We all know that most electronics segments suffer from a horribly destructive disease called low profit margins. It’s great for us, the consumers because we see through the hype, the 100 million dollars marketing budgets telling us why certain electronics really are worth spending a premium, which at the end of the day is really just an expanded profit margin for the manufacturer.
But there is an exception to this re-occurring theme in the electronics world, the Micheal Phelps, the Lance Armstrong, the Prefontaine, the freak of nature that somehow obliterated every expectation that exists in the respective consumer electronics world.
Apple, as I mentioned in my blog post previous to this one, averages roughly 50% profit margins on its product line. Incredible. As us consumers slowly grow accustomed to the sleek, clean, minimalist 21st century design of Apple products we will simultaneously take them for granted, we’ll feel entitled to that quality and design and inversely as such, decrease our valuation of Apple’s devices. While we were holding our breaths for Apple to reinvent themselves… we got the iPhone 5. We’re all aware of the the Jimmy Kimmel genius, the memes associated with how lackluster the iPhone 5 was and remember how much we made fun of people that waited overnight on the streets for it’s release. Bafoons.
Apple TV’s. The secret sauce is in the software. Google and Samsung are players, Samsung ridiculously lacks the audience, Google has the fastest growing audience interacting with its interface. Apple has iTunes and iTunes will never die but this is what I think is going to happen.
The same exact thing that has happened with Apple in cell phones and computers. Apple’s TV will be the most expensive, it will be the sexiest (even if it’s not), it well sell well and Apple will be the first player in the television device market to make large profit margins. Samsung, Sony, Panasonic, these companies don’t really make significant profits on televisions, when the flat screen technology came out it become one of the most saturated, inundated, over-competitive markets in the history of technology. For years now brands have been competing in the television device market with flat profit margins for advertising purposes, to compliment other products, please their loyalists.
Apple’s getting into your living room and you’re going to gladly pay that 30%+ plus profit margin while Google eats the flat profit margin, does satisfactorily in software and web product sales as as a result and Samsung eats everyone’s dust, just managing to stay on their heals in production like a red headed step child.
I just hope the aesthetics of the Apple TV is not hopelessly identical to all of their other devices, but I have a sinking feeling it will end up looking exactly like an oversized, clumsy iMac that manages to maintain elegance and prestige…. and maybe some ridiculous overnight lines outside of stores.
Read far more expert commentary on this topic at http://online.wsj.com/article_email/SB10001424127887323981504578174532274021230-lMyQjAxMTAyMDEwMjExNDIyWj.html