Categories: AppleGadgetsIndustry

Three Surprises From The New Apple Big Top

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.

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  • "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!

  • 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.

  • "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...

Published by
Dave Zatz