Analyst says Apple working on 'Smart TV' prototype in bid for living room
According to one analyst's checks with Apple's Asian suppliers, the company is in the process of building a 'Smart TV' prototype as part of an ongoing effort to assert a stronger presence in consumers' living rooms.
In a note sent to investors on Friday, analyst Katy Huberty of Morgan Stanley wrote that the firm's "checks in Asia suggest Apple is working on a Smart TV prototype." Though further details remained scarce, Huberty speculated that an Apple Smart TV could be an opportunity for the Cupertino, Calif., company to consolidate "TV/Video content, gaming, DVR, as well as other features like apps and FaceTime into one product," much like the company did with its strategy for the iPad.
Huberty sees Apple's rumored Smart TV as "potentially the next new product category" and predicts that an Apple-branded TV could add approximately $4 billion per 1 percent share of the TV market captured by 2013.
The analyst also cited three other under-appreciated growth catalysts for Apple in her note: sales growth in Asia Pacific, especially China; expansion of iPhone price points leading to increased smartphone market share and continued dominance of the fast growing tablet market.
Projecting 60 percent annual revenue growth for Apple in Asia Pacific, excluding Japan, Huberty sees the Asian share of Apple's revenue approaching 30 percent in 2013. Huberty also noted that the Asia Pacific region tends to skew toward mobile devices, resulting in a higher profit margin for the company.
Huberty predicts an LTE iPhone from Apple in 2012, with Apple marketing older 3G iPhone models to developing markets. According to the analyst, new features and faster performance of an LTE iPhone could preserve the device's $600 price point, while 3G iPhones would sell for a lower average selling price in countries like China, India and Brazil.
With the international launch of the iPad 2 set to begin on Friday, Apple's lead in the global tablet market is expected to widen. Huberty's long-term view of the device projects adoption rates similar to the iPod. Citing weak sales of non-Apple tablets in the first quarter of 2011 and mixed reviews for upcoming devices, Huberty predicts Apple will easily maintain "well north of 50%" of the tablet market.
Huberty maintains a price target of $410 for Apple stock by November 2011. In a bull case scenario, the analyst sees shares of Apple possibly reaching as high as $540, assuming 55 percent iPhone growth and 74 percent iPad growth. According to the analyst, a bear case scenario could see Apple stock drop to $270 due to the possibility of lower margins and concerns over CEO Steve Jobs' health.
Regarding rumors of a Smart TV from Apple, Huberty is not alone in her prediction. Analyst Gene Munster of investment bank Piper Jaffray has long held the belief that Apple will release a connected television in the near future.
"While Apple's commitment to the living room remains a 'hobby,' we continue to believe the company will enter the TV market with a full focus, as an all-in-one Apple television could move the needle when connected TVs proliferate," Munster said in a note to investors earlier this year. Munster sees a rumored $3.9 billion supply investment for display components by Apple as a possible indication of an upcoming connected TV.
Though Munster does not see an Apple-branded TV coming in 2011, he predicts that Apple could sell 1.4 million units in 2012, adding as much as $2.5 billion in revenue to the company's top line.
In a note sent to investors on Friday, analyst Katy Huberty of Morgan Stanley wrote that the firm's "checks in Asia suggest Apple is working on a Smart TV prototype." Though further details remained scarce, Huberty speculated that an Apple Smart TV could be an opportunity for the Cupertino, Calif., company to consolidate "TV/Video content, gaming, DVR, as well as other features like apps and FaceTime into one product," much like the company did with its strategy for the iPad.
Huberty sees Apple's rumored Smart TV as "potentially the next new product category" and predicts that an Apple-branded TV could add approximately $4 billion per 1 percent share of the TV market captured by 2013.
The analyst also cited three other under-appreciated growth catalysts for Apple in her note: sales growth in Asia Pacific, especially China; expansion of iPhone price points leading to increased smartphone market share and continued dominance of the fast growing tablet market.
Projecting 60 percent annual revenue growth for Apple in Asia Pacific, excluding Japan, Huberty sees the Asian share of Apple's revenue approaching 30 percent in 2013. Huberty also noted that the Asia Pacific region tends to skew toward mobile devices, resulting in a higher profit margin for the company.
Huberty predicts an LTE iPhone from Apple in 2012, with Apple marketing older 3G iPhone models to developing markets. According to the analyst, new features and faster performance of an LTE iPhone could preserve the device's $600 price point, while 3G iPhones would sell for a lower average selling price in countries like China, India and Brazil.
With the international launch of the iPad 2 set to begin on Friday, Apple's lead in the global tablet market is expected to widen. Huberty's long-term view of the device projects adoption rates similar to the iPod. Citing weak sales of non-Apple tablets in the first quarter of 2011 and mixed reviews for upcoming devices, Huberty predicts Apple will easily maintain "well north of 50%" of the tablet market.
Huberty maintains a price target of $410 for Apple stock by November 2011. In a bull case scenario, the analyst sees shares of Apple possibly reaching as high as $540, assuming 55 percent iPhone growth and 74 percent iPad growth. According to the analyst, a bear case scenario could see Apple stock drop to $270 due to the possibility of lower margins and concerns over CEO Steve Jobs' health.
Regarding rumors of a Smart TV from Apple, Huberty is not alone in her prediction. Analyst Gene Munster of investment bank Piper Jaffray has long held the belief that Apple will release a connected television in the near future.
"While Apple's commitment to the living room remains a 'hobby,' we continue to believe the company will enter the TV market with a full focus, as an all-in-one Apple television could move the needle when connected TVs proliferate," Munster said in a note to investors earlier this year. Munster sees a rumored $3.9 billion supply investment for display components by Apple as a possible indication of an upcoming connected TV.
Though Munster does not see an Apple-branded TV coming in 2011, he predicts that Apple could sell 1.4 million units in 2012, adding as much as $2.5 billion in revenue to the company's top line.
Comments
Cripes, I'm remembering trying to help my mother-in-law figure out her TV-VCR setup and trying to picture what an "Open" TV would be like. Now I need a drink!
I thought the consensus was that there isn't enough margin in TV's to make it something Apple would do... or is the idea to sell the screen low margin like other TV's and then profit from the extra iTunes movie/TV sales?
That's OK... ...Now I need a drink!
Have one for me!
(Remember VHS vs. Betamax?)
So are we talking about an actual television here? Like a Cinema Display - but bigger - with an Apple TV built in?
I thought the consensus was that there isn't enough margin in TV's to make it something Apple would do... or is the idea to sell the screen low margin like other TV's and then profit from the extra iTunes movie/TV sales?
I guess that in the final analysis, it's a matter of affordable hardware and unbeatable services, the ecosystem. Can Apple be successful there? Guess I know why I am just a spectator!
Perhaps it is because I am not an analyst but I do not see how an Apple branded TV could see ever the light of day. Seriously, it is getting old.
The Apple TV is the right strategy for the living room as it works with existing TV sets and serves the intended purpose: to enable the consumption of iTunes content. They can definitely improve on it (2 thumbs up for adding Netflix support but what about Apple TV Apps?) but it cannot be a better product if it were simply integrated with the TV panel.
Let's remember that Apple entered the smartphone and tablet markets because their offerings were disruptive. They were groundbreaking innovations. The Apple TV in its current form is not a game changer and only proved to be a success after a significant price reduction. That says a lot: consumers are not interested to spend a lot of money to get iTunes content on their TV sets.
Unless these highly paid analysts have something insightful that they are not sharing, an Apple branded TV is not a good idea. Apple is better off focusing on its core competencies.
So are we talking about an actual television here? Like a Cinema Display - but bigger - with an Apple TV built in?
I thought the consensus was that there isn't enough margin in TV's to make it something Apple would do... or is the idea to sell the screen low margin like other TV's and then profit from the extra iTunes movie/TV sales?
That's certainly my feeling. And, of course, assorted "analysts" have predicted all kinds of products from Apple over the years that never shipped.
I would love an Apple TV that was price and performance competitive and included some additional functionality, like AirPlay. I just can't see where Apple can do that, however. Samsung are using their own panels and pricing their sets accordingly; by the time Apple assembles the components and puts in some Apple-ness they're obliged to sell a 40" screen for $2,000, which is a non-starter.
...Apple is better off focusing on its core competencies.
One could have made that statement 10 years ago! (Not to belittle your argument though.
That's certainly my feeling. And, of course, assorted "analysts" have predicted all kinds of products from Apple over the years that never shipped.
I would love an Apple TV that was price and performance competitive and included some additional functionality, like AirPlay. I just can't see where Apple can do that, however. Samsung are using their own panels and pricing their sets accordingly; by the time Apple assembles the components and puts in some Apple-ness they're obliged to sell a 40" screen for $2,000, which is a non-starter.
Do you think that Apple is getting to the point where it needs an in-house display capability as with processors in the iPad, or at least a capability more directly under their control? Anyone know of investments by Apple in such areas as mems display technologies or other?
One could have made that statement 10 years ago! (Not to belittle your argument though.
True but I also stated that Apple enters a market only when they can bring something new.
That being said, TVs generally have pretty low margins compared to the price of the product, and the margins needed to make a TV worthwhile would skyrocket the price into rich mans land. And TVs are probably one of the most held onto devices in a home.
They already have a connected box strategy and it looks like they are finally paying some real attention to it. I think they should focus their efforts there.
Sounds like more fallacies to increase the stock price...
The Apple TV is the right strategy...
... Let's remember that Apple entered the smartphone and tablet markets because their offerings were disruptive...
... Apple is better off focusing on its core competencies.
With all due respect, I disagree:
1) Apple TV could be selling along with an all-in-one Apple branded TV providing more options and choices to consumers, just like you have the Mac mini and the iMac in the computing space. That would be the ideal way to go. You don't want to buy Apple TV set? You want to keep your Sony? No worry, go with Apple set top box instead.
2) Apple could be as disruptive in the TV business as it has been with smartphones. You do not have to go far. Just make the app store available for Apple TV and you'll see the impact. Games my friend. And I'm not even talking about the integration of TV programs with other apps...
3) Whether Apple like it or not, TV will have to be part of their core competencies because it will include a computer in it. Sure, we're talking about a different experience from when you sit in front of a desktop. But if Apple does not do it right, someone else will. You don't want an HP or a Google to eat your lunch. This is just like the tablet. Before iPad, nobody did it right so it seems so irrelevant as a product. However they kept trying because they knew there was something there. It was not really clear what, but there was something. All-in-one TV is the same. Do it right and you'll at least lead a space if not owning it.
This will be the logical endpoint of the evolution of TVs for the last 30 years, which have become progressively more and more useless without the remote, which wears out faster and faster?and are glued together now, so you can't even clean the contact pads without breaking them all to Hell.
So the Apple TV will have a $500 remote?but at least it's a remote that can be replaced and updated.
I don't think they will be a part of the tv display, rather a comment of it.
Like google tv but better!!
I think Apple will stay with the hockey puck STB design. It is simpler and quicker to develop and due to the low price, consumer do no mind replacing it regularly. Contrast with how long most people hold on to their TV set, definitely much longer that they would a computer or any other item of consumer electronics.
It was rainy and cold last night, so we had a fire going in the family room.
My daughter and 2 of her 3 kids were gathered 'round the HDTV to watch AI (American Idol).
My daughter and I are great basketball fans (Go Arizona) so we wanted to watch the games also -- sometimes as many as 3 running concurrently.
My daughter said we could do split screen or Picture-In-Picture... but we didn't remember how to do it, the shows and games were starting -- no time to dig out the Sony Bravia manual and/or the AT&T U-verse manual...
Long story... even longer:
-- everyone watching American Idol running on the HDTV
-- my daughter (also) watching UCon vs SDSU on her iPad
-- me (also) watching Duke-Ariz on my iPad
-- me also watching BYU-Fla on a second iPad (1 grandson's iPad)
-- second grandson upstairs watching NetFlix on his iPad
-- no channel roulette, no distractions
To summarize, we were concurrently watching 5 different TV shows -- and only one TV set was involved.
The points:
1) Should Apple make an HDTV... No, I don't think they should!
2) Should Apple enhance AppleTV... maybe!
3) What they really should do is make an inexpensive box that sits before the Cable STB, rather than after it:
Wall TV outlet ---> New Apple Box ---> Cable STB
This new Apple box (let's call it the Apple-TV-Server) can decode the TV signals and rebroadcast them over WiFi to any and all computers and iDevices in the home.
In its simplest form it would be just a TV signal to WiFi re-broadcaster, and less than $100. It would replace nothing and require nothing else except an app running on the target devices.
It could evolve to include your Internet Router, ATV, TimeMachine, DVR, iTunes Media Server, etc.
This would eventually revolutionize the TV and eliminate all the STBs -- the typical TV would become a Screen with WiFi and some intelligence to run the app.
I know there are issues to be overcome... but that's exactly why we have revolutions.
“Après moi, le déluge"
Sent from my Smart Apple TV set (iPad)
.