Apple Tests Designs for TV
By LORRAINE LUK And JESSICA E. LESSIN
Apple is working with suppliers in Asia to test large-screen, high-resolution TV prototypes. The WSJ's Yun-Hee Kim explains how Apple's move into the TV market would intensify competition with Samsung and Google.
TAIPEI—Apple Inc. is working with component suppliers in Asia to test several TV-set designs, people familiar with the situation said, suggesting the U.S. company is moving closer to expanding its offerings for the living room.
Officials at some of Apple's suppliers, who declined to be named, said the Cupertino, Calif.-based company has been working on testing a few designs for a large-screen high-resolution TV.
Two people said Hon Hai Precision Industry Co., which assembles the iPhone and iPad, has been collaborating with Japan's Sharp Corp. on the design of the new television.
"It isn't a formal project yet. It is still in the early stage of testing," said one of the people.
Apple, which works with suppliers to test new designs all the time, has been testing various TV prototypes for a number of years, according to people familiar with the efforts. The company generally tests and develops products internally before doing so with outside suppliers.
Competitors such as Google Inc. are toying around in the business of making software for televisions and set-top boxes as well, but no one offering has gotten big traction to date. Apple's move into the television market would intensify competition with some of its biggest suppliers such as Samsung Electronics Co. The South Korean company supplies key components to Apple and is also the world's biggest TV maker by shipments.
"The potential for consumer lock-in that the television creates will likely drive platform companies to continue exploring the space. As such, while the battle is just getting started on this front, we see it as having the potential to either further entrench current winners such as Apple, or completely disrupt the market once again," Goldman Sachs said in a report.
Apple supplier Hon Hai, known by the trade name Foxconn, has been expanding into the market for large high-resolution TVs, capitalizing on chairman Terry Gou's investment in a Japanese liquid-crystal-display factory that used to be owned by Sharp.
In July, Mr. Gou, through his investment firm, took a 37.6% stake in the operator of an LCD factory in Sakai, western Japan, to become a co-investor along with Sharp. Under that deal, Hon Hai receives up to half of the panels manufactured at the plant and those panels can be used for any TV sets.
The Sakai plant, which cost Sharp more than $10 billion to build in 2009, is particularly suitable for making LCD panels 60 inches or larger for TV sets. Earlier this year, Hon Hai began assembling 60-inch TVs for Vizio Inc., a California-based vendor of low-cost, flat-panel televisions, using panels from the Sakai plant.
Apple could opt not to proceed with the device and how a large-screen TV fits with its overall strategy for remaking watching TV remains unclear. Apple has also been talking to cable television operators about building a box that would carry live television, according to people familiar with the matter.
In a recent media interview, Apple Chief Executive Tim Cook suggested that the company's interest in television has progressed beyond a "hobby." He likened turning on a TV today to going "backwards in time by 20 to 30 years."
"It's an area of intense interest. I can't say more than that," said Mr. Cook in the interview with NBC News.
Apple shareholders are anxious about the timing and nature of the company's plans. While iPhones and iPads are selling briskly, they believe television could be one of the next big catalysts for Apple's business as those products eventually peter out. Apple shares fell to $541.39 on Tuesday from all-time high of $702.10 in September amid concerns about the company's future profits and growth.
Apple has been trying to make its way into the living room for years. In August, The Wall Street Journal reported that Apple has been talking with major cable operators, including Time Warner Cable, about letting consumers use an Apple device as a set-top box for live television and other content.
Plenty of hurdles remain. Apple doesn't appear to have any deals with operators to sell such a device and getting them on board is likely to be challenging. The relationship between Apple, cable companies and content owners remains tense. Apple has tried repeatedly over the past few years to persuade entertainment companies to grant it rights for various kinds of TV offerings, with limited success.
Sales of Apple's current TV hardware, a $99 set-top box, are picking up but are still small. The company sold 1.3 million in the quarter that ended in September. The device allows users to access some Internet video on larger screens but doesn't offer traditional channel lineups. Apple has struck deals with video providers such as Netflix Inc. and Hulu LLC to offer apps for the device.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.