AAPL – 2 Big Reasons Apple Will Not Launch Apple TV In 2014

Is TV attractive enough for Apple?

   
AAPL – 2 Big Reasons Apple Will Not Launch Apple TV In 2014

AppleTV AAPL   2 Big Reasons Apple Will Not Launch Apple TV In 2014NPD Group analyst Paul Gagnon says the development of an Apple (AAPL) TV is on hold again. A TV product from Apple had previously been expected in 2014. But Gagnon’s supply chain sources say the long-expected, never-arriving date has been pushed back yet again.

Apple has two major issues with TV production, Gagnon says.

  1. TVs aren’t replaced often enough for them to be an attractive business for Apple. Until Apple can persuade us to buy new TVs more frequently, the business doesn’t seem attractive.
  2. Apple wants to assure its TV’s success by offering compelling content that is better than traditional TV fare. That’s way out of Apple’s comfort zone. It’s taken years for Netflix (NFLX)  to achieve the same task, for instance.

Gagnon writes:

According to our Global TV Replacement Study, the average TV replacement cycle is 7-8 years, as opposed to replacement cycle purchases for mobile devices Apple currently sells, which is 2-3 years. In addition, consumers are likely to only purchase one Apple TV per household, as opposed to multiple phones or tablets. Even laptop PCs have a much shorter replacement cycle than TVs. In the end, Apple would have a difficult time keeping products updated with the latest hardware and software, unless it took a modular approach to upgrading components, such as what Samsung has done with their Evolution Kit for TVs.

To offer truly unique product differentiation that would allow Apple to capture market share from existing smart TV brands, they would need to either deliver some exclusive source of content that the other brands cannot, such as a la carte pay-TV channels, or proprietary content not available on other devices. Neither of these is easy to achieve, and our sources indicate this is one of the principle reasons for the delay in the project.

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Article printed from InvestorPlace Media, http://investorplace.com/2013/11/aapl-apple-tv-nflx/.

©2014 InvestorPlace Media, LLC

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