Apple’s financial results for their fiscal-year 2011 (fourth calendar quarter, 2011) were mind boggling — $46 billion in revenue, net income of $13 billion. They’re officially in uncharted territory, financial performance-wise. But the number that caught my eye was the disclosure from CEO Tim Cook that the company sold 1 million Apple TVs in the last three months of 2011.
Steve Jobs referred to Apple TV as a “hobby.” Then, in the “Steve Jobs” biography, he was quoted as saying he’d “cracked the code” on the TV experience. And for a product that receives precious-little in the way of U.S. or worldwide marketing support (not a lot of TV ads, for example), the company sold one million. So it’s still a hobby, right?
Sure, but think about it. Turning a hobby into a profession is really hard. And, come to think about it, some hobbies are harder to master than most. Golf? I hear it’s really difficult to become proficient. Needlepoint? Learning curve’s a little easier. Surfing? Takes time on the water to become proficient. Going from that point to being towed into 60-foot waves? Not too many surfers make that step.
Let’s keep those examples in mind and look at Apple’s challenges in the world of TV. Re-invigorating the music industry? Hard and complex, and ultimately Apple’s innovation, hardware design, and software design and integration carried the day. But the music industry was absolutely desperate for a way to re-monetize itself. The TV industry – rightsholders in particular – are not in the same dire straits as the music industry circa 2001.
More important, Apple’s not the same company it was in 2001 when it launched the iPod and it’s not held to the same standards. I mean, just look at 2011 numbers: revenues $108 billion for the year. In 2002, about a year after the iPod launch, the company’s yearly revenue was $5.74 billion.
When we think about Apple TV, we have to think beyond the fact that Apple has more than enough industrial design skills, UI design and software chops to create a unique and, let’s just stipulate now, good looking TV device. And beyond those assets lay the complexities and costs of licensing premium content – movies and TV episodes (and entire seasons), not to mention the requirement for live sports that many consumers have when they think of pay-TV offerings. And that’s when you have to wonder how risk-averse Apple might be when it comes right down to it. Can they cut through the licensing clutter to create a unique and compelling “TV experience” for consumers?
They have the resources and the brand equity but I wonder how if the risk-reward calculations aren’t still being checked and re-checked.