Originally Posted by jragosta
You're absolutely right. The TV hardware sales are much smaller.
This source says that the number is around 50 M units in a quarter - or 200 M units per hear. At $1000 per TV, that's $200 B. Add in the watches and you have $250 B - so the analyst is expecting Apple to capture 1/3 of the total market - which is just plain absurd. Those are both well-established markets with strongly entrenched market leaders and very little profit potential. To think that Apple will come in with a premium priced product and take a third of the market is crazy.
Yes, they did it with iPads, but that was not an strongly established mature markets. Let's look at mobile phones. At launch, Jobs said Apple wanted a couple percent - and the analysts thought that was unreasonable. Even now - after 7 years of the most successful product launches in history and products that completely revolutionized the industry, Apple has around 10% of the entire mobile market.
So why are TVs and watches so different that anyone would reasonably predict Apple to get 1/3 of the entire market? Nothing. It's pure hype intended to create unrealistic expectations.
Not to beat a dead horse, but I did not see unit per year numbers anywhere in that source article. Perhaps is is in the linked full story pdf. Nonetheless, assuming that the yearly unit television sales are 200M, the average sale price is far lower than $1,000USD. It is likely closer to $650USD. (My Wolfram Alpha query, "average cost of a television" resulted in a median price of $649USD. A low-end 15" Coby goes for $94.98 and a 90" Sharp goes for $9,999.98.). 200M TV units at that median price gets you to about $129.8B in global revenue for televisions (not the entire TV industry including content).
Also, the global watch market was $46.6B, not $50B as you rounded to upthread. That's a big difference. With the TV hardware revenues, that gets us to a total of $176.4B USD.
Lastly, the contention was Apple capturing 20% of the combined market, not 33.3% (1/3) of those markets, collectively. That's another big difference. So, your numbers were rather fuzzy, again. What we have now is 20% of $176.4B, which is $35.28B in revenue that someone "inanely" projected Apple could generate in profit in the foreseeable future.
Considering that Apple reported $155.97B in revenue in FY 2012 (as compared to "only" $32.48B four years earlier in 2008: http://www.marketwatch.com/investing/stock/aapl/financials) suggests that even if Apple's revenue growth slowed substantially, it could easily report over $200B in annual revenue in the foreseeable future-perhaps in five years or less.
It is not only not inane, or not possible, but perhaps actually likely that a single breakout product of Apple's could generate 20% of the revenues in the TV and watch markets. Interestingly, the $35.28B figure represents close to 20% of Apple's current revenue. If Apple can scoop up well over $30-40B in revenue from the telephone (iPhone) and PC (iPad) industries, why not from the TV and watch industries?
We know that Apple's iPad accounted for 20% of its 2012 revenues and iPhone accounted for 53% of its revenues: http://www.macrumors.com/2012/01/24/apple-reports-best-quarter-ever-in-q1-2012-13-06-billion-profit-on-46-33-billion-in-revenue/. Furthermore, from a market share (and absolutely from a revenue and profit share) perspective, Apple has demonstrated a keen ability to do exactly what you say is inane to consider. It can capture greater than 20% of a market it enters very quickly. On a related note, it also can drive a significant proportion of its own revenue with a single breakout product.
It is not pure hype and the expectations are not unrealistic, but actually supported by historical data.