understating the incoherence of their Apple TV strategy here.

    Remember that Apple has recently committed to spending $1B/yr on content. If you factor that in, which Apple won’t, it cuts into their Apple TV margins likely to negative. They’ve shifted Apple TV from a hobby to a money-losing business with an eroding future.

    Obviously the non-incoherent options would’ve been to either: 1) Produce a competitively priced Apple TV model, or even better 2) Allow Apple video on other boxes, while simultaneously producing a high-end, best-of-breed box of their own.

    But they can’t pick either of those sensible options since they conflict with Apple’s two prime directives: their service tied to them only as the hardware provider, and absurdly high margins on hardware widgets.

    So, instead, they’ve chosen the most non-sensible option of continuing to lose market share while lighting a large amount of money on fire at the same time. Cupertino!

  2. I agree that the strategy for Apple TV is completely lost (unless they have some super-secret plan to actually revolutionize TV, but any such possibility likely died with Jobs). The likely plan, which the masses have known about for some time now, was to produce a Sling TV like sub service, or maybe really drive App-based viewing, but Roku, Sling and others beat them to the punch. Like TiVo, Apple gets in its own way with outrageous pricing, even though they can still deliver a beautiful experience on phones and other devices (see the mythical AirPods). Apple TV is nothing more for me than a way to show my iPhone or iPad on my TV when the family wants to look at pictures or something that I have locally on my device. I think I have only once watched a movie or show on there, and while I have a game controller for it, I think the novelty of playing Crossy Road wore off for me about a week into owning the thing.

    I do like that they are keeping older phone gens around for a bit longer, as it allows my oldest daughter to keep getting some kind of functionality (though not all of the latest features, to be sure) on her 6s, and my middle daughter to get her first iPhone without dumping $700+. I don’t expect Apple to ever provide a cheap, plastic phone (like they did with the 5c), but having them provide various price points is a nice touch.

  3. “I agree that the strategy for Apple TV is completely lost (unless they have some super-secret plan to actually revolutionize TV, but any such possibility likely died with Jobs).”

    Even Steve-o didn’t have a plan! The furthest he ever got was getting Rupert Murdoch and Bob Iger to do him a personal favor for six months, and let folks rent their TV shows on the cheap. But short-term personal favors don’t scale.

    You’ve gotta do the hard, long slog of work to make a strategy work in this space. Amazon has been doing a helluva job, and at this point, it’s looking like a battle between them and the giant MSO’s for the future, where both survive.

    “Like TiVo, Apple gets in its own way with outrageous pricing”

    A slur on TiVo, Bricketh! As you well know, TiVo has actually been a bargain compared to MSO boxes, as long as you consider a rational time frame to amortize, (unlike Apple). And TiVo actually has had a notably superior UX to their competitors in the MSO boxes, (unlike Apple).

    “Apple TV is nothing more for me than a way to show my iPhone or iPad on my TV”

    Yup. AirPlay and Apple fanbois have been the only things sustaining their declining “hobby” here. But as I note above, now they’re getting really crazy by burning $1b/yr in content to sustain their “hobby”. I get continuing to make the boxes, but I don’t get continuing to make them if they’re now going to be losing money on a declining business. (Humorously, if they’d decided to burn money by heavily subsidizing that “skinny bundle” a couple of years ago, they could’ve ruled the space. But those days are gone.)

    And lest anyone think Apple’s content investment will make the Apple TV a compelling option at some point, consider that against their $1B/yr in content, here’s what the competition spends:

    Netflix: $6.5B/yr
    Amazon Prime: $4.5B/yr
    HBO: $2.5B/yr
    ESPN: $7B/yr

    And here’s the super-duper crazy thing: even if that $1B/yr buys them a show compelling enough to make it a “watercooler” show, it won’t actually become a “watercooler” show because too few people have an Apple TV to watch it.

    If Netflix, or Prime, or HBO makes something that becomes a “must-see” for folks, they can just fork over a minimal amount for a few months, which those services hope will keep them as subscribers. But if Apple makes something that should be “must-see”, folks aren’t going to fork over $180 to watch it. And without the numbers watching to talk over the watercooler, it ain’t “must-see”.

    Cupertino! Where they do supply chains great, lock-in great, and then, uh, hmm, well… That spaceship that is currently masquerading as an office building until it takes off is pretty cool…

  4. Say what you will about Apple’s content strategy, but the device itself stacks up just fine against the other streaming boxes and offers some nice features and cohesive integration for those already invested in the Apple ecosystem.

    At least Apple is attempting to create some relatively content agnostic solutions for making it easy to manage and access content across disparate apps with their TV.app, universal search, live tune-in etc.

    Frankly, all of the streaming boxes are fragmented, app-based messes, with stupid little remotes that require a decent level of tech-savviness to even operate.

    They are all clumsy alternatives to traditional grid-based guides with DVRs and proper remote controls (ala TiVO).

  5. Chucky, don’t get me wrong, I love my Roamio and Minis, and have always been an advocate of Lifetime service since the early days… That said, I also believe TiVo priced themselves out of the competitor space because it is much easier to sell people on a loaner box with a small monthly price tag to do the basic functions that most people want (recording and pausing live TV). The TiVo audience has always been people with more disposable income and typically more understanding of the benefits over the long haul, but had TiVo embraced a strategy in their earlier days that kept Scientific Atlantic from ruling the CableCo roost, they may have become the household name (which people still call their SA and other non-TiVo DVRs) and saturated, in-home content delivery system that they wanted. It’s hard to sell the average joe on $300-$500 up front, plus some sort of monthly service fee (or lump payment of another $300-$500), plus the rental of a cable card (at this point) when they can pay $10 to $15 per month for whatever crap DVR the local carrier has.

  6. “but had TiVo embraced a strategy in their earlier days that kept Scientific Atlantic from ruling the CableCo roost”

    Nah. Was never gonna happen, absent the Feds truly pushing 3rd party boxes hard, in which case, someone with deeper pockets or deeper connections than TiVo would’ve ruled the roost. (Steve-o would’ve had his “viable go-to-market strategy”.)

    However, it’s admirable to me how Amazon is incredibly smartly leveraging their very deep pockets and their very good customer service to position themselves advantageously for what is to come. They are to services what pre-dead-Steve-o-Apple was to hardware.

  7. Chucky, pricing is even harder to comprehend in relation to their content aspirations. Is it all children’s programming they assume most will watch on iPads? Are they waiting until content arrives to lower prices? Or expect the content to be so amazing, folks pony up for the boxes? Perhaps there’s some sort of master plan we don’t yet see.

    Bryan, I prefer Roku’s universal search and Amazon’s Fire TV remote – which allows me to reliably do stuff compared to Apple’s remote which doesn’t even always recognize the tender touch of my vampire skin. And most would prefer a home button that actually takes you to the homescreen with a single click. But I do appreciate Apple’s Siri keyboard dictation, but supposedly that’s coming to my Fire TV as well. I’ll likely use my Apple TV more once the Amazon video app hits. Unless I sell it first. But aside from all of this. almost all TVs are coming with apps now – so Apple is also competing with “free” in the box space.

  8. One thing that did surprise me was the journey away from the cadence they had set with ‘S’ models between major reworks. I honestly expected an iPhone 7S and 7S Plus to be the next versions in addition to iPhone X that was horribly leaked. Most of the leaks and speculation were focused on the higher end phone. Given Apple had decided to go “all-glass” with all the new phones in their line-up, I do understand why they would not consider this an ‘S’ version of what they introduced last year.

    it’s very apparent that most folks are either waiting for the iPhone X pre-orders. Doing a mock-order, I could click on all the carriers and the 8 and 8 Plus are all delivering next week. In prior years, the wait was a few weeks to a month for delivery by now. I wonder what heft margins Apple will have with the iPhone X? I’m definitely going to wait it out until next year, or perhaps, the year following…

  9. The trade-in valuations aren’t great this year, so I’m likely also staying put (on iPhone 7)… but I say that every year and two weeks later end up with a new phone. I’d feel guilty, irresponsible if I went for an $1149 phone though. And, as far as design aesthetic, the Galaxy S8 is the most beautiful phone I’ve seen (in person, anyway) and it comes with OLED, wireless charging, no notch, for hundreds less.

  10. “Chucky, pricing is even harder to comprehend in relation to their content aspirations. Is it all children’s programming they assume most will watch on iPads?”

    From what I’ve read, like everyone else, they’re after a “Game of Thrones” type must-see hit. And from what I’ve read, like everyone else, they see spending on content as primarily a lean-back play. (As always, video has much more value in the lean-back than it does on mobile devices.)

    “Perhaps there’s some sort of master plan we don’t yet see.”

    Nah. I really don’t think so. It’s just a nutso plan that leads nowhere, but as long as there isn’t a shareholder rebellion, they can pursue nutso plans that lead nowhere and light stacks of money on fire. Have any of their TV plans ever made sense? Did the parameters of the way they approached their “skinny bundle” plan make any sense?

    Willard: They told me that you had gone totally insane, and that your methods were unsound.
    Kurtz: Are my methods unsound?
    Willard: I don’t see any method at all, sir.

  11. Going by software hell that Roku is going through I would rather Apple keep the quality up. I would expect Apple new content to be playable on phones, tablets… Most content is not watched on any streaming device, it’s portable devices that why Apple is doing it. Smaller screens younger market = the future.

  12. “It’s portable devices that why Apple is doing it. Smaller screens younger market = the future.”

    That’s not what Apple has been hinting at in the trades.

    And, to repeat the mantra I’ve repeating for years: while folks certainly watch video on mobile devices, video has much more pricing power, and thus perceived value to consumers, in the lean-back than it does in mobile.

    I could literally give you 10 examples, but here’s one currently relevant example:

    Take Amazon. They are using the appeal of their Prime content as leverage to wage total war on lean-back boxes that won’t let Amazon do video retail business on those lean-back boxes in an economically viable manner – aka getting rid of the commission. You are likely aware of this war Amazon has been waging on Apple and Google, which Apple seems to be in the process of unconditionally surrendering to Amazon.

    But note that at the same time, Amazon doesn’t seem to give a shit about the exact same issue on mobile platforms. You can watch Prime video on iOS devices without Amazon requiring Apple to make any concessions. You can watch Prime on Android mobile devices, as long as you download the app through the Amazon app store rather than Google Play.

    What’s the difference? Amazon, just like everyone else in the business, sees video in the lean-back as having substantially more value to the consumer than video in the lean-back.

    And like I say, I could provide a boat load of more examples, but this example is one of the most clear-cut demonstrations of how the players see as the issue, and is one folks are likely already aware of.

  13. As always, video has much more value in the lean-back than it does on mobile devices.

    Ha ha, Chucky is old. We get it, you don’t watch TV on a phone, tablet or laptop. (Neither do I, generally speaking.) But it’s always dangerous to extrapolate your own experiences to the entire market. And trying to use Amazon’s strategy — with an emphasis on “lean back” — as some kind of validator of your opinion here seems a bit wrong-headed. Don’t you think this may have a teensy bit to do with the fact that Amazon tried to get into the mobile phone business and failed miserably? Meanwhile, they have gained traction in the TV-connected streaming device business.

    And you seem to keep assuming that the $1 billion that Apple plans to spend on video content will only be viewable on Apple TV. I don’t think we have any firm clues so far as to what Apple’s video strategy will be, other than that, so far, their first few (unpopular) shows have just been add-ons to the Apple Music subscription service (which has an app, BTW, for Android). Perhaps that will continue — video will just be a sweetener for Apple Music to help it gain more market share. It would seem un-Apple-like for them to include ads in the videos but that’s a possibility, which would definitely change the economics. Ad-supported free video is the direction Facebook is taking with their $1bn entry into original shows.

    If Apple intends to launch a separate subscription video service to compete with Netflix and Amazon Prime Video, and seriously wants it to become a profit generator on its own, then they’ll need to produce an app for it for Android on mobile (as they’ve done with Apple Music) and for non-Apple TV devices, e.g. Roku, Chromecast, maybe Fire TV. (It’s worth pointing out that Apple has a far lower share of the TV device market than they do the mobile phone market.)

    OTOH, maybe they do plan to spend $1billion on video for their own free service exclusively available on Apple devices (ATV, iPhone, iPad), using the content to help sell more hardware. I’m a little skeptical about how successful that would be, although they might build sufficient buzz for a show among younger viewers on the strength of viewing on iPhones. And if the free shows were ad-supported (and lots of young users are fine with ads in exchange for free video), then the video service may even be profitable on its own, apart from whatever halo effect it would have on hardware sales.

    I guess the third scenario is the Apple may try to make it a paid video subscription service that’s only available on Apple devices, which IMO would fail. Apple would likely be far less successful than Amazon has been so far (which is not very successful) in creating broadly popular “must-see” shows under that plan.

  14. “Ha ha, Chucky is old. We get it, you don’t watch TV on a phone, tablet or laptop. (Neither do I, generally speaking.) But it’s always dangerous to extrapolate your own experiences to the entire market. And trying to use Amazon’s strategy — with an emphasis on “lean back” — as some kind of validator of your opinion here seems a bit wrong-headed.”

    Dude. I have a background in the business of motion pictures. I continue to read the trades. What I’m saying about the value of video is not extrapolated from my own personal experience. And like I say, I could give you a bunch of other examples of my point here that don’t involve Amazon, but I’ve learned the hard way about where attempts at dialogue with you lead, or rather don’t lead, Tim…

  15. You read the trades, Chucky? Cool. I read Variety, Deadline, Multichannel News, Light Reading, etc. on a regular basis too. And as someone who’s read your voluminous posts here over the years (and back-and-forthed with some of them) you don’t much seem interested to me in dialogue, just close-minded bloviating that harps over and over on the same points. But whatever. That’s typical of internet comment boards, I guess.

  16. “You read the trades, Chucky? Cool. I read Variety, Deadline, Multichannel News, Light Reading, etc. on a regular basis too. And as someone who’s read your voluminous posts here over the years (and back-and-forthed with some of them) you don’t much seem interested to me in dialogue, just close-minded bloviating that harps over and over on the same points. But whatever. That’s typical of internet comment boards, I guess.”

    It’s worth noting that you entered this thread with ad hominem, Tim. Your damn opening paragraph was ad hominem. Who enters a conversation that way?

    It took me a bizarrely long time to figure it out, since you have a high enough IQ to write coherently, but as we both know, I’ve had your number that you’re a garbage person for a while now.

    I may well “bloviate” on the few topics I have a very high level of specific familiarity with, like this one, as is kinda normal behavior. But unlike you, I’m genuinely happy to be shown wrong on any given topic, so I can goddamn learn something. Learning new stuff contrary to what I’d previously believed is how I get my kicks, unlike a garbage person like you, Tim, who only wants to win arguments.

    And given that you read the trades, Tim, (cool), I find it odd that you are entirely unfamiliar with the industry’s universal take on the relative monetizable value of lean-back vs mobile video. It’s not really a point in dispute, although people of good faith could certainly dispute the broader implications of that point to the topic at hand. But you’re not a person of good faith, Tim. You’re a garbage person.

    And given that you’ve succeeded in pulling me down in the mud with you away from the non-ad hominem topic at hand, you win the argument! Garbage people like you, Tim, are good at that. All the lulz are yours! Congrats! Pepe for the win!

  17. I’m an Apple household but also a TiVo household. A while back I had to make a decision on which platform I would make my movie purchases. I decided to go with VUDU because of their disc-to-digital program as well as the TiVo’s 24Hz support. My brother went the iTunes route (he doesn’t own a TiVo, FWIW). I sometimes switch to his iTunes account on my Apple TV 4, and I’m happy that Apple has made iTunes account-switching pretty easy.

    The news of the Apple TV 4K providing free 4K upgrades had me second-guessing my choice to purchase movies via VUDU, and there’s a thread on VUDU’s forums with others clamoring for an official response from VUDU on whether they’ll offer free 4K upgrades (yes, as many have pointed out in that thread, that decision is likely up to the individual studios and not VUDU).

    One final note for those who care: Apparently the Apple TV 4K (like all Apple TV’s before it) only support 60Hz playback. That’s a big disappointment for me, as I hate judder.

  18. “Perhaps there’s some sort of master plan we don’t yet see.”

    Maybe they’re going to try and have the best picture/video quality out there and target videophiles? I have no idea.

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