I agree with Dave that Apple will never go into the commodity consumer electronics business. In its heydey Sony was able to charge a premium on its product just because it was, well, Sony.

Apple will never beat the Sonys and Matsushitas at their game. What Apple is doing instead is redefining the game and dictating the terms. For one, the multi-component entertainment center with a horde of CDs, DVDs and other media stacked right next to it will disappear. What will replace it is probably being prototyped somewhere in the bowels of Apple’s campus. Or Steve Jobs’ head.

Apple had the foresight to position itself to get into this market several years ago, when it became married to the cinema-format monitor long before that became anything remotely like industry-standard. Well, actually, Apple positioned itself for two markets: it already has a strong advantage for anybody who wants to make and edit his own HDTV movies (and the price of HDTV cameras is coming down ,to the point they can be described as consumer products). Now it can consider getting into the movie-distribution business. But this is not just a matter of selling the hardware, which is what Gene chooses to focus on. As with music, it involves an integrated marketing system, and music provides Apple with a tried-and-true business model IF (and this is the crucial question) they can persuade enough of the major studios to go along with them. But the basic point is this. Computers (and particularly Apples) are getting more and more like home entertainment centers all the time, and televisions are getting more and more like computers all the time. It’s inevitable that sooner or later these two consumer products will merge into one.

I don’t believe Apple wants to get into the true commodity home electronics game and I’m going to go against the grain and say that Apple has problems in the aesthetics department. Only Apple would put bright, appliance type, white plastic around a high definition display (the new iMac). There’s a good reason why every HDTV manufacturer uses more subdued colours. Even the silver one in my living room has a darkened, angled bezel around the display to reduce glare and provide a dark area around the screen. The iMac G5 was an impressive design, but in many minds, a rather ugly one. The phrase on the net is “lose the chin” in reference to that obnoxious white area beneath the display.

Having said all that I think Apple does have an opportunity to make a better HDTV by putting their iTV functionality inside.

Maybe getting into the home entertainment business would convince Apple to put more than one DVI connector on their Cinema displays too. I started out with Apple displays back in the early 1990’s, but haven’t owned one since dual inputs started showing up on other brands. Having a PC sitting next to my Mac won’t be nearly as important when I can afford to get a MacIntel, but having a display with a second input will remain just as valuable as ever. My PowerBook is always connected to a second display at work and I find it constraining to work at home without that extra screen real estate.

I beg to disagree that the flat panel TV business does not present a lucrative new market for Apple. Let me throw out the following random talking points:

1. The industry is by no means in its infancy, but consider the looming demand when the Feds finally turn off the analog TV signals.

2. Yes the major components of a flat panel TV are fundamentally commodity parts. (Just like the iPod incidentally.) Which is probably the main reason no one manufacturer can boast of a unique, compelling hardware feature that distinguishes it from the rest of the field. The only way to differentiate is through software and yes, aesthetics. Where, by happy coincidence, Apple is lightyears ahead of all those software and design stumblebums at, name your company — Sony, Samsung, Matsushita, the whole lot of them.

3. Finally, one thing that Apple does right, that nobody seems to have observed, is that despite the fanfare about breakneck innovation, Apple introduces new product and technology incrementally. They give the consumer time to digest and get used to new product features a little at a time. Just look at the progression from the iPod, to iTunes music sales, then extend it to iPod with video and downloaded TV shows and short films, then movies, then iTV. [You can see that the natural terminus of this is the flat panel TV, or I'd argue the whole entertainment center.] There’s also that branch which goes from the iPod to the iPhone.

Compare this with what Microsoft did –they tried to plunk down this three-headed monster called the Media Center PC on the consumer’s lap. Who was the genius who decided that this Rube Goldberg contraption was going to be a mass market product? Is there any wonder why the Media Center PC is still sitting on its launching pad?

I assert that Apple is the new Sony. They will eventually be the pre-eminent consumer electronics company. But while Sony did it primarily through hardware, Apple will do it, is doing it, coming from the software end.