In February of 2012 I wrote a blog post called Chocolate Cheesecake, Apple’s Flat Panel TV and Steve Jobs. The post was my way of processing sadness over the loss of this wonderful man, who had made a huge difference in my life. I predicted iTV was coming and even described how it would work. At the same time I questioned if Apple could continue to innovate without the vision of Steve Jobs. I pointed out some things I was seeing in the updates to the Macintosh OS that worried me.
“I really wonder now that Jobs is gone how will Apple fair at this magical process? With no one like Steve to say “its crap start over” what will happen to new products being developed?”
So now, a year later (mid April 2013), can the question be answered with anymore clarity?
Based on the precipitous drop in Apple’s stock price from the $700 range to under $400 it would seem that Wall Street has lost faith in Apple’s ability to continue to alter the landscape they owned in 2012. Why? There are probably two major reasons.
Market Share. Apple has felt the power of Samsung and the Android OS developed by Google. Even though they are not as well constructed as the iPhone and iPad, Samsung offers a greater range of cell phones at all prices including low cost. In smartphones Android has more international market share than Apple while Apple still dominates the tablet marketplace. It’s not like Apple has stood still, over the last year they have developed several new models of the classic iPad (smaller screens, more resolution, more memory) but these are all evolutionary incremental changes, not the revolutionary changes that sprung from the brilliant mind of Steve. Rumors abound of the iTV, a low cost iPhone and most recently a iPod-screened wrist watch encased in a glass bracelet. Since these products have remained rumors a good deal of confidence in Apple’s fulfilling Steve’s dreams has been lost.
Perseverance. It’s too early to write Apple’s epitaph. Steve left us only a year and a half ago on October 11, 2011. While that might seem like a long time in the world of computer tech, I don’t think it’s long enough to design and test a product of the scale of Apple’s past innovations. Steve first hinted at the iPhone in 2003, and it was not ready until January of 2007. That is 4 years! So assume by “cracked the code” Steve meant that in 2011 he had an iTV design he felt could be successful. Then using the same math as the iPhone, it stands to reason we would not see an iTV until 2015, over 2 years from now. Add to this the fact that Jonathan Ive, the industrial designer responsible for all of Apple’s case designs, is now heading up the software division and you’ve added more potential delays. Couple that with the loss of iOS visionary Scott Forstall plus the fact Tim Cook runs Apple by consensus instead of conflict, and it’s easy to tack on another year of delays, taking the iTV to at least 2016.
Steve was only able to focus on a single revolutionary product at a time. Indeed he often pulled engineers off existing projects to make sure to make sure whatever was his favorite product got the priority he wanted. Thus to assume Apple is working on multiple revolutionary products, such as an iPad based watch or radial digital glasses seems unlikely to me.
The Broadcast and Cable Establishments
There is one major wrinkle in iTV’s future. The Broadcast and Cable Establishment. The term Broadcast Establishment was coined by Ted Turner when he took on the television networks during the Regan era, when the White House would not share it’s video’s with anyone but the big 3 networks. Ted showed you could beat the establishment when he created CNN’s 24 hour television and changed the model itself. But for Apple it’s way more difficult now. The nemesis is the way the networks and cable industry have locked down the commercial models distribution of television in America. There is not enough room on our the drives of our SQL server to discuss this issue in proper detail. But you can find some amazing articles online that describe why the networks and cable companies don’t want to see Apple gain a foothold in television like they have done to the music industry with the iPod and iTunes. Without the iPod there would never have been iTunes and without Jobs getting the music industry to agree to selling 99 cent tracks there would have never been the revolution in music we now enjoy. Apparently Steve Jobs has been unsuccessful in getting his reality distortion field to hypnotize the Broadcast and Cable Establishment.
Here’s what Forrester’s James McQuivey had to say on his blog :
“Let’s be clear what the company is up against in its long-rumored interest in the TV business. The reason it has failed with the Apple TV so far is not that it hasn’t tried. It’s that the TV business is a tough nut to crack: Content is still controlled by monopolists unlikely to give Apple the keys to their content archives. And simply introducing a new display on which to watch that content as it is currently delivered by existing distributors won’t offer consumers much that’s new.”
The basic concept here is that Apple will never be able to strike deals with content providers sufficient to support an iTunes for television. And if all Apple plans to do is improve its current Apple TV set-top box, which means steaming content through television set, it will not have a compelling offering.
Time to buy Apple Stock
So with all this going against Apple it’s my opinion that Tim Cook will strike a deal with the broadcast networks. The price of Apple’s stock was run up to unrealistic levels and it has similarly been unrealistically beaten down. Indeed if we are 2 to 3 years away from an i-television you can wait to buy a while longer. However given the fact that the iPhone is due for a major hardware update, and June 2013 is the most likely time such a product would be launched, I would not be surprised to see Apple’s stock jump from its current under $400 price to as high as $500, before dropping again. It won’t be until we see the iTV, digital watch or i-Glasses that the stock will return to its highs of 2012.