DisplaySearch: Apple prioritizes wearables, puts iTV on the back burner

iTV mockup (Martin Hajek 005)

So what’s up with the supposed Apple television set, that elusive iTV? According to the latest chatter, the iTV plans have been put on hold as wearables take priority inside the 1 Infinite Loop, Cupertino walls. The notion jives with Tim Cook’s recent assertion calling for new a Apple product category in 2014 and a bunch of patent filings and high-profile hirings pointing to an iOS-powered wearable device with health and fitness sensors, the rumored iWatch.

Of course, that a non-Apple product is delayed by another unannounced product isn’t necessarily newsworthy in and of itself, but given the source – DisplaySearch – we thought you should at least be informed about what’s making the rounds across Apple’s components and supply chain in Far East…

DisplaySearch says the iTV has been put on the back burner as Apple appears to be putting more wood behind fewer arrows, so to speak.

Paul Gagnon, DisplaySearch’s director of the North American TV Research division, quotes sources in the TV supply chain as claiming that Apple’s iTV plans have been delayed, fairly possibly to be “replaced by a rollout of wearable devices”.

He’s right about that: aside from rumor-mongering, we’ve seen zero evidence of a large-screen television set with the shiny Apple logo being worked on. Parts of unreleased Apple products typically leak out from Asia months in advance so you’d be right to think that moving those 55 to 65-inch panels around wouldn’t go unnoticed.

iTV mockup (Martin Hajek 001)

He acknowledges that the iTV project continues to be marred with difficulties on the services side as broadcasters and major TV networks have been reluctant to agree to Apple’s terms.

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.

The article goes on to argue that Apple’s won’t be able to succeed in the cut-throat TV biz unless it can move enough units “to generate sufficient content purchasing points,” offer a unique point of differentiation and create follow-on replacement purchases “to keep hardware sales from flat-lining once household penetration peaks”.

Apple television mockup (Dan Draper 002)

Indeed, conventional wisdom has it that the television industry is in a state of disarray, with market incumbents making little, if any, money and basically scrapping the bottom of the barrel with bargain-priced TV sets.

On the high-end, 4K TV sets are priced out of average consumers’ reach and there’s no 4K-friendly content on the horizon yet (Netflix will test 4K movies in 2014).

On top of that, the commoditized biz suffers from multi-year replacement cycles – you don’t upgrade to the latest TV set every other year, do you? And even if you bought a pricey living room TV set recently, you’d unlikely buy another one for your bedroom.

Apple television mockup by Motley Fool

Contrast this to mobile devices: your household may have purchased a few iPhones and iPads in past three years alone.

Yes? No?

Gagnon also wrote:

Indeed, the existing Apple TV box may be an impediment to Apple’s success with a smart TV product, which as a category, is not growing in the U.S. as many had hoped for. Our most recent smart TV forecast is that they will only account for about a quarter of TV shipments in 2013, and grow very slowly from there, with the focus on low-end premium models.

Rumors of a full-fledged television set have been swirling for years now, mostly thanks to the crazypants Apple analyst Gene Munster who each year insist that the iTV is due next year, hoping his prediction will eventually come to pass.

With all these factors not playing to Apple’s favor, why would it waste energy on what the company itself refers to as a “hobby project”?

But then again, conventional wisdom does not apply to Apple.