Reports: Apple Puts Smart TV Project on Hold, Again

Apple (AAPL) reportedly has put the clamps on its on-again, off-again smart TV project that may have produced as many as four new units next year, perhaps reasoning that the market potential is greater in wearable computers than in Internet-connected televisions, according to a researcher.

Chatter from the TV supply chain about the vendor’s plans for a smart TV (and not a set-top box), while never reaching a full-on roar, lately has pointed to a possible lineup of two or three large screens at 4K resolution, wrote Paul Gagnon, DisplaySearch North American TV research director, in a blog post.

The “hangup has always been the content,” said Gagnon. “For Apple, selling hardware is partly a way to sell more software and content.”

Gagnon speculated that Apple may not have believed that the necessary market drivers for a successful smart TV launch were in play. For example, to bring to market a viable smart TV, the vendor had to be convinced that it will sell enough units to significantly boost its content sales, particularly among first-time buyers. In addition, it may not have believed it could differentiate its TV products from entrenched competitors Samsung and Vizio to establish a suitable working profit.

In the end, Apple perhaps concluded—at least temporarily—its ability to sell enough smart TVs to make it a profitable venture is compromised by one simple fact: Consumers typically buy one TV per household, a far cry from the multiple smartphones and tablets common in the mobile market. Indeed, the market does not appear to be taking off as some have predicted: DisplaySearch’s smart TV forecast shows it only accounting for about 25 percent of all TV shipments this year and slow growth thereafter, mostly for low-cost models.

Apple may have seriously questioned its ability to create enough of a buzz about its smart TVs to build a strong market for follow-on purchases that would solidify its presence.

“The last point is particularly difficult to achieve,” Gagnon said, noting that DisplaySearch’s research shows the typical cycle to replace TVs is seven to eight years, more than double the two-to-three-year sales cycle Apple is used to for mobile devices such as the iPhone and iPad.

If the ultimate point of smart TVs for Apple is another vehicle from which to sell content, the project may not have passed the tests to move ahead with a launch schedule, he said. The necessity to add exclusive content to differentiate itself from rivals already in the market may have thrown a hurdle in Apple's path too difficult to clear.

“To offer truly unique product differentiation that would allow Apple to capture market share from existing smart TV brands, they would need to either deliver some exclusive source of content that the other brands cannot, such as a la carte pay-TV channels, or proprietary content not available on other devices,” Gagnon said.

But even that presented an uphill climb. “Consumers already access services like Netflix, Hulu, YouTube and more on a plethora of cheap devices that can be connected to their existing TV, such as the Apple TV and Roku media players, and more recently Google’s (GOOG) Chromecast,” he noted.