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Why Apple Needs to Sell More than Just a Television Set with the Apple TV

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The internet is abuzz with an increasing number of reports on the 2012 release of 32" and 37" Apple televisions in third or fourth quarter 2012.

Commenter aaronl makes a really smart point about what the reported size of these sets means about Apple's strategy going forward:

"If Apple is targeting the 32″ and 37″ market, I would not be surprised if they intend to handle their entry into the television market quite differently than, say, Bose with its 46″ high end set. A 32″ TV would not be much bigger than the 27″ iMac," Aaron writes. "I am left wondering if they are going to be trying to go after the second TV set market – bedrooms, dorm rooms, etc. – while leaving the living room to the popular 42″ (and larger) sets and panoply of media devices people already own (DVD players, cable boxes, game consoles, etc.)

"Then, having made the stealth entry, they can wow consumers with their technology and interface, before they start producing larger sets for the living room. It would be a departure from tradition for Apple to license the manufacture of hardware to other manufacturers, but if it can control the OS (and they weren’t scared off by Apple’s historic pulling of the plug on the third party production of computer hardware) I could see Apple doing that as opposed to trying to stay at the leading edge of television technology – a market in which the big, experienced players seem to have a lot of difficulty maintaining profits.

"Their size choices suggest that their goal is to sell something other than the television itself – TV’s are notorious for their thin profit margins, and smaller sets aren’t likely to appeal to the traditional high end electronics buyer. It seems obvious that the TV would include the iTunes Store, where you could rent (and perhaps buy) shows and movies. But you would also likely see sets powerful enough to support some impressive app- and cloud-based gaming, as with the iPad.

"I remain a skeptic, as entering the TV market seems like a much bigger step than the rumored bravado suggests, and it seems possible that the rumors may turn out to have little to do with reality, but I’ll admit that I was a skeptic of the iPhone until I saw its launch, and I was a skeptic of the iPad as seeming like “just a large iPhone, without the phone”, until I actually used one. So I’m prepared to be proved wrong in all of my speculation (Apple has a history of doing that to me) and hope to be impressed."

I'm with Aaron on this one. After the success of the iPhone and iPad, it's pretty hard to doubt Apple's business savvy. Selling the TV to sell the platform is also a pretty sensible move on Apple's part. That's what Amazon has done with its Kindle Fire which is, essentially, a portable cash register for the online retailer.

I do think Apple will need to improve its iTunes store if it really wants to capture the TV/entertainment market in a meaningful way. With Netflix, Amazon, and the various other TV services out there from Hulu to Vudu and so on, it's not going to be easy.

Will Apple release a subscription service for music and video streaming? What, other than the Apple brand and aesthetic, will convince users to go with an Apple TV over an LG or a Samsung?

One thing that Apple has been able to convince users of is ease of use. An iPhone just works. So does an iPad. So does a Mac. But so does my TV. Even with lots of new technologies in new television sets, most of them work pretty well. Plug in your TV and hook up the Roku and you're ready to roll.

This is a very different market than the tablet or smartphone market, and I have trouble seeing exactly where Apple can differentiate itself in a truly meaningful way.

But I'm happy to be surprised. My tech-skepticism is always of the reluctant variety.

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