5 Reasons Apple Abandoned Its TV Set

Apple Inc. (NASDAQ: AAPL) reportedly canceled any and all plans to release a high-definition television.

According to The Wall Street Journal, Apple didn't think its new features (such as a FaceTime camera that senses who is talking and directs the camera toward the speaker) were "compelling enough to drive an entry into a new product area." That may be true, but that doesn't mean it is the only reason Apple decided to stay out of the TV race.

Read on to see why analysts believe Apple exited the business before releasing its first product.

1. The Large Screen No Longer Matters

Analysts made it clear that large, stationary displays are not as important as they were 10 years ago.

"There's no value in the large screen," Global Equities Research analyst Trip Chowdhry told Benzinga. "It's a dumb screen. The value is in…content [that] allows consumers to have a frictionless and continuous experience from one device to another. When you think about these things, the screen by itself adds little value."

Patrick Moorhead, president and principal analyst at Moor Insights & Strategy, told Benzinga that while he would like to see Apple release a "real 4K TV," he understands why it might have backed off.

"More and more people are consuming their content from their phones, tablets and PCs, and spending less time on their larger televisions," he said.

Related Link: Gene Munster Admits Defeat On Apple TV

2. Apple TV Adds Nearly As Much Value

Moorhead said he feels like Apple could deliver 90 percent of the experience "by providing an add-on box that delivered 4K video services, light games, and a hub for home automation."

"I can see them adding Siri functionality to the controller, too, to provide natural language search for content," he said.

3. TVs Have A Long Lifecycle

Apple is not in the business of selling consumers a product they can use for 10 years.

"People [will] change Apple's set-top box every three years," said Chowdhry. "People will not change their big screen TVs every three years! They get changed or replaced every 10, 15 years. It's a very long lifecycle."

4. TVKit Might Be All Developers Need

Apple's rumored TVKit SDK (software development kit) could be all developers need to create the future of television.

"I think the Apple TV is moving toward an iPad-type experience where it becomes an app-centric technology," Cody Willard, chairman of Scutify and Futr, told Benzinga. "You will use apps to do a lot of different stuff: to watch movies and videos, but also to do things we haven't even thought of yet that brilliant app developers are going to come up with."

Moorhead believes Apple is developing a device and an SDK "that will enable 4K content streaming, light gaming and maybe even a home automation hub."

5. Apple TV Could Provide 3 Revenue Streams

Apple doesn't need to sell a television set to profit from the evolving world of television.

"When you think of an Apple set-top box, there are three revenue streams," said Chowdhry. "One is the device, which [debuted at] $99. Second [are] the subscription services, in which Apple takes between 10 percent and 20 percent. Third is the app revenue."

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.