Apple does not produce televisions for real reasons

Bloomberg reported on Wednesday that rumors about Apple’s entry into the TV manufacturing business were rampant, and that Apple observers such as Carl Icahn and Gene Munster were convinced. However, given the high proportion of TV displays in the entire product cost, and Apple itself does not have a display business, once it gets involved, it will be controlled by others. In addition, the current TV business has become fiercely competitive and the profit margin is very small. Apple started as early as a year ago. The TV project has been stranded.


The following is a summary of the contents of the article:

Display short board

For Apple should enter the television market, billionaire, radical investor Carl Icahn has given compelling reasons: People have a quarter of their leisure time is watching TV. In addition, the television market is of an objective size: The market size of the television market, which does not include advertising, has reached 575 billion U.S. dollars, far exceeding the number of smartphones.

Icahn's reasons sounded good, but the reality is that, from an economic point of view, building a television is far different from manufacturing mobile phones and laptops. The key difference is that the entire TV product essentially depends on an accessory: the display. According to Bloomberg data, display screen costs account for 80% of the total equipment cost on many TV sets. According to the data provided by the market research company IHS, the smart phone display only accounts for 20% of the total cost of the device, which leaves a lot of space for the manufacturer to provide features that differentiate it from other mobile phone products.

For savvy smartphones or computer buyers, they often look at the product's software, memory, processor features, and other technical details. For users who purchase TVs, they choose a product and tend to value the quality and price of the product. Apple itself does not have a display business, so whether it is the quality or price of the TV, it depends entirely on its Asian competitors - because Apple TV must use the display screens provided by these manufacturers.

A report in the Wall Street Journal recently stated that Apple had abandoned development of television products as early as last year. It now appears that compared to the lack of exciting new features, the above reasons may be Apple's temporary plan to enter the TV business.

Intense competition

In order to gain a foothold in the TV market, large-screen products are indispensable, but only a few manufacturers offer large display components. IDC data show that South Korea's two major technology giants - Samsung Electronics and LG Electronics accounted for 42% of the global LED display market share. In order to obtain these manufacturers' display panels, Apple will have to persuade them to allow them to compete in the television business. According to TrendForce, a market research organization, the Samsung and LG brands dominate the global consumer TV market by about 38%.

In terms of television technology, Korean companies have advanced technologies ahead of companies in China, Taiwan, and Japan. Samsung and LG already have the most cutting-edge TV technology, such as curved display, OLED organic display, 4k ultra high-definition technology.

China Huaxing Optoelectronics Technology Co., Ltd. and other similar companies in Shenzhen began to rise rapidly and their products met the needs of local cheap brands. Although Sony's TV sales are still good, its market share has been declining over the years. After years of losses, Sony has separated its television manufacturing business into a separate department to promote its development. Sharp's display business, which is the display supplier of Apple products and another Japanese consumer electronics company, is also not dominant. On May 11, Sharp said that he considers measures such as reducing expenditures and issuing preferred shares to support his balance sheet.

Apple's attempt to enter the TV market with its advantages in other consumer electronics sectors may not have a chance at all. When Apple entered the mobile phone market in 2007, it copied the success tactics of the iPod in the music player market. Apple’s mobile phone actually encapsulates some industry-standard parts into an attractive box with easy-to-use software. It is this gadget that drags Nokia, Motorola and blackberries.

The current television business has become very competitive and the profit margin is very small. Despite the unfavorable situation facing the television project, several observers are surprised that Apple will not be involved in the television business in the future. Icahn said in an interview with CNBC that he was puzzled by the Wall Street Journal's allegation that "Apple has stranded the TV business before you."

However, Icahn's estimate of the size of the television industry market is debatable. According to data previously provided by IDC, last year the television industry generated $149.5 billion in revenue. Although this figure is not small, it is only a quarter of the latter compared to Icahn’s estimated data, not half of the size of the smartphone market.

Paige analyst Jean Munster, the Apple observer who has been flagging the Apple TV project, is trying to accept this attack. Munster stated in an investment report recently released that “In view of the unwavering belief that Apple TV will become a reality, it is difficult for us to accept this reality without Apple TV at the moment.” But don’t worry, even if you don’t have Apple TV, There are many other excellent TV products for users to choose from here.

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