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Steve Jobs: HDTVs Are a Bad Business

12/19/2011 7:00 AM

It’s tough to pierce Apple’s legendary Kremlin-like secrecy.

Apple execs have “discussed their vision of the future of TV” with media companies in recent weeks, the Wall Street Journal reports today — a vision that includes plans for a wirelessly connected TV, with voice and gesture controls (following in the footsteps of the Xbox 360’s Kinect).

But what Apple will actually end up doing remains as clear as a busted iPad screen.

Anonymous sources told the Journal that the Applers were “vague” on product details and weren’t discussing licensing TV shows for a new service.

And, ambiguously, the Journal piece concludes with an (unsourced) anecdote from a 2010 Apple managers’ meeting: Steve Jobs tells an employee that HDTVs would be “a bad business to get into,” pointing out the slim margins in the segment and the fact that people don’t replace their TVs very often.

So the takeaway is… Apple is forging pell-mell into a money-losing, hyper-competitive product category? Hmmm.

Apple’s brand power is certainly unparalleled, but not even maniacal fanboys and fangirls would be willing to pay twice the cost of an HDTV just for voice-activated search features or the, ahem, privilege of being locked into iTunes.

Piper Jaffray & Co. analyst Gene Munster recently predicted that a TV that costs $800 from most manufacturers would run $1,600 from Apple. Even if the cost delta is less than 100%, it’s hard to imagine an Apple HDTV ending up being much more than a hobby, as Jobs famously referred to the Apple TV set-top.

Is the Apple HDTV project a loss-leader? A vanity project? The company has been unable to crack the TV code so far, and the factors that have prevented it from doing so haven’t changed.

In any case, the tea leaves indicate that Apple’s “assault on television” (as the WSJ called it) won’t seek to dislodge pay-TV directly: The company has “talked to television-service providers about teaming up on new video services for Apple devices,” the paper reported. That’s after Apple tried and failed to piece together its own monthly TV subscription service.

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