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Will Apple make a real TV?

Mark Gurman at Bloomberg <noreply@news.bloomberg.com>

November 24, 1:51 pm

Power On
Also: Inside Siri’s future.
by Mark Gurman

Apple doesn’t need its own TV set. But it should make a low-cost TV streaming stick to bring its content, apps and smart home features to more households. Also: Siri will be revamped for the modern AI era; Amazon beats Apple to new smart home displays; and Oura and Dexcom team up in a bid to make glucose tracking mainstream.

Last week in Power On: Apple’s Tim Cook has ways to cope with Trump’s looming tariffs.

The Starters

Amazon Fire TV Sticks. Photographer: Al Drago/Bloomberg

Well over a decade ago, after bringing the iPad to market and starting the search for a new product category, Apple Inc. explored developing a TV-like device.

The idea was to make something with a huge display that could be nestled into a stand for TV viewing, but also serve as a touch-screen Mac or giant iPad if needed. It would have been a bit similar to the old-school Microsoft Surface (now known as the PixelSense) — something that could handle media, videoconferencing and even office work. At the height of Apple’s ambitions, it hoped the device would turn the industry on its head like the iPhone did years earlier. 

Teams at Apple built full-scale prototypes, crafted user interfaces, and started to contemplate plans for manufacturing and the supply chain. Apple fans, meanwhile, had long anticipated that the company might make a TV set — prodded in part by comments from co-founder Steve Jobs.

Though he wasn’t referencing the Surface-like concept, he famously told biographer Walter Isaacson that something TV-related was coming: “I finally cracked it,” he said. The product would seamlessly sync with other devices and the iCloud service, Jobs said, and “have the simplest user interface you could imagine.”

But once Apple started to seriously analyze the TV market as a business, work on the the project stopped. The effort never got as far as the Apple Watch or Vision Pro — or even the now-defunct self-driving car. TVs are a low-margin industry, and consumers don’t buy new ones very frequently. At the time, Apple was highly dependent on people upgrading iPhones, iPads and Macs as often as possible (that remains true today, but the company at least has a healthier services business). A low-margin device without a path to upgrades would have been a mistake. 

Apple also immediately encountered cost concerns, including the expense of air-shipping gigantic panels from factories to warehouses to homes. The company would have needed to develop and produce new chips to power the displays, as well as the input-output electronics. And the project would have required manufacturing facilities for the high-quality screens and adequate supplies of glass.

Apple TV announcement in 2015. Photographer: David Paul Morris

Given the challenges, it was clear that Apple wasn’t going to replace Sharp, Sony, Samsung and LG in consumers’ living rooms. So the company pivoted to bringing some of the most promising ideas to a new version of its Apple TV set-top box. In 2015, it launched the first model with Siri control, a touch-pad remote, an App Store and the new tvOS operating system. Over time, Apple has added more features: The device now works with 4K televisions and supports FaceTime via an iPhone rear camera.

A year after the revamped box arrived, the company announced the Apple TV app. It was designed to offer a single place where users could tap into content from iTunes and third-party services. In addition to the Siri voice assistant, this is what Jobs was referencing when he said he nailed the future of TV. The app eventually became the home for the TV+ and Apple TV channels, where users can subscribe to video services a la carte. 

After that initial investigation of a TV years ago, Apple never seriously went to work on such a product again. But the itch didn’t quite go away either.

In the late 2010s, realizing that the Apple TV box wasn’t a breakout success, the company reached a fork in the road. Apple’s services division was considering bringing its TV app and other content offerings to third-party televisions, starting with Samsung and LG. 

But before giving away its prized technology to other hardware makers, Apple again evaluated whether it should go it alone and make a TV. It ultimately ran into the same issues it did the first time around and didn’t move forward with the idea. Instead, Apple announced plans in 2019 to bring its services to third-party devices. Since then, it’s only made marginal tweaks to the Apple TV box, tvOS operating system and its living room lineup.

That said, some people within the company see its Vision Pro headset as an offshoot of its TV ambitions. And it’s perhaps no surprise that Dan Riccio, Apple’s former head of hardware engineering, led development of the Vision Pro after long advocating for a standalone TV.

The Vision Pro is indeed a great way to watch video, and it excels at some of the other tasks that the Apple TV set would have handled, such as communications and doing light computer work. But it’s also an overengineered and overpriced device, and — so far, at least — a commercial flop. It also suffers from the same drawbacks that an Apple TV set would have: low margins, production complexity, limited content and a lack of reasons to upgrade frequently.

A customer trying on the Apple Vision Pro. Photographer: Betty Laura Zapata/Bloomberg

And yet, Apple’s TV set dream isn’t dead. As I reported last week, the company is back to evaluating the prospect as part of a smart home push. Is it possible that the company actually does it this time around? Well, the economics of the television business haven’t changed. If anything, TVs have become more commoditized, and the business has become even less compelling. And Apple hasn’t grown more willing to take risky bets. 

For those reasons, I don’t expect management to do anything different this time. But something does need to change. The Apple TV set-top box is lagging behind rival products, and the company’s best video-watching device — the Vision Pro — is years away from being a consumer hit.

Instead of a full set, the tech giant should create the building blocks for an Apple living room setup. That starts with making an HDMI streaming stick that can rival the Google Chromecast and Amazon Fire TV Stick. Those devices now sell for under $50 and are capable enough to run full operating systems. If Apple offered a cheap and quick way to access tvOS, the App Store and services on any TV, it could quickly create a foothold and increase its services revenue.

As it stands, the company makes little to no money in Apple TV hardware. The devices don’t fetch the kind of 40%-60% margins that Apple sees in other categories, and it’s hard to command a premium price. Though the latest model costs 30% more than the $99 original Apple TV from 2010, the company has been looking to cut the cost to stay competitive. 

The best scenario for Apple in TV hardware would be a cheap stick (perhaps with no physical remote — use your iPhone instead). It’s an idea that Apple marketing executives detest, but it would help the company quickly expand its presence. If consumers want more power and storage, they can opt for the current box.

At the top of the line, Apple could offer something like the new Mac mini, providing the best streaming quality and gaming options. For this exercise, let’s call these three tiers the Apple TV SE, Apple TV and Apple TV Max. It would use the same “good, better, best” strategy employed by the iPhone, Mac, iPad, AirPods, Apple Watch and even the Apple Pencil.

Apple could then augment this new central hardware with accessories. It recently began allowing dedicated cameras to use FaceTime in tvOS, something that could be extended to a HomePod smart speaker or a sound bar with a built-in camera. And everything would be controlled by the company’s upcoming iPad-like smart home device, which is designed to be the central command center for modern households.

It would be a roundabout route to taking control of consumers’ living rooms, but Apple could finally get there.

The Bench

Apple Intelligence marketing on an iPhone. Photographer: Victor J. Blue/Bloomberg

Apple prepares a Siri overhaul for the ChatGPT era, but it’s not coming until 2026. Since announcing its AI platform in June, Apple has promised a more powerful Siri — something that’s long overdue. For years, the company’s voice assistant has failed to properly respond to questions and commands from users. And, at the end of 2022, it was leapfrogged by OpenAI’s ChatGPT.

But the first version of Apple Intelligence — the one available today — mostly just makes cosmetic changes to Siri. It adds a new interface (the glow around the screen) and the ability to type in requests rather than using your voice. There’s also more in-depth knowledge about Apple products, and Siri can better deal with pauses when hearing commands. Over the next several months, Apple will add more precise control of third-party apps via the new App Intents software, as well as the ability to tap into users’ data and the context from what’s currently on their screen.

These upcoming upgrades will make Siri easier to use on a day-to-day basis, but it’s not the brain transplant that the service really needs. Siri is still based on an outdated infrastructure — AI models that have been overtaken by the technology used by ChatGPT and Google’s Gemini. Siri hasn’t yet been rebuilt for the generative AI age, even if Apple is trying to create the impression that it has. 

That’s exactly why Apple partnered with OpenAI and will be adding ChatGPT to Siri this December. But Apple knows it can’t rely on partners for such a fundamental piece of technology in the long run.

This past week, I reported that Apple has made progress on a true revamp to Siri that will make it more conversational and rely on in-house large language models — the foundation of chatbots like ChatGPT. The company is actively running and testing this new service internally, calling it “LLM Siri.”

The bad news is that it isn’t scheduled to launch until around the spring of 2026. We should get an unveiling sometime before that, possibly at the 2025 Worldwide Developers Conference or another event next year. That will provide a bit of deja vu since many Apple Intelligence features were previewed long before they were ready.

The bigger picture: Apple is introducing more of its technology in a staggered way, rather than in one large annual refresh. The company is planning a big upgrade this spring with the release of iOS 18.4, but some new capabilities once expected for later in the year are already getting pushed back. I’m told that a larger-than-usual number of features scheduled for iOS 19 (beyond the new Siri) are already postponed until spring 2026 (when iOS 19.4 debuts).

Amazon Echo Show 21 on a stand. Source: Amazon.com Inc.

Amazon debuts impressive new smart home displays — including a 21-inch model — ahead of Apple’s launch. Back in 2017, Amazon.com Inc. introduced its first kitchen-oriented smart display: the Echo Show 15. I’ve been using this product for years now, and it’s essentially a high-tech kitchen TV that can also control your smart home accessories. This past week, Amazon gave the Show 15 an upgrade while also rolling out a Show 21 with a 21-inch screen.

Apple is now preparing an answer to this device: its own smart screen that users can stick in their kitchens for videoconferencing and looking up recipes. But seeing the 21-inch Amazon model makes me wonder if Apple is missing an opportunity here. As I’ve reported, the Apple version will be about the size of two iPhones side by side, putting the overall screen size below 7 inches.

I assume Apple doesn’t want to cannibalize its larger-screen iPads, but this feels like a mistake. When it comes to watching video and doing FaceTime calls, bigger is better. We have to hope that Apple will eventually roll out bigger models if the device is a hit.

Oura Rings. Photographer: David Paul Morris/Bloomberg

Oura could take a small step toward making blood sugar monitoring mainstream. Today, 99.9% of people who track their blood sugar probably do so because of a condition or real concern — whether that’s diabetes, prediabetes or hypoglycemia. Compare that with people who monitor their heart rate on an Apple Watch or other fitness device. Far fewer of them have an actual heart condition.

The question now is whether blood sugar tracking can reach that same level of mainstream use. Smart ring maker Oura Health Oy and medical device company Dexcom Inc., by way of a new agreement, are looking to find out. 

Dexcom, which sells an over-the-counter glucose monitor called the Stelo, announced a $75 million investment in Oura last week as part of a strategic partnership. The Oura Ring can already track heart rate, sleep quality and other variables. With the new tie-up, Oura users will get glucose data from Dexcom’s devices and apps to get a more complete picture of their health.

Personally, I think this is a smart move by both companies. And I hope that Apple, Google, Samsung Electronics Co. and other fitness product makers speed up development of their own blood sugar tools.

Understanding blood sugar levels can be a major health benefit. Users can better grasp the effect of certain foods, exercise and sleep on their glucose levels. The data can also help people understand their so-called glucose curve, helping them avoid becoming at risk for diabetes over time.

A few weeks ago, I reported that Apple tested an in-house app that used third-party glucose meters to show the impact of food and exercise on a person’s blood sugar numbers. I don’t expect that app to ever launch. Instead, Apple will probably integrate the functionality into its Health app.

The company also has been working on a noninvasive monitor for blood sugar — a holy grail for the health industry. Though the Dexcom Stelo doesn’t require a prescription, it still forces people to insert it into their skin, where the tracker measures the glucose in interstitial fluid.

Oura, meanwhile, deserves credit for what it’s done in the smart ring field. Its technology runs laps around the competition, and the company has created something so simple that it feels like an Apple product. As of now, Apple isn’t developing a fitness ring of its own, but there are plenty of people who would rather sleep or work out with such a device than a full-fledged watch.

I think Apple should consider offering both watches and rings as part of its wearables lineup. The fastest way to do so might be by buying Oura. But with that company now valued at $5 billion, it would be the biggest acquisition in Apple’s history.

Post Game Q&A

(Answers to the below are shown in the subscriber-only version of this newsletter.)

Q: Will Apple make the new AirTag rechargeable?
Q: Why is Apple launching a superthin iPhone?
Q: Do you expect Apple to launch new AirPods Max headphones?

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