What are the chances of Apple entering the TV business?

The net is freshly abuzz with rumors about Apple’s plans to manufacture their own television. Although reignited by the reports of an analyst visiting china this week, this is a long-discussed topic. But what exactly are the chances that Apple will enter the TV business?

There’s always an inherent risk associated with predicting the moves of a company like Apple. It has notoriously tight lips about its plans for the future and it’s one of the most profitable companies in consumer electronics today.

It’s sort of like trying to anticipate a super-rich uncle with a Mensa membership and a flair for the dramatic.

Regardless, that hasn’t stopped some people from predicting the chances that Apple has been making plans for their own TV, presumably with integrated Apple TV features.

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On his blog, Chris Dixon makes the argument that although most people thought that the mobile market was far too crowded for Apple, they managed to not only enter, but remake it in the process.

What Apple ended up doing, however, was creating a phone that was so incredibly desirable to consumers that it completely restructured the industry, causing a massive shift of power away from the carriers.

He’s right of course, although that was something that no one at the time could have predicted. The pre-Apple cell phone market was an old boys club that left customers with little power. In addition, it was a market that thrived on high sales and low margins, just the kind of market that Apple didn’t want.

Marco Arment addresses the parallel, arguing that the only part of the television market that Apple would be interested in is a slice of the high-end.

You can draw some parallels to markets that Apple’s doing well in, like smartphones and computers, but Apple has chosen only to serve the high end of those markets. How big is the high end of the TV market? How many people are willing to spend a significant premium over the competition for a TV?

It’s definitely true that the iPhone primarily addresses the top-end of the cell phone market, raking in immense profits for Apple but selling a comparatively small amount of the 1.2 billion phones sold yearly.

It would seem at first glance that a feat equal to the shakeup of the cellular industry would be relatively impossible, considering how stolid and slow moving the TV market is. Most people purchase TV’s in 10 year intervals, not the 1-3 year turnover that Apple is used to.

But its actually already happened, recently.

Back in 2005, if you told someone that small panel maker Vizio would be the market leader in less than 2 years, they would have given you the crazy eyes. But in 2007, Vizio, with a 76% growth over the year before, had become the number one seller of TV’s. Displacing previous leader Samsung in the process.

Once again, though, Vizio made its move based on price, becoming the low-cost leader. Surely, this is a strategy that Apple would never adopt?

But what about the Apple TV?

Currently Apple already makes one of the least expensive set-top boxes that streams Internet content, including Netflix and digital rentals, to consumer TVs.

Vizio didn’t have the advantage of an in-house set-top box solution that was already a cost leader when it entered the market. They also didn’t want just the high-end, they wanted it all.

I think that there’s a case to be made in this instance for Apple entering the market with one of the most affordable options in Internet connected TV’s. Note that a set with all of the AppleTV’s features would not be one of the most affordable sets available. Instead, it would be a well priced set in terms of features.

The iPad for instance isn’t the absolute lowest cost tablet on the market, but back in April of 2010 people didn’t realize exactly how well priced it was. A fact that we’re all coming to realize now that manufacturers are trying to equal Apple’s technical feats at a similar price point.

It’s obviously hard to determine whether these anecdotal examples have any bearing on Apple’s plans for a piece of TV hardware. But Apple has experience in dropping an anvil-sized stone into a small pond of established players.

I think it would be premature at this point to say that Apple isn’t making plans to do the same in the TV market.