The global TV market is in need of a savior. Many expect the likes of Apple (NASDAQ:AAPL), Google (NASDAQ:GOOGL), and Microsoft (NASDAQ:MSFT) to use some of their magic to revolutionize the TV market, but mass-market products from each of these names have yet to materialize. This has resulted in consumers increasingly sitting on the sidelines as they await some kind of smart television from tech giants like Apple, Google, and Microsoft.
Unfortunately, this has proven to be a negative drag for TV sales today. According to research firm IHS, the global TV market is now officially set to contract for a second straight year. And in a somewhat counterintuitive way, Apple, Google, and Microsoft are perhaps more to blame than anyone.
As IHS explains, Apple, Google, and Microsoft's budding tablet empires today present consumers with cheaper alternatives to traditional TVs for consuming content. This makes it easier for consumers, especially in emerging markets, to chose to purchase a tablet instead of a PC.
But as Fool contributor Andrew Tonner explains in the video below, Apple, Google, and Microsoft are also the key to reinvigorating growth into the global TV market in the coming years.
Andrew Tonner: Hi, Fools, Andrew Tonner here.
One of the interesting sides from the explosion of the global tablet market has been its negative effect for not only the PC market, which we've seen, but now also the TV market.
What am I talking about? I'm talking about research from IHS coming out and reiterating this fact, saying that the TV market globally was likely to contract for a second straight year due to very, very weak shipment months in both June and July.
There are a few reasons at work here. It's interesting to note that TVs, of course, are a big-ticket purchase item, costing at least well into the hundreds, if not thousands, of dollars.
With low-cost tablets presenting a cheaper alternative and also giving many of the same opportunities to access and consume things like media or the Internet now, you have tablets sort of being able to replace TVs at that lower pricing point as well.
The second thing to also take into consideration is the TV market really hasn't hit on any of the great innovations that people had seen it potentially living up to in the last couple of years. The last several years, the focus has largely been on 3D, and now that's recognized as pretty much a dead standard.
You also see the TV market just having a multi-year life cycle as well. People can hold onto these, and really put off the purchases in one year to the next, similar to the effect we've seen in the global automotive market as well.
It seems like people are really waiting on the sidelines to refresh their TVs, in the expectation that Big Tech's going to step in -- and I think that's actually an investable theme here in technology as well.
You see names like Apple, Google, and Microsoft really understanding software. I think software's going to be the next major innovation in terms of making the TV smart and actually expanding the set of capabilities that you'll be able to do with your TV in years to come.
I think when you look at these big tech names -- and a lot of them are starving for growth drivers -- you can see how they would break into the space. There's a natural progression for many of their business models into the big TV space.
I wouldn't be looking at this as a potential market upswing, where you can maybe buy a TV maker, but I think Big Tech is actually a set of companies that are really going to revolutionize this space. I'm talking about, of course, Apple, Google, Microsoft. They're names to watch in this space, and they could really drive a refresh cycle in years to come.
Thanks a lot, and Fool on!
Fool contributor Andrew Tonner owns shares of Apple. Follow Andrew and all his writing on Twitter at @AndrewTonner. The Motley Fool recommends Apple, Google, and Intel. The Motley Fool owns shares of Apple, Google, Intel, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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