Lang Lang
Panel makers LGD have made bulk purchases of Apple's 55-inch LCD console panels, leading to speculation that Apple will soon enter the smart TV market. This account has spread like wildfire. On August 28, reports from abroad suggested that many authoritative experts in Silicon Valley believe Apple will launch smart TV products based on the iOS platform in the first half of next year.
For the music player iPod, iPhone smartphones, and iPad tablet PCs, Apple has adeptly defined global products in these three areas and changed industry patterns. With an already mature platform and hundreds of thousands of appliance software applications available through the iOS App Store, could extending this ecosystem to the field of smart TVs redefine another industry?
For Apple, entering the flat-panel TV business comes at a time when Sony has been losing money in this sector for the past 8 years, while Samsung Electronics and LG Electronics, which rely on vertically integrated supply chains, are among the top two LCD TV manufacturers globally. These companies are feeling unprecedented pressure.
A few years ago, Apple introduced the set-top box known as Apple TV, which, despite being just a test, caused considerable surprise. Now, with Apple’s upcoming smart TVs, the TV industry, which has relatively low overall profits and slow technology upgrades, is facing a real challenge.
According to DisplaySearch, a market research firm, although the growth of global LCD TV sales dropped significantly in 2011, the annual revenue of the LCD TV industry still remains around $120 billion. Samsung, LG, Sony, Sharp, and Panasonic continue to be the top five players, holding over 50% of the total market share. This pattern has been maintained for about five years, with only minor changes in rankings among LG, Sony, and Sharp.
Despite Apple allegedly entering the intelligent TV sector, the global TV industry is still dominated by Japanese and Korean brands. Korean brands have risen from behind and now dominate certain markets, while Chinese brands lead in their home market. Technological advancements have moved from CRT to LCD, from CCFL backlighting to LED backlighting, and from 2D to 3D technology.
Veterans in the color TV manufacturing industry have stated that there are two main profit-making segments in the TV industry chain: upstream, where companies like Corning form a cartel for glass substrates, and downstream, where retailers like Walmart HyperTerminal control distribution. Panel and machine manufacturers generally earn lower profits.
Apple's iOS ecosystem relies on completeness and strength to pull in significant profits in the smartphone and tablet PC sectors. If Apple can replicate this success in the smart TV industry, the television industry will see the emergence of true high-end brands. The high-end market positions held by Samsung and Sony may be shaken, and they will bear the brunt of the impact. The long-standing dominance of Japanese and Korean brands in the color TV industry could be disrupted.
Some TV giants argue that Apple entering the TV market, which currently lacks profitability and technical content, represents new opportunities for advancement within the industry. Similar to how the iPad impacted PC makers, it may open a path for breakthroughs.
The TV business is also an important source of income for Japanese and Korean brands like Samsung and Sony, and they will not easily give up their dominance in the industry. Samsung and Sony might collaborate with Google’s Android or Microsoft’s Windows platforms, creating a tripartite operational scenario that could extend into the field of smart TVs.
However, for the domestic color TV market, local brands have an advantage due to their established channel networks. Additionally, China's regulatory policies are more responsive to radio and television content. Therefore, unless Apple secures broadcasting cooperation rights in China, its development of smart TVs will be difficult to take off, making its impact on Chinese TV brands less absolute.
Apple is expected to launch its Apple TV late in 2012 or early next year, equipped with an initially congenial content library based on the iOS platform.