AAPL - Apple Inc.

[Guest valueInv]

^ How would you get content though without agreements with cable cos?

 

Negotiate directly with the producers. Check out your AppleTV, they're adding new content every few months.

 

They were negotiating with cablecos but word is that they weren't getting anywhere. So they're probably trying a new route.

[LC]

 

They were negotiating with cablecos but word is that they weren't getting anywhere. So they're probably trying a new route.

Of course not, Apple is trying to eat their lunch and they aren't happy about it.

 

In the cable co's perspective, it's all bandwidth to them. For internet bandwidth, they aren't entering licensing agreements with anyone. They simple provide the service for a price. For TV, they have to negotiate with content providers, then price that service to make a profit.

 

So if Apple comes in, takes their margin from the TV business and just allows the customer to access the exact same content over the internet...the cable co's will lash out against that. Otherwise they're essentially giving Apple, Netflix, etc. their business. So, what will they do? They are the providers of bandwidth to the customer....it seems rational that, if this turns into a trend, they will raise their prices on internet service to compensate for the loss of cable subscribers and provide the additional bandwidth.

[Palantir]

Yep, I think they can sell a TV under contract with a "data plan" meaning internet access for the TV. Apple can try to pitch it as a way to save their businesses, which may be threatened by cable-cutting.

[Liberty]

So if Apple comes in, takes their margin from the TV business and just allows the customer to access the exact same content over the internet...the cable co's will lash out against that. Otherwise they're essentially giving Apple, Netflix, etc. their business. So, what will they do? They are the providers of bandwidth to the customer....it seems rational that, if this turns into a trend, they will raise their prices on internet service to compensate for the loss of cable subscribers and provide the additional bandwidth.

 

If you check the Liberty Media discussion, that's what John Malone has been saying for a while when he's talking about debundling and charging more proportionally for bandwidth.

[Guest wellmont]

apple does not own any data facilities. not sure where their leverage is. they would have to resell  telco or cableco product.

[Liberty]

apple does not own any data facilities. not sure where their leverage is. they would have to resell  telco or cableco product.

 

Data facilities? I don't understand what you mean, care to elaborate?

[Guest valueInv]

 

They were negotiating with cablecos but word is that they weren't getting anywhere. So they're probably trying a new route.

Of course not, Apple is trying to eat their lunch and they aren't happy about it.

 

In the cable co's perspective, it's all bandwidth to them. For internet bandwidth, they aren't entering licensing agreements with anyone. They simple provide the service for a price. For TV, they have to negotiate with content providers, then price that service to make a profit.

 

So if Apple comes in, takes their margin from the TV business and just allows the customer to access the exact same content over the internet...the cable co's will lash out against that. Otherwise they're essentially giving Apple, Netflix, etc. their business. So, what will they do? They are the providers of bandwidth to the customer....it seems rational that, if this turns into a trend, they will raise their prices on internet service to compensate for the loss of cable subscribers and provide the additional bandwidth.

 

On the bandwidth side:

  - There are plenty of alternatives like DSL, FiOS, fixed wireless and even mobile broadband. Plus our friends at Google Fiber (and other similar projects) are pushing down bandwidth prices. There are also some new emerging technologies that could create an explosion of bandwidth supply.

  -  There are also many techniques like compression and caching that reduce the consumption of bandwidth.

  Bottomline, I don't think the cable providers have the ability to set prices for bandwidth in the long run.

 

On the content side:

  - The cablecos do have a lot of content locked up in contracts. That is why Apple was negotiating with them in the first place. But that is changing. Netflix and Amazon (and probably YouTube) are beginning to show alternate distribution channels can be successful and lucrative. The Cablecos are no longer the only feasible distribution channel for content.

  - With a growing number of cord cutters, cable's ability to lock up content is decreasing.

 

 

[Guest valueInv]

Yep, I think they can sell a TV under contract with a "data plan" meaning internet access for the TV. Apple can try to pitch it as a way to save their businesses, which may be threatened by cable-cutting.

 

They are already been delivering content without a data plan quite successfully with the current AppleTV. Despite it being a "hobby", it has grown pretty big:

 

http://gigaom.com/2013/07/16/apple-tv-roku-sales-stats/

 

A set top box is unlikely to cost that much to need a subsidy.

They can even get away pricing a TV high. Americans , for some reason, already spend thousands of dollars on their TVs.

[Guest valueInv]

apple does not own any data facilities. not sure where their leverage is. they would have to resell  telco or cableco product.

 

They don't. They already have proven AppleTV without telcos and cablecos.

[Liberty]

iOS 7 seems like a solid update for people with disabilities

 

[Guest wellmont]

apple does not own any data facilities. not sure where their leverage is. they would have to resell  telco or cableco product.

 

Data facilities? I don't understand what you mean, care to elaborate?

 

this was in response to the idea that apple could sell tv's "on contract" with a data plan. I don't think that's in the cards. my comment was that apple doesn't own any pipes into the house. they don't own the fiber, they don't own the spectrum. at least google has taken some very small steps to putting some pipes into homes and businesses.

[Palantir]

Why would Apple need pipes to sell TVs via a data plan? Does Apple own telcos so it can sell iPhones with a data plan?

[Liberty]

this was in response to the idea that apple could sell tv's "on contract" with a data plan. I don't think that's in the cards.

 

I guess I missed that comment. I don't think it makes any sense either.

 

IMO, there are two main ways they could go:

 

1) Make an actual TV set that has a great interface, great hardware, and is basically a computer that allows you to do all kinds of things including stream over-the-top content from content owners like Disney, FOX, etc.

 

2) Make a new version of the current Apple TV (don't make the actual screen -- people's problem right now is not with the screen but with the interface, how content is bundled, etc) that does more than it currently does (ie. act as a gaming console, has local storage and more CPU/GPU power, integrates better with iPhones and iPads and Macs, etc), with access to ever more content as Apple strikes new deal with content owners.

 

Despite many people who think they'll make a TV, I think #2 is much more likely, especially since TV tech is changing fast and it's much easier to just upgrade your Apple TV box once in a while and keep the TV than change the whole TV panel too just because you want the latest version. Apple TV has been growing right under everyone's nose the past few years.. At some point it can reach a state where it is good enough to disrupt the industry because it does so many things better than the competition (better way to watch content than cable, better gaming platform than current consoles, better way to view your content on your TV than other boxes, etc).

[Guest wellmont]

they could do it. but they would simply be reselling service provider products. I don't see what the value of that is. especially considering most buyers of TVs already are paying for home internet service. I think if you could justify this idea with the numbers, it might make more sense to skeptics.

[Liberty]

they could do it. but they would simply be reselling service provider products. I don't see what the value of that is.

 

What do you think iTunes and the App Store are? Mostly reselling other people's content and taking a cut. But these are valuable because they sell the hardware on which Apple makes a lot of money. Same thing there.

 

They don't need to own the content, they just need access to it (that's what the telcos do too).

 

But if they wanted to go nuts, they could set a billion aside and buy up original series like Netflix has done with House of Cards and Orange is the New Black so they have some exclusive stuff. It's sofa money for them.

 

Customers aren't happy with bundling. They pay a lot for all kinds of stuff they don't want (especially sports). Apple can come in and say: "Only pay for the content you want."

[Guest wellmont]

they could do it. but they would simply be reselling service provider products. I don't see what the value of that is.

 

What do you think iTunes and the App Store are? Mostly reselling other people's content and taking a cut. But these are valuable because they sell the hardware on which Apple makes a lot of money. Same thing there.

 

again, why is this service needed? instead of looking at things that apple can "gobble up", i prefer to look at things from a needs perspective? does the market need a data product from apple? I say no. apple offers them nothing. apple has no facilities or spectrum. what value is it to the consumer of buying internet access that apple is simply reselling? I am not talking about content. I was simply addressing one idea----that apple should offer a tv with a "data plan".

[Liberty]

again, why is this service needed? instead of looking at things that apple can "gobble up", i prefer to look at things from a needs perspective? does the market need a data product from apple? I say no. apple offers them nothing. apple has no facilities or spectrum. what value is it to the consumer of buying internet access that apple is simply reselling?

 

I'm not sure I understand what you're saying. Data product? Spectrum? Facilities? Internet access that Apple is reselling? What are you talking about?

 

The point is: People want to sit on their couch and have a good experience watching content or playing games. Apple could potentially offer a better experience than what is currently on offer, and people would pay for the hardware and services that can do that.

[Guest wellmont]

once again, I am addressing the idea, posited in this very thread, that apple would sell a TV with a data plan. apple is in no position to do that. you obviously have not thought through the implications of apple offering a internet service plan with their tv.

[Liberty]

once again, I am addressing the idea, posited in this very thread, that apple would sell a TV with a data plan. apple is in no position to do that.

 

Well, that's not what I'm saying at all, so why are you replying to me with that?

 

Apple would sell something that you plug into your internet router and it would get content over the internet (like Netflix right now). Why would they compete against ISPs? That makes not sense at all.

[Guest wellmont]

I didn't reply to you. I replied to the thread. you did ask for clarification of one post I wrote. that was when I replied to you. and why are you escalating the confrontation level?

[Palantir]

There is a lot of value in Apple selling a TV with different content. You could pick and choose what channels you want, you don't have 30+ channels you don't watch, you get a superior TV, you get something that syncs with your iPhone and iPad.

 

Your argument that "Apple can't do this because it doesn't own pipes" doesn't make sense.

[Guest wellmont]

There is a lot of value in Apple selling a TV with different content. You could pick and choose what channels you want, you don't have 30+ channels you don't watch, you get a superior TV, you get something that syncs with your iPhone and iPad.

 

Your argument that "Apple can't do this because it doesn't own pipes" doesn't make sense.

 

I am not talking about content. yes apple could put content on the tv. but they will have to pay a lot for it. nobody is rolling over and cutting un economic deals for apple anymore.

[Liberty]

I didn't reply to you. I replied to the thread. you did ask for clarification of one post I wrote. that was when I replied to you. and why is your negative tone escalating?

 

My tone is not negative, it is puzzled, because I don't understand what you mean.

 

If you think it is negative, you are projecting.

 

I described two things I thought could be done, and then you had 3 messages obviously replying to me ("they could do it, but.."), including 1 quoting me, saying basically the same thing that doesn't really have anything to do with what I said, or even with any realistic expectation of what Apple would do, hence my puzzlement.

[Guest wellmont]

take a breath. they were not in response to you. it was simply the timing of when our responses posted. you asked me to elaborate then you turn it into a negative.

[Liberty]

I am not talking about content. yes apple could put content on the tv. but they will have to pay a lot for it. nobody is rolling over and cutting un economic deals for apple anymore.

 

Customers will pay for it, just like they do now with cable. It's not like Apple will pay and give people free access. Except instead of having only the choice of subscribing to super-expensive bundles with lots of stuff they don't want, Apple could offer them a more a-la-carte way to subscribe to content (ie. I just want Disney, HBO, CBS, AMC, and Netflix).

 

And content owners will sell to Apple because they know that over-the-top streaming is the way of the future and will be a major source of revenue for them. Many already have deals to be on Apple TV. Telcos will recoup some of their cable losses by charging more proportionally for bandwidth. This is what John Malone has been describing for a while.

 

Apple isn't planning to make money primarily by selling other people's content, though they'll probably take a cut. They make most of their money on hardware and their own services. iTunes sells tons of music, TV series, and movies, but it's primarily a way to make iPhones and iPads and Macs sell better and be more useful.