Where's Apple HDTV?

Monday July 30, 2012 – Stewart Wolpin

The Web is alive with speculation concerning iPhone 5 and an iPad Mini, as well as pending new Kindle Fires from Amazon and maybe its first smartphone, along with lingering when-and-how-much questions about Microsoft's Surface tablets and the varying Windows 8 editions and Office 2013, Nintendo's long-awaited release of the Nintendo Wii U, Sony's PlayStation 4, a Blu-ray equipped Xbox 720, and the now delayed appearance until early next year of the long-awaited RIM savior BlackBerry 10.

But like asking everyone not in the room to raise their hands, the rumors about Apple HDTV have been conspicuous by their absence.

A few months ago, the interwebs was chock full of "Apple HDTV is coming!" hubbub.

Now? Crickets.

Why? Nothing but my own fecund imagination is fueling the following fulmination, but I think Apple has delayed its HDTV because it doesn't want to enter the TV market with just another "smart" TV.

No, Apple wants to change how we watch TV the way it changed how we buy music – by offering individual programs for sale either a la carte or via an all-you-can-watch subscription. Except Hollywood won't let Apple do what consumers want it to do.

Last March, CBS CEO Les Moonves told a symposium how Steve Jobs approached him a year before to sell CBS programming under a subscription content plan. Moonves turned him down.

Moonves may have been right in the short term. But the whole studio-to-cable/satellite provider-to-consumer model is an endangered species; to quote The Crow, "They're all dead, they just don't know it yet."

From where I sit, an oncoming train is speeding toward the broadcast TV business model. That train is a consumer's desire to cherry-pick what they want to watch rather than paying for things they don't want to watch, with an unnecessary cable/satellite provider in the middle.

We can already see this train. Many Hulu, Vudu and Netflix subscribers are watching TV this way. A couple of months ago, an online petition asking HBO to make its popular "Game of Thrones" series accessible via its online HBOGO app without being tied to a cable subscription attracted nearly 170,000 signatures – people begged HBO to take their money. CNN's Dan Simon provided an excellent report on why HBO said no to a standalone Internet HBOGO service.

In brief – HBO didn't want to rupture relationships with cable providers. But nearly every TV and cable channel has its own attendant Web site via which consumers can consume programming, bypassing cable or satellite providers. Viacom tried to shut their content Web sites down during its recent kerfuffle with DirecTV so satellite subscribers wouldn't have this alternative access. But Viacom reversed course after a hew and cry from not only non-DirecTV subscribers but from one of Viacom's own employees, Jon Stewart.

All of which illustrates the inexorable move from the current broadcast paradigm to a la carte or subscription viewing via the Web.

"Cord cutting" has become a parlor game protest exercise for the technologically clever, an economic necessity for others. The only thing stopping cord cutting from becoming a full-blown trend is an organized alternative to cable/satellite middlemen – such as what Apple wants to provide with its HDTV. But my guess – Apple won't until it can.

YouView Arrives - But Will It Survive?

Tuesday July 24, 2012 – Greg Scoblete

Better late than never, as they say. Two years past the promised delivery date and just weeks before the London Olympics, YouView, a UK web video service, was rolled out earlier this month with great fanfare.

YouView is the product of Britain's public broadcasters and two internet service providers - BBC, ITV, Channel 4, British Telecom (BT) and TalkTalk. It's designed to offer a combination of the country's free-to-air Freeview channels plus interactive services and video-on-demand. It won't deliver Freeview stations over the Internet - customers will still need an antenna - but it will offer subscription-free catch-up TV as well as the option to tap premium video-on-demand libraries from the founding companies. The YouView platform will also host TV apps.

Initially YouView will be available via a single set-top/PVR box from Humax, which will be sold through UK retailers with the hefty price tag of 299 pounds. A subsidized box will also be packaged in broadband subscriptions offered by TalkTalk and BT. YouView may also receive a selection of programming and sports from BSkyB (on a pay basis), giving YouView owners a large selection of free and paid content to choose from.

While critics hammered YouView for its delayed launch, the deeper question lies with the standards employed. Outside of the UK, European consumer electronics firms and pay TV providers have been coalescing around HbbTV as the "hybrid" broadcast standard (mixing over-the-air and internet content in a unified interface). While YouView incorporates elements of HbbTV in its specifications they're not, as yet, fully interoperable. It's not clear whether hardware and software vendors will swing their full support behind YouView or focus on the wider opportunity afforded with HbbTV-enabled devices.

Given the delayed launch and large price tag of the initial PVR, YouView will have to quickly diversify its hardware portfolio if it hopes to gain traction. 

Some good news and some (okay, a lot of) bad news…

Monday July 16, 2012 – Stewart Wolpin

If you missed CE Week in New York a couple of weeks ago (and judging by the turnout compared to, say, Black Friday at Walmart, most of you did), you missed a lot. I don't mean to sound like a commercial, but this mid-year CE Week confab, while not exactly a substitute for the late lamented Chicago Summer CES (damn, I miss that show), have proven to be entertaining (except for the 90-degree heat) and informative (at least for us on the analyst, market research and Amazing Kreskin forecasting merry-go-round), if not a little depressing (through no fault of the organizers).

But enough parenthetical asides (at least for this graf). For me, the highlights of CE Week are the Shawn-and-Steve presentations – state-of-the-US-industry reports from CEA's in-house analysts Shawn Dubravac and Steve Koenig. Combined with the new parallel photo industry session from PMA's 6Sight analysts, I got a great deal of detail and insight into the near-future of the gadget world.

Since you weren't there (and you know who you weren't), allow me to succinctly transmit the bad news:

The US CE business sucks.

Shawn's presentation was ominously entitled "Mid-Year Update: A Meltdown in the Second Half?" Oh, an optimist!

Three of Shawn's sunnier summations:

•       Nominal spending up nearly eight percent in 2011. Will be difficult to match in 2012

•       Tablets and smartphones primary growth drivers (nominal spending down three percent without both categories)

•       In the face of a volatile economic landscape – inventories remain lean

More specifically, total video unit sales – TVs, DVD and Blu-ray players – are down (albeit not as catastrophically as last year) 13.7 percent and revenue is down 7.6 percent in the first half after sinking 14 percent in each category in 2011. I guess these numbers can be spun as an improvement.

Flat panel HDTV unit sales are down 2.3 percent, revenue 2.9 percent – even though ASP has risen from $515 last year to $536 so far this year. Plasma HDTV unit sales are sinking faster than the Titanic, down 30 percent so far this year. The only TV growth area seems to be in sets 50 inches or larger. Sales of all other sizes continue to drop.

Suffering an even more precipitous collapse are digital camera sales, down a whopping 31 percent in the first half of 2012 compared to last.

According to Shawn, the smartphone camera shoe has finally dropped (pun intended). Consumers no longer feel the need to buy or schlep a cheap digital camera when they already have a perfectly serviceable (i.e. the dreaded "good enough") 5 or 8 MP camera in their smartphone. Just how sales of the new higher-priced mirrorless compact system cameras might stall this slide remains to be seen. CSC camera sales may stabilize revenue and profit margin, but as smartphones camera capabilities continue to improve it's doubtful digital camera unit sales will ever grow again.

Audio sales may actually have recovered a bit – down 26.1 percent in 2011 but down merely 6.6 percent so far this year. But revenue has dropped, down 16 percent last year but down 18 percent in 2012. Perhaps the biggest anchor on audio sales are falling MP3 sales, down 20 percent – again, smartphones being the culprit.

Where's the growth? C'mon, you know – all together now:

Smartphones and tablets.

According to Shawn, smartphones sales are growing 22 percent and will zoom 120 percent-plus this year. Tablets unit sales are set to hit 120 million units in 2012 – Apple alone is expected to sell 20 million this quarter alone – after reaching 17 million units in 2010 and tripling to 55 million in 2011.

This fall promises to be rather fecund for smartphones and tablets. Amazon is expected to announce more advanced as well as less expensive Kindle Fires, and also is rumored to be readying its own Android smartphone. Microsoft will hopefully finally release Windows 8 OS versions for the desktop, smartphone and its new Surface tablets. On the heels of its successful launch of its Galaxy S III smartphone this summer, Samsung will supposedly spring a 5.5-inch Galaxy Note II on us – because apparently a 5.3-inch screen isn't quite big enough.

And amidst its usual ballyhoo, Apple will announce the iPhone 5 and, if the rumors are true, an iPad Mini.

What about an Apple HDTV to help bolster sagging TV sales? Not likely in 2012 IMHO. I'll explore why I think Apple is holding its HDTV in this space two weeks hence.

And hopefully Shawn will have better news in Las Vegas in six months.

The Battle to Save Netflix Moves to Washington

Monday July 9, 2012 – Greg Scoblete

The future of over the top video (at least in the United States) is increasingly moving into the hands of the U.S. federal government.

On June 16, the New York Times reported that the Justice Department was investigating whether cable companies were discriminating against video providers such as YouTube and Netflix by treating their data differently (i.e. counting it toward a data cap while exempting similar data from the provider's own Web video service from said cap). In addition to determining whether cable companies are engaged in discriminatory practices, the Justice Department is supposedly taking a broader look at video delivery in the United States. According to the Times:

The department is also said to be studying the ways in which distributors bundle disparate television channels together in all-you-can-watch packages. Distributors and programmers have resisted calls to unbundle channels, but Internet distribution may give consumers more choices in that area — assuming that data caps or other network management practices do not stand in the way.

As if on cue, the Times had another story just a week later. Can you guess the title? "Internet Providers Testing Metered Plans for Broadband."

Imagine that.

What's happening is obvious: the cable companies are digging a second trench around their profit margins. The first trench is the uneven application of 'data caps' to third party video services and the providers own Internet video (the kind that sparked the Comcast-Netflix row). If this trench is over run, the second line of defense will be to hike the price of America's broadband access or put caps in place to discourage bandwidth-heavy applications like video streaming among price-sensitive consumers.

The Justice Department may yet rescue over the top providers from discriminatory treatment, but they can't set the price of broadband access. Even more competition for residential broadband - the oft-cited remedy for price hikes - may not be enough. In the mobile world, there is far more competition for data access and all the major carriers have either scrapped or are poised to scrap unlimited data plans in favor of tiered pricing.

While data caps wouldn't kill streaming video options outright, it could definitely put the brakes on future growth in the U.S. Those cord cutters, and cord shavers, who are driven by cost pressures may think twice as the economics of their Internet bill change. And, as the Times piece notes, tiered pricing would also put a crimp on pay providers attempt to "unbundle" their service by offering a selection of pay TV content to any subscriber with broadband access.

And while we're on the subject of Washington and the future of video delivery, Dish's Chairmen Charlie Ergen also made an appearance, testifying before the Communications and Technology Subcommittee of the Energy and Commerce Committee about Dish's new commercial-skipping set-top box technology. Broadcasters are suing Dish over the technology, but Michigan Democrat John Dingell voiced his own concerns, as reported by National Journal:

"I've got an election coming up, like all my colleagues," Dingell said, during his questioning of Dish Network Chairman Charlie Ergen. "We all put political ads on the local stations to reach our constituents. The Hopper potentially limits the ability of every member of this subcommittee to reach constituents to help them make up their minds on Election Day.

I think Dish just found their next marketing hook.

Happy 90th birthday Jack Wayman

Monday July 2, 2012 – Stewart Wolpin

When you celebrate a birthday, you're supposed to receive gifts. But leave it to Jack Wayman to give the industry he essentially founded a gift on his own 90th birthday.

You know who Jack Wayman is, don't you? If not, here's a quick curriculum vitae:

• During World War II, Army 1st Lieutenant Jack Wayman was at Normandy and the Battle of the Bulge, and was with General Eisenhower at Auschwitz. In between, he earned the Silver Star, Bronze Star, Purple Heart with Cluster, two Presidential unit citations, five battle stars, an Air Medal and the Combat Infantry Badge.

• In 1947, started work in the home electronics business as a salesman and manager, including 10 years selling for RCA.

• In October 1962, he was the second full-time director ever hired to run EIA's Consumer Products Group – the first full-time guy hired quit after less than two years.

• From June 25-28, 1967, despite opposition from the EIA, initiated and ran the first Consumer Electronics Show. That first show consisted of 100 exhibitors and 17,000 attendees at the Americana and Hilton Hotels in midtown Manhattan

• Jack also changed the name of the show from "Home Electronics" to the more all-encompassing "Consumer Electronics."

• Founder the first Winter CES in January 1973 and the first Las Vegas CES in 1978.

• Oversaw the evolution of the EIA Consumer Products Group and its $50,000 budget and two employees into the Consumer Electronics Group (CEG) with a $15 million budget and 50 employees, which has morphed into the independent CEA.

• Encouraged the entrance of "off-shore" (i.e. Japanese) consumer electronics products into the U.S. market.

• Spearheaded the drive for home recording rights including the Sony Betamax legal case.

• Hired and mentored current CEA president Gary Shapiro.

This just scratches the surface of Jack's influence over the last 60-plus years in how the entire consumer electronics business operates.

And you can't miss Jack; with his shock of silver hair and more than a passing resemblance to Ted Baxter, Jack cuts a gregarious and energetic presence at nearly all CEA events, often wearing his bright yellow CEA sports coat.

During CE Week in New York last week, a small dinner party was organized by CEA at the Waldorf-Astoria (to which I was privileged to be invited) to help celebrate Jack's 90th birthday (his actual birthday is May 12, 1922). During his thank-you speech, Jack related a story about the early days of the Sony Walkman.

For some reason, states and cities were considering bans of the new-fangled headphone stereo systems, probably because many perceived them as safety hazards – you wouldn't be able to hear potential traffic danger.

Chicago was one of the cities considering the ban. So Jack called then-Chicago mayor Jane Byrne and gently reminded her that the winter CES was held in Chicago – but if the ban were enacted, maybe it wouldn't be.

Byrne made sure her city didn't restrict the new gadget, a lead soon followed by other ban-considering locales. And now streets across the country are filled with folks with earbuds stuck in their ears oblivious to all around them.

In gratitude for Jack's usual persistence in protecting the industry, Sony founder Akio Morita presented Jack with a Tiffany silver engraved Walkman in a beautiful teak case.

And at his 90th birthday celebration, Jack presented this Tiffany silver Walkman to CEA and his successor Gary Shapiro.

Classic Jack – still giving to the industry he helped found, even on his birthday.