Did Apple’s Tim Cook Abandon Steve Jobs’ Final Project?

For his eponymous biography, Steve Jobs, former CEO of Apple (NASDAQ: AAPL  ) , gave author Walter Issacson a preview into Apple's next product -- a TV set -- with this quote [emphasis added]:

I'd like to create an integrated television set that is completely easy to use. It would be seamlessly synched with all of your devices and with iCloud. It will have the simplest user interface you could imagine. I finally cracked it.

This revelation, released in the posthumous book, fueled speculation for years in regards to its release. Noted Piper Jaffray analyst Gene Munster has guessed incorrectly that Apple's TV was on the verge of being released seemingly forever now. And he's not alone -- many are eagerly anticipating its release.

Alas, nearly three years after Jobs' death, there's still no Apple TV. What's more, most new product rumors center on a payment service, the iPhone 6, and the smart watch that's being called iTime. Has Tim Cook abandoned Jobs' final discussed product?

Not that Apple TV!
Casual readers will note that "Apple TV" already exists, and rightfully so. However, that isn't what Jobs was referring to. Apple TV already existed at the time of the interview, coming to market in early 2007. Jobs was looking at a TV set -- not another streaming, "me-too" device that competes with Google's Chromecast dongle and privately held Roku. Jobs' vision appeared bigger: a disruptive, game-changing step forward, much like the iPhone and iPad.

And it appears the television industry could use some disruption. Sales have been sluggish for the last couple of years, according to IHS's industry report, culminating in the U.S. market's massive 9% drop in unit sales last year. And while some of the blame can be attributed to poor macroeconomics, much of this stems from a lack of innovation. The IHS specifically mentions smart TVs -- just what Jobs had envisioned -- as the one bright spot in the report.

Are margins what's keeping Apple away?
After Cook took the reins, Wall Street was somewhat reluctant to accept him as the next Steve Jobs. Although Apple continued to report amazing quarterly numbers, doubts crept in. A familiar refrain about a "lack of new and imaginative products" developed. But an even larger discussion centered over Apple's quarterly gross margins -- especially after Apple's margins hit an absurd 47%. As the infographic below shows, it wouldn't touch that high-water mark again, and it's averaged "only" 40.25% since -- and even lower than that recently. 

While it's hard to speculate on a product that isn't in existence yet, it would be hard for an Apple TV unit to approach these lofty margins. The TV business is hallmarked by price cuts and competition. And while it is a stretch to think of the TV market today as a commodity market with very few differentiators, many would-be TV shoppers are extremely price-conscious. Apple could use a premium-pricing strategy due to its following and brand cachet, but in the end, asking for such lofty margins would probably price it out of most people's budgets.

Final thoughts
Tim Cook is no Steve Jobs. And in many ways, that's a good thing. Jobs was at best indifferent to shareholders, and by withholding Apple's growing cash hoard, in some ways even punitive toward them. However, as far as Apple fans and customers go, we really want to see Jobs' last discussed product. Mr. Cook, we're waiting!


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