In yesterday’s post I covered where Apple has been in relationship to the TV concept.  So all signs point to Apple’s next market involving TV.  But knowing the past and what Apple has done and figuring out they are going is two very different things.  Hindsight, they say, is 20/20.   Will that be just content supplier of TV?  An actual traditional TV? Maybe even a new type of physical TV? Apple has the know-how, technology and foresight to set up things well ahead of time to make an Apple TV work.  Apple needs to get both the technology and consumers in a position that will make them want to get this “magic” new 4th market device.

First what we do know…

We do know that Apple is finishing up a $1 billion, 500,000-square-foot data center set in rural North Carolina. Code-named “Project Dolphin” by locals, it’s a huge invest of time and energy by Apple.  A lot of people, claim this is just for the upcoming iCloud service… To me, that seems like over kill.  Could this be related to whatever Apple is planning on releasing?

We also are aware that Apple currently has an AppleTV that is just a hobby that has only sold 3 million units (both gens 1 & 2) since it’s come over 5 years ago.  Jobs let us know it was something for hobbyist.  To me this means “early adopters”.  But early adopters for what?

Apple as a TV Subscriber?

Unfortunately it looks like this ship has sailed.  Late last year Apple and studio executives tried to work out some sort of subscription model.  Unfortunately between being afraid that they’ll anger cable and satellite companies, and worrying that they’ll fall into the same trap which locked Apple in as “the” music store online (and arguable saved the record companies), it never happened. Apple’s idea was to subscribe to the shows you wanted, and not pay for the ones you didn’t.   Apple apparently has given up that idea this past spring, say the executives reported in a BusinessWeek article.  Would have been nice though.  How many people would have instantly canceled their TV subscriptions and bought a $99 AppleTV.  I know I would have.

Apple TV… as a TV?

This is the prevailing rumor that I just can’t see happening.  Supposedly analyst have found evidence that apple is gearing up to make a TV set in 2012.  High ranking TV related people have rumored about it, TV component people have rumored about it, people have even claimed that Steve Jobs himself hinted at apple producing a “real” TV unit (although more on that later).  But look at the downsides of apple making TVs.  TVs are high production, low margin.  Not typically a game that Apple plays.  Consumers tend not to replace a TV very often. Traditional flatscreen TVs are also typically  big.  You don’t go and buy a small TV for your living room.  This is something you wouldn’t imagine fitting into an Apple store.  Roll all that together and you get a large item, that people don’t by very often (even less than computers), that’s expensive, and a very low-income source for Apple.  And low-income isn’t something Apple is known for.

Also could you imagine bringing your 50+ inch TV to an Apple store Genius bar to be fixed? Yea, I can’t either.

Apple TV… as a Service?

Perhaps the future Apple TV won’t be an Apple device at all.  Apple could license out the Apple TV experience to TV manufactures.  I see this going two ways.

The least likely of them is Apple allows companies to put a fully functional AppleTV into the TVs.  With All the features of AppleTV at their disposal, companies wouldn’t have to worry about trying to set up an app eco system, or work out content deals.  You could just use the iOS architecture to get all you need on your TV.  Only down side with this idea is that Apple doesn’t really like giving up control, and I can’t imagine the TV manufactures letting apple control how their devices work.

But option 2 is most likely and I see this as 1/4th of Apple’s TV strategy.  You could just license out Airplay to TV manufactures.  We are already seeing this happen with speakers, why not TVs? Apple would get to benefit twice. First they would be able to stream all those iOS devices directly to customer’s TVs (which would make TV manufactures happy to add another built-in features) and second to allow for wireless AppleTV interrogation.

Apple TV… as an AppleTV?

Wait. But an AppleTV doesn’t even have an Airplay out function, you say?  Well we’re not talking about current AppleTVs. If you’ve been following along at this point you might already know where I’m going with this.  AppleTV has been slowly fine-tuned and the services slowly been set up to make this much more than a “hobby”.  Apple doesn’t release products lightly, and the inclusion of Apple releasing something “just as a hobby” has always irked me. It’s out-of-place.  It’s like seeing a kids running around quietly… You know they haven’t done anything yet, but you also know something’s going on and should keep an eye on them.  Apple always seems content at playing the long game and between all the history that we saw in the past post, and this “hobby”, it appears that Apple is moving all it’s pieces in place.

Tomorrow I’ll explain myself and let you know what I think will actually be in this new AppleTV device to create that “magical” 4th Market.