Should You Believe in an Apple 4K TV?

The TV industry continues to search for the next big thing that can potentially reinvigorate a new upgrade cycle. TV technology doesn't change as rapidly as other consumer electronics industries, and we can go ahead and consider the attempted transition toward 3-D dead.

At this year's Consumer Electronics Show, 3-D TVs were nowhere to be found, and that's a good thing because it was so obviously a gimmick from the get-go. Companies are now turning their attention toward 4K TVs, which boast "Ultra HD" resolutions. The "4K" moniker refers to the horizontal dimension, which is approximately 4,000 pixels. One challenge with 4K adoption is that there's really not much content optimized for such high resolutions.

Apple (NASDAQ: AAPL  ) has successfully popularized super high-resolution displays in mobile devices like smartphones and tablets, and is working on doing the same in PCs, starting with the Retina MacBook Pros. The latest rumor out of DIGITIMES suggests that Apple is interested in launching a 4K TV with a 3,840 x 2,160 resolution, which doubles the dimensions of standard 1,920 x 1,080 HDTVs.

Can Apple push the TV industry forward in the same way?

Not you again
The questionable report says that Apple has been trying to line up panel suppliers, but most Ultra HD panel vendors are booked up through 2013. Meanwhile, Apple already has other capacity locked down at panel makers for its iDevices.

DIGITIMES believes that Apple is hoping that LG Display (NYSE: LPL  ) can pitch in with Ultra HD panel production, as LG Display is one of Apple's primary display providers for its other products. If LG Display can get its facilities in order, Apple could potentially launch the long-rumored iTV by the end of 2013. However, chances are that the Mac maker will end up launching in early 2014, if DIGITIMES' dubious predictions turn out to be accurate.

First off, I wouldn't doubt that Apple has 4K TV prototypes, since the company makes all sorts of prototypes that never see the light of day. At the same time, it's a long road between prototype and commercial viability. If such prototypes exist, perhaps that's where these rumors come from.

Here's why Apple faces much larger challenges in catalyzing 4K TV adoption -- and why it's so unlikely.

Lessons learned
First, we should look at the industries where Apple has or is in the process of catalyzing high-resolution change, and we'll see that there are some very notable differences.

In mobile devices, displays are relatively small, which also means that the cost for a consumer to adopt a high-resolution display is less (or nonexistent with the presence of smartphone subsidies). When Apple went from the iPhone 3GS to the iPhone 4's Retina Display, consumers didn't have to pay a dime more than the $200-on-contract price. Meanwhile, it incentivized its legion of developers to optimize apps and content for higher resolutions.

It then had both pieces of the puzzle: consumer willingness and optimized content. It's fair to say that high-resolution displays are the standard now for high-end mobile devices, and Apple no longer holds the title of having the greatest pixel density.

In PCs -- a transition that's still under way, starting with laptops -- Apple is quite literally the only company that could spark the industry into action, specifically because of its integrated strategy. The segmented value chain on the Microsoft (NASDAQ: MSFT  ) Windows side meant that no company had an incentive to push high-resolution displays, and such a major transition required everyone's cooperation.

Microsoft would have to optimize the operating system; low-margin PC vendors would have to spend extra to buy premium panels; software developers would have to optimize their apps and content; all of this while conveying to the consumer why such a high-resolution PC is worth the premium.

This is simply something that a segmented value chain couldn't deliver, but a highly integrated player with powerful marketing and messaging like Apple can. The Windows value chain was faced with a chicken-and-egg dilemma, while Apple delivered the chicken and egg at the same time. Only now that Apple has catalyzed the industry can the Windows ecosystem work together.

There are a lot of scaling algorithms necessary to make Retina happen in PCs, and Apple built them into OS X. It's long been a premium PC brand, so was able and willing to pay extra for better displays, while the company also offers plenty of first-party apps that were Retina-ready and similarly incentivized third-party developers to do likewise. Add in a pinch of hyperbolic marketing and you're on your way.

This time is different
With TVs, it's a totally different game. Instead of a premium of $0 to $500 that's borne by the consumer, we're talking about 4K TVs costing anywhere from $40,000 to $300,000. With full HDTVs right now going for under $500, good luck with that.

On the flip side, the primary content source for TV is Hollywood, instead of armies of developers. Creating 4K content is much more expensive than optimizing an app for high-resolutions, something that the TV and film industry won't commit to unless consumers are on board. These are chickens and eggs that not even Apple can deliver simultaneously.

At the same time, the actual benefit for 4K in everyday usage is questionable, since TV viewing distances haven't changed. In fact, pixels on a current 40-inch 1,080p HDTV aren't discernable from 5.2 feet or more, so buying a TV that costs as much as your car or house to make pixels you already can't see even harder to see is what I like to call a "tough sell."

Apple may launch a 4K TV one day, but not for a very, very long time.

There's a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.


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Comments from our Foolish Readers

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  • Report this Comment On March 27, 2013, at 10:43 PM, speechisntfree wrote:

    Thomas Edison once said, "For every good idea, ten men thought of it first, but all they did was think".

    If Mr. Edison were alive today, he would probably say, "For every good company, a hundred self-aggrandizing bloggers with personal agendas try to tear it down, but all they ever really do is flip a coin".

  • Report this Comment On March 28, 2013, at 12:01 AM, applefan1 wrote:

    Should I believe in an Apple 4K TV? I don't know, I guess I would have to see them release one to the market before I can believe it. It also has to do with how they handle displaying regular content in 4K if it's not available in 4K.

    I would have to also see it side by side against a 1080p to see if there is much of a difference and I would have to see if the price is affordable.

    I can see 1080p TV first and then a 4K. 4K is really bleeding edge and most people are STILL watching mostly 720p content.

  • Report this Comment On March 28, 2013, at 12:30 AM, SyDVooh wrote:

    I want to believe! Can't wait to buy one! Seriously, $40,000 to $300,000 per unit? Sure it will be more expensive, say 20 - 25% more than the competition, but hey it's an Apple device, so it will sell. Apple products sell because they work, and seamlessly with other Apple products in the Apple Ecosystem. If you have one Apple product, then you want them all. That's why I say: "Long Apple!

  • Report this Comment On March 28, 2013, at 2:38 AM, lakawak wrote:

    Pelase let me pay a ridiculous amount of money...not even including the Apple Fool's Price tacked on...for a device that nothing will be able to utilize to its fullest!

  • Report this Comment On March 28, 2013, at 6:32 PM, rlcato wrote:

    Should You Believe in an Apple 4K TV?

    No.

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