Entrance into HDTV market seen boosting Apple's market cap by $100B

Posted:
in AAPL Investors edited January 2014
Categorizing Apple's rumored entrance into the high-definition television market as an "eventual" next step, a new analysis concludes that such a move could increase the company's market capitalization by $100 billion, or $100 per share in incremental value.



Analyst Maynard Um with UBS Investment Research does not believe it is a foregone conclusion that Apple will enter the television market by manufacturing its own HDTV. But he does believe the "logic is sound" for Apple to enter the market with a new product differentiated enough to stand out from the competition.



"We believe Apple is most likely to target the fusion of TV and (set-top box) market, the connected TV, as it enables Apple to add value through its innovative hardware/ease of use, iTunes ecosystem and provide a better overall consumer experience," Um wrote in a note to investors on Monday.



Based on the market capitalizations for seven of the largest television set vendors, Um believes Apple could increase its own market cap by $100 billion if it could gain a similar share of the industry value as other major players like Sony, Samsung and Philips.



He admitted that tracking the market capitalization of HDTV makers i san "inexact science," because many of the companies in that market are major companies in which television sales are only a portion of their business.



"If we assume that the market capitalizations are overstated because of the diversified business of each company, we still believe there is opportunity for Apple to gain an incremental $50 billion in market capitalization," he said.







Rumors of an Apple-branded Internet-connected HDTV are nothing new, and one report from April even suggested that Apple could release its own television set this year. Despite that, Um does not believe that the prospect of an Apple HDTV is included in the company's current stock valuation, meaning investors could see huge gains if Apple does in fact begin selling an HDTV -- something he sees as a long-term possibility.



"We believe there is a likelihood that Apple will enter the television set market at some point in the future," Um said. "however, we do not expect this to happen in the next year."







In looking for ways for Apple to grow its market cap, Um also suggested that Apple expand its retail "Genius Bar" concept to a pay model much like Best Buy's own "Geek Squad." This so-called "Genius Squad" could generate up to $2 billion in annual revenue for Apple, he said.



Um doesn't see revenue being the primary driver for Apple to create a "Genius Squad." Instead, he believes the company could increase the value proposition of its products by installing a number of connected devices in a user's home.



"For example, if a consumer came to Apple to purchase an Apple television set and have it installed by a Genius, the person may also choose to purchase an iPod Touch or iPad (to control the Apple television set) and an Airport wireless router or Time Capsule (to connect all the Apple products together) if ti will already be included in the price of the install," he said. "Hence, the service could be 'halo effect' driver for more Apple products."
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Comments

  • Reply 1 of 94
    tallest skiltallest skil Posts: 43,399member
    Oh, yeah. This rumor. I forgot about it because of how COMPLETELY STUPID it is.



    There's no money in HDTVs. Why sell the TV when you can sell an interface that is SO good that no one would ever use anyone else's?



    *coughA5AppleTVcough*
  • Reply 2 of 94
    MacProMacPro Posts: 18,303member
    Quote:
    Originally Posted by Tallest Skil View Post


    Oh, yeah. This rumor. I forgot about it because of how COMPLETELY STUPID it is.



    There's no money in HDTVs. Why sell the TV when you can sell an interface that is SO good that no one would ever use anyone else's?



    *coughA5AppleTVcough*



    It is the interface Apple could bring that makes this a vague possibility but if they could somehow develop the interface to run on any TV that makes it better then that would be great too, just not sure how they do that or create revenues from it. FiOS just updated their interface where we are in Florida and it is worse than ever. The people that design the user interfaces for programming the HD-DVR must be rejects from Microsoft.
  • Reply 3 of 94
    sailorpaulsailorpaul Posts: 297member
    What an idiot. Perhaps license Apple TV as an internal card JUST to bring/expand the wonderful interface to HDTV sets, but not actually jump into low margin TV mfg.



    Then the analyst goes on to prove his stupidity by proposing to undermine the genius bar that so differentiates the Apple brand
  • Reply 4 of 94
    I do not believe it would be in Apple's best interest to change it's Genius Bar to a pay system like this Um fella is suggesting.
  • Reply 5 of 94
    cloudgazercloudgazer Posts: 2,161member
    Quote:
    Originally Posted by Market_Player View Post


    I do not believe it would be in Apple's best interest to change it's Genius Bar to a pay system like this Um fella is suggesting.



    I think he's suggesting it would be an additional offering on top of the existing free in-store service. You could pay for them to come and do an in-site installation etc.
  • Reply 6 of 94
    zindakozindako Posts: 468member
    This Um guy is an idiot, he is trying to suggest Apple should change it's business model to be like that of an average cable provider with field technicians, what utter trash.
  • Reply 7 of 94
    Quote:
    Originally Posted by AppleInsider View Post


    "For example, if a consumer came to Apple to purchase an Apple television set and have it installed by a Genius, the person may also choose to purchase an iPod Touch or iPad (to control the Apple television set) and an Airport wireless router or Time Capsule (to connect all the Apple products together) if ti will already be included in the price of the install," he said. "Hence, the service could be 'halo effect' driver for more Apple products."



    WHAT planet does that guy live on. So I go into an Apple store (well I would if there were some in belgium anyway), pay about 1000? (1499$) for an Apple HDTV. The paid Genius sets it up (how ? my Sat reciever connects via HDMI...), which is a service offered for free by most retailers here.



    And on top of that I purchase an iPod and/or iPad (an item worth about 350?/425$) at the same time ???



    So I end up paying 1000? + 50? setup +350? (iPo(a)d) = 1400?, 40% over the odds ? I mean - get your reality check Mister Um....
  • Reply 8 of 94
    focherfocher Posts: 640member
    This guy is brilliant! He's suggesting Apple become more like Sony, and we know that's a formula for success.



    Really, one only has to look at the quality of his slides to evaluate his skills at analyzing Apple.
  • Reply 9 of 94
    cloudgazercloudgazer Posts: 2,161member
    Quote:
    Originally Posted by SailorPaul View Post


    What an idiot. Perhaps licence Apple TV as an internal card, but not actually jump into low margin TV sets



    You realize that people said pretty much the same thing back in 2007 about handsets right? They were low margin, Apple should just license an OS, etc. Apple went on to demonstrate that it could offer a completely new experience on the phone which consumers would pay for.



    If Apple decide to enter the HDTV market it will be because they feel they can differentiate from the existing market, enough to earn a nice margin on top. I've no idea if it will enter the market, but it almost has to have considered it, because at this point there are very few markets that Apple can enter that will materially affect their bottom line.



    Apple has the problem of success - it owns the PMP market, it's growing strongly in the handset market, it seems likely to own the tablet market. Where does it go next? What possible business can it invest in that will materially affect the bottom line?



    The reason this rumour keeps popping up again and again is because the HDTV market is big enough to make an impact, and fits vaguely into Apple's core competency.
  • Reply 10 of 94
    gatorguygatorguy Posts: 20,752member
    FWIW, if Apple were to market their own branded HDTV, I'd look at LG as the likely manufacturer. Unlike the other "connected" TV's, LG includes a full-fledged browser with a wand-shape remote that allows interaction with functions by using gestures.
  • Reply 11 of 94
    Quote:
    Originally Posted by Tallest Skil View Post


    Oh, yeah. This rumor. I forgot about it because of how COMPLETELY STUPID it is.



    Agreed, the interface is all Apple needs to sell. They can sell it to the consumer or they can sell it to TV manufacturers - or both.



    My zillion-channel TV does indeed need a better interface (even TiVo doesn't cut it for me anymore), and presumably interface design and implementation IS Apple's field of expertise, so...



    The cable companies offer some excellent iPad apps that suggest a direction for an interface. This is the place to start. Of course, Apple would offer a stripped down version for the iPhone, and a bare-bones version for some sort of iPhone-like remote control it could sell cheaply (with advertising support??).



    This fits neatly into Apple's strategy wherein iPhone help sell iPads and iOS devices help sell Macs and so on. This Apple-TV variant would help sell iPads and iPod Touches, which would sort of be upgrades to the remote. Or, people would buy the device because they already had an iPad and the Apple-TV was well integrated with it.



    To some degree this stuff is already happening but that's also typical of Apple - they pick up on trends in the use of their devices and run with them.
  • Reply 12 of 94
    jonrojonro Posts: 49member
    Leave it to the "analyst" to suggest that Apple completely screw up the genius bar by using the Best Buy model. Best Buy is despised for its poor business practices and their "Geek Squad" has a mediocre reputation. This guy doesn't begin to understand what drives Apple's retail success.



    Is Apple going to compete in the low margin HDTV market? Possibly, but doubtful. If people can buy an $800 42" HDTV and a $100 Apple TV, they are not likely to buy a $1,200 42" HDTV with an internal Apple TV. If Apple decides it's worth their effort to sell price competitive HDTVs in Costco and Best Buy, then they will probably sell a lot of them. Apple could add enough value to an HDTV to charge some kind of premium, but that market is very competitive. I think that Apple would have to own a flat panel manufacturing facility to really make it worthwhile, something they could afford to do.
  • Reply 13 of 94
    MacProMacPro Posts: 18,303member
    Quote:
    Originally Posted by Gatorguy View Post


    FWIW, if Apple were to market their own branded HDTV, I'd look at LG as the likely manufacturer. Unlike the other "connected" TV's, LG includes a full-fledged browser with a wand-shape remote that allows interaction with functions by using gestures.



    If Apple were to enter this market I'd look for Ives to redesign the entire concept of a TV and for it to be made for Apple in total secret under license to their exact specifications with ground breaking new technology that will have the entire industry scrambling to have me-also products a year later. Google would no doubt come up with a clone they will give to other manufacturers to have a half baked, buggy look-a-likes but it will be open to hackers and will report everything you do to advertisers.



    Then again, Apple might not
  • Reply 14 of 94
    sdw2001sdw2001 Posts: 17,038member
    Quote:
    Originally Posted by Tallest Skil View Post


    Oh, yeah. This rumor. I forgot about it because of how COMPLETELY STUPID it is.



    There's no money in HDTVs. Why sell the TV when you can sell an interface that is SO good that no one would ever use anyone else's?



    *coughA5AppleTVcough*



    Agreed, completely. More at the end of the post...



    Quote:
    Originally Posted by digitalclips View Post


    It is the interface Apple could bring that makes this a vague possibility but if they could somehow develop the interface to run on any TV that makes it better then that would be great too, just not sure how they do that or create revenues from it. FiOS just updated their interface where we are in Florida and it is worse than ever. The people that design the user interfaces for programming the HD-DVR must be rejects from Microsoft.



    1. Bingo. Steve has said this exact thing. The business model is the problem.

    2. Or current employees?





    Quote:
    Originally Posted by freelander51 View Post


    WHAT planet does that guy live on. So I go into an Apple store (well I would if there were some in belgium anyway), pay about 1000? (1499$) for an Apple HDTV. The paid Genius sets it up (how ? my Sat reciever connects via HDMI...), which is a service offered for free by most retailers here.



    And on top of that I purchase an iPod and/or iPad (an item worth about 350?/425$) at the same time ???



    So I end up paying 1000? + 50? setup +350? (iPo(a)d) = 1400?, 40% over the odds ? I mean - get your reality check Mister Um....



    What are the "odds?" I take it you think the OP is a tard, but please elaborate....



    Quote:
    Originally Posted by focher View Post


    This guy is brilliant! He's suggesting Apple become more like Sony, and we know that's a formula for success.



    Really, one only has to look at the quality of his slides to evaluate his skills at analyzing Apple.









    Let me add this:



    I don't see Apple doing this. Steve has already explained as much (wish I could find it...it was fairly recent). The problem is the industry's business model and what consumers want. An Apple media hub like the AppleTV is cool, functional, and pretty cost effective (no disclaimer needed...I don't own one, but have seen and used one). Going beyond that is tricky. The cable/satellite industry has a certain business model, one that often rents or gives free hardware. This hardware is mandatory to use their services. So now Apple has to worry about interfacing with all of that? It also has to deal with the fact that consumers have shown that for the most part, they don't care about internet connected TVs. Do you really think I check my Facebook through FioS?



    I think I'm a prime example. I'm a Mac user, iPhone and airport base station(s) owner. I have three TVs running through FioS. I have a home media DVR in the living room and two HD set top boxes. I pay $40 a month JUST IN EQUIPMENT CHARGES. What am I going to do...pay a few hundred dollar premium for an Apple-branded set that has many of the same features I have now? I'm still going to have to pay for the boxes, meaning I'll spend maybe $500 more on the TV than your run-of-the-mill non-Apple version and another $480 a year on the boxes. Huh?



    The only thing I can see Apple doing is offering an upgraded AppleTV with DVR and a blu-ray drive. Of course, they may just surprise everyone and offer all of that in a sleek, HDTV package. But I doubt it, both for the reasons listed above, and the market for HDTVs itself. For one thing, prices are plummeting. 5 years ago, I bought a 42" 720p Panasonic plasma TV. It cost $2200. A better, thinner version of that TV is now approximately $400. Apple is really not interested in markets that are going that way. "Cheaper" is not what Apple does.



    Sorry for all the personal, anecdotal arguments. I think it males sense, though.
  • Reply 15 of 94
    The smarter thing to do would be to wrap an existing provider's service in the apple interface ie apple tv and the apple tv could integrate a watch it now feature kind of like on demand just broader; and the shows will be like 1 or 2 dlars to rent for 48hrs and linked into your account so you can watch them anywhere. They'll probably release a 50 iMac or something, but a whole tv doesn't make any sense.
  • Reply 16 of 94
    cloudgazercloudgazer Posts: 2,161member
    Quote:
    Originally Posted by Gatorguy View Post


    FWIW, if Apple were to market their own branded HDTV, I'd look at LG as the likely manufacturer. Unlike the other "connected" TV's, LG includes a full-fledged browser with a wand-shape remote that allows interaction with functions by using gestures.



    I think we can assume that it would be made by Foxconn/Pegatron/etc, at this point it's a fairly good bet that anything that Apple builds in the next few years will be assembled by those firms. The panels themselves could be LG, they could even be Samsung



    The biggest problem that I see here is that HDTVs aren't something that I spend a lot of time touching. Apple has done best with products that consumers actually touch, and a big part of that is that Apple has gone to huge efforts to make objects that we WANT to touch. The MBP, the MBA, the iPhone, the iPod - they all had surfaces that cried out to be touched. Cool metal and glass, hard edges, rounded corners, - even the little space where you put your thumb to pop the lid on an MBP is beautiful with incredible sharp corners.



    A big part of the reason that consumers fall in love with these devices is that sensuous experience, and there's just no way for Apple to deliver it with a big HDTV, no matter how thin they make it or how beautiful the enclosure.
  • Reply 17 of 94
    paxmanpaxman Posts: 4,603member
    Quote:
    Originally Posted by Tallest Skil View Post


    Oh, yeah. This rumor. I forgot about it because of how COMPLETELY STUPID it is.



    There's no money in HDTVs. Why sell the TV when you can sell an interface that is SO good that no one would ever use anyone else's?



    *coughA5AppleTVcough*



    One reason would be to make 'a statement'. Were Apple to make a big push into the living room nothing would make their presence felt better than a big Apple Logo on the thing that everybody is staring at. It would drive awareness better than the tiny aTV. So whereas the HDTV may not bring in large amounts of money in itself, the added services and the potential halo-effect resulting in further Apple hardware purchases in order for users to benefit from the Apple Eco system... COULD make this idea not so completely stupid.
  • Reply 18 of 94
    prof. peabodyprof. peabody Posts: 2,860member
    Quote:
    Originally Posted by digitalclips View Post


    It is the interface Apple could bring that makes this a vague possibility but if they could somehow develop the interface to run on any TV that makes it better then that would be great too, just not sure how they do that or create revenues from it. FiOS just updated their interface where we are in Florida and it is worse than ever. The people that design the user interfaces for programming the HD-DVR must be rejects from Microsoft.



    I'm not convinced Apple is going to be making TV's myself but as someone who finds themselves shopping for a new TV this week I sure wish they would. What's out there is just horrendous.



    One way in which Apple could "fix" the TV for instance is to make one with built in sound that actually doesn't suck. I'm in the market for my first flat screen plasma and I had no idea that basically *none* have decent sound built in.



    Why should I have to buy a "stereo" (an ancient concept if ever there was one), with auxiliary speakers and set them up around the room? What do I even have to plug into said stereo? I don't play LPs, CDs, DVDs, cassette tapes, VHS tapes, or even miniDV tapes anymore. I don't have "tuner" to listen to old fashioned radio, I don't have cable or a TV tuner, I don't even have rabbit ears. Why can't the TV just handle the sound?



    I play my music through my TV via AppleTV and do the same for my TV Shows, Movies etc. All I want is a TV that is a giant slab for the living room that has a single HDMI input for the AppleTV, a good screen, and nice sound. Hang it on the wall, ... done.



    When I realised that this is what I was looking for, it sounded very "Apple-esque" to me. The very description of a TV Apple might make. One slab, one power button, one cord on the back.



    It's all I need and likely all a lot of folks will need soon.
  • Reply 19 of 94
    MacProMacPro Posts: 18,303member
    Quote:
    Originally Posted by Prof. Peabody View Post


    I'm not convinced Apple is going to be making TV's myself but as someone who finds themselves shopping for a new TV this week I sure wish they would. What's out there is just horrendous.



    One way in which Apple could "fix" the TV for instance is to make one with built in sound that actually doesn't suck. I'm in the market for my first flat screen plasma and I had no idea that basically *none* have decent sound built in.



    Why should I have to buy a "stereo" (an ancient concept if ever there was one), with auxiliary speakers and set them up around the room? What do I even have to plug into said stereo? I don't play LPs, CDs, DVDs, cassette tapes, VHS tapes, or even miniDV tapes anymore. I don't have "tuner" to listen to old fashioned radio, I don't have cable or a TV tuner, I don't even have rabbit ears. Why can't the TV just handle the sound?



    I play my music through my TV via AppleTV and do the same for my TV Shows, Movies etc. All I want is a TV that is a giant slab for the living room that has a single HDMI input for the AppleTV, a good screen, and nice sound. Hang it on the wall, ... done.



    When I realised that this is what I was looking for, it sounded very "Apple-esque" to me. The very description of a TV Apple might make. One slab, one power button, one cord on the back.



    It's all I need and likely all a lot of folks will need soon.



    I agree on the sound and the obsolete connection. The GUI could be an app for iPads that is logical and intelligent for controlling the TV consistent with everything we are already used to on Macs and iPads. Perhaps this could start off as another 'hobby project' just for us fans.



    I wonder how heavy a 64" would be cut from a solid block of aluminum?



    Actually in seriousness I am ready for a TV that is the entire wall. I love my small stuff but also like big stuff on occasions



    Go the USA Women's Soccer Team! YEAH!!!
  • Reply 20 of 94
    richlrichl Posts: 2,213member
    Quote:
    Originally Posted by cloudgazer View Post


    You realize that people said pretty much the same thing back in 2007 about handsets right? They were low margin, Apple should just license an OS, etc. Apple went on to demonstrate that it could offer a completely new experience on the phone which consumers would pay for.



    No-one ever said that about Apple entering the handset business. Smartphones have always been about high margins, stretching back to the early 2000s.
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