Apple television could double US household spending on Apple products
If Apple were to launch a full-fledged television set, it could cause total average annual U.S. household spending on Apple products to double to $888 by 2015, according to a new projection.
Analyst Katy Huberty with Morgan Stanley explained in a note to investors this week that Apple's U.S. household spending doubled following the launch of the original iPhone, from $150 per year in 2007 to $295 in 2010. She expects that the iPad will double that spending again, to an average of $635 per household, per year by 2013.
"Given a 97% TV household penetration and a 61% broadband household penetration in the US along with an expected high price (and value) point, an Apple TV is likely to generate a similar increase in average household spend, with some help from iPad and iPhone growth," Huberty wrote.
Her projections call for the average U.S. household with at least $10,000 in disposable income to spend about $888 on Apple products by the year 2015, which would be double the $444 average spent per year in 2011.
If Apple were to take a 10 percent share of global spending on televisions, including hardware, subscriptions and advertising, it would represent $60 billion per year, or an incremental increase of $64 per household, per year globally.
While the initial impact of an Apple television on average household spending would likely be seen mostly in the U.S., Huberty noted that Apple's real growth potential remains outside of the U.S. Ten years ago, Apple generated about 56 percent of its revenue from the U.S., but in its most recent fiscal year, that number fell to 39 percent.
Still, as of last year the average U.S. household spent $444 on Apple products as compared to just $113 for non-U.S. households that have at least $10,000 in disposable income. Huberty noted that in order to hit global household spending on part with U.S. levels today, non-U.S. household spending on Apple products needs to grow 36 percent annually through 2015.
To reach those goals, she believes Apple needs to forge deals with more carrier partners internationally. Huberty noted that 77 percent of carriers in Asia, 78 percent in Eastern Europe, and 88 percent in Africa have no access to the iPhone.
"The combination of new carriers, introduction of a TV, and just our base case assumptions for the remainder of the business build-up to $393 global household spend annually," Huberty wrote. "We assume 10% market share of the global TV market (including hardware, accessories, content, advertising), 40% penetration of addressable (not total) subscribers at major new carriers and regions, low penetration of the remaining subscribers currently with no access to iPhone, and modest growth relative to historical run-rate in current iPhone carriers, iPad, Mac and other businesses."
Analyst Katy Huberty with Morgan Stanley explained in a note to investors this week that Apple's U.S. household spending doubled following the launch of the original iPhone, from $150 per year in 2007 to $295 in 2010. She expects that the iPad will double that spending again, to an average of $635 per household, per year by 2013.
"Given a 97% TV household penetration and a 61% broadband household penetration in the US along with an expected high price (and value) point, an Apple TV is likely to generate a similar increase in average household spend, with some help from iPad and iPhone growth," Huberty wrote.
Her projections call for the average U.S. household with at least $10,000 in disposable income to spend about $888 on Apple products by the year 2015, which would be double the $444 average spent per year in 2011.
If Apple were to take a 10 percent share of global spending on televisions, including hardware, subscriptions and advertising, it would represent $60 billion per year, or an incremental increase of $64 per household, per year globally.
While the initial impact of an Apple television on average household spending would likely be seen mostly in the U.S., Huberty noted that Apple's real growth potential remains outside of the U.S. Ten years ago, Apple generated about 56 percent of its revenue from the U.S., but in its most recent fiscal year, that number fell to 39 percent.
Still, as of last year the average U.S. household spent $444 on Apple products as compared to just $113 for non-U.S. households that have at least $10,000 in disposable income. Huberty noted that in order to hit global household spending on part with U.S. levels today, non-U.S. household spending on Apple products needs to grow 36 percent annually through 2015.
To reach those goals, she believes Apple needs to forge deals with more carrier partners internationally. Huberty noted that 77 percent of carriers in Asia, 78 percent in Eastern Europe, and 88 percent in Africa have no access to the iPhone.
"The combination of new carriers, introduction of a TV, and just our base case assumptions for the remainder of the business build-up to $393 global household spend annually," Huberty wrote. "We assume 10% market share of the global TV market (including hardware, accessories, content, advertising), 40% penetration of addressable (not total) subscribers at major new carriers and regions, low penetration of the remaining subscribers currently with no access to iPhone, and modest growth relative to historical run-rate in current iPhone carriers, iPad, Mac and other businesses."
Comments
We would all love to get our hands on Apple branded HDTV, tweener iOS devices and a phone only Mae West could love. The question is, what would Apple get out of it?
It's pretty amazing that she can estimate to within $1 accuracy, something 3 years out based on a product that's only a rumor. That is so impressive I think I'll invest my life savings.
Ugh. We need a new TV right now!
Ship the thing already!
Going to shop for a cheapy this weekend to tide us over.
Can Apple hit another home run? As much as I love their products, I can not help but wonder...
Quote:
Originally Posted by FrankenSigns.biz
Can Apple hit another home run? As much as I love their products, I can not help but wonder...
At the end of the day, it'd be the software, the controls, and the cable carriers that'd determine whether this can be successful. Hardware-wise, it'd be nice but won't be much different from a Samsung/Sharp/LG TV.
Let the electronics giants chase quality up and prices down. All Apple needs to supply is the doo-hickie that attaches to the TV. That way, I can buy the gorgeous 80" monster at Costco vs. the puny 47" or whatever Apple thinks is the sweet spot this year.
I like the prior poster's question: What's in it for Apple? This is a content game and Apple can win this by giving us Apps (games) and other cool services linked to the iCloud and iOS devices.
Quote:
Originally Posted by ascii
It's pretty amazing that she can estimate to within $1 accuracy, something 3 years out based on a product that's only a rumor. That is so impressive I think I'll invest my life savings.
She has a crystal ball obviously! Imagine the numbers using the same logic if Apple had a $40,000 iCar!!!!
Off topic a bit but related to new off the wall products Apple 'might' do ...
I just installed the Nest™ which as many here will know is the super intelligent house AC thermostat that was developed by ex Apple folks. It does make you start to see what Apple thinking can do to products other than computers, phones and tablets. I am blown away by this thing. I now start to thinking Apple should have a division for Nest like products. How about an intelligent oven that talks to the meat thermometer? I wish the smiley faces worked on this new blog!
OMG AAPL went up a bit!
I think Apple needs to offer 2 different size TVs. 42-47" and a 50-55" TVs. And sure, there will be the "Apple" price point. I think $1299 and $1599 respectively.
I'd like AI to run a "2008 retrospective" to put all this crap in context.
But seriously, anyone else starting to only hear Charlie Brown adults when analysts speak these days?
Re: Drobforever:
Actually, it would be a major improvement from LG, at least. We've a year-old LG HD set, an LG BluRay player, and an HD DirecTV box. I can neither fully control the BluRay from the LG TV controller nor the TV from the BluRay controller. I've managed to get the DTV controller to switch the TV back to the DTV box, but need both the BluRay and the TV controller to shift to BluRay mode.
I can't speak to other major players in the HD market, but could Apple improve on this nonsense? I think they could....
I'd home we wouldn't be expected to buy a new set twice as often if we're on the Apple HDTV. Mine is from 2007 and it's still going strong, an SoC from a phone or tablet would be long outdated by now.
The one (Sharp) that makes the 80 inch monster is often mentioned in the same articles as Apple.
For $1299 it better make me coffee too
I don't think they will improve this as I don't believe an Apple HDTV will include a built in Bluray player (they'll expect you to buy movies from iTunes instead) so if you want to watch your existing Bluray movies you will still need a separate player and two remotes.
The real question to whether Apple succeeds is how likely are you to replace your year old TV with a new Apple HDTV (especially if the $99 AppleTV provides the same functionality)?
Quote:
Originally Posted by Orlando
I don't think they will improve this as I don't believe an Apple HDTV will include a built in Bluray player (they'll expect you to buy movies from iTunes instead) so if you want to watch your existing Bluray movies you will still need a separate player and two remotes.
The real question to whether Apple succeeds is how likely are you to replace your year old TV with a new Apple HDTV (especially if the $99 AppleTV provides the same functionality)?
Built-in Siri function. AppleTV will probably not include it.
Quote:
Originally Posted by starbird73
...starting to only hear Charlie Brown adults when analysts speak these days?
Wah, wah, wah wah wah?
I'm very fond of my many Apple toys, along with my many non-Apple toys, but have a hard time imagining what they can add to a TV that would compel me to purchase. All I can see is the expensive and time consuming nightmare of shipping, stocking and demonstrating such a product. Can you imagine the floor space consumed by this in an Apple store? I'd rather they concentrate more on Macs.
But, they do seem to have a knack for pulling rabbits out of hats. Let's hope this one does not have sharp teeth and leap about decapitating people.
Basically, as soon as you turn on the TV for the first time as well as all of your assorted devices, Apple will ask if you want to be able to control it from the TV remote, which naturally will sync with the Remote app on your iPod Touch, iPhone or iPad.
And seriously, I don't think this would be all that technically challenging for Apple either.
Just an idea
All well and good except Katy Huberty, the most clueless of the ignorant AAPL analysts, did the projection.