Apple's living room strategy a multi-year venture
Apple Computer's recently introduced iTunes movie store and iTV streaming media hub are just the start of what will be a multi-year assault aimed at capturing the living room, says PiperJaffray analyst Gene Munster.
"This service and product are the first in what will be a multiple year strategy by Apple to target the living room as a new leg to the growth story," he told investors on Wednesday. "We consider the living room as one of the key, untapped consumer electronics markets."
With its more than 50 million iTunes users, Munster believes Apple maintains the pole position to convert or up-sell iTunes users into living room customers, fueling additional hardware and digital media purchases.
"While the impact to numbers won't start until the March quarter of 2007, we consider the move into the living room as significant given it represents Apple's third major addressable market," he said. "In the 1980-90s Apple was a personal computing company, it added portal music in 2001, and now the living room in 2006."
While many of Apple's announcements on Tuesday had been anticipated by the Street, according to Munster, he believes the impact of the new products will act as catalyst to help drive the company's shares over the next three to four quarters.
Similarly, the analyst believes updates to the iPod nano and iPod shuffle will be sufficient enough to reverse the two-quarter decline Apple has seen with iPod sales.
Munster maintains an "Outperform" rating on Apple shares with a price target of $99.
"This service and product are the first in what will be a multiple year strategy by Apple to target the living room as a new leg to the growth story," he told investors on Wednesday. "We consider the living room as one of the key, untapped consumer electronics markets."
With its more than 50 million iTunes users, Munster believes Apple maintains the pole position to convert or up-sell iTunes users into living room customers, fueling additional hardware and digital media purchases.
"While the impact to numbers won't start until the March quarter of 2007, we consider the move into the living room as significant given it represents Apple's third major addressable market," he said. "In the 1980-90s Apple was a personal computing company, it added portal music in 2001, and now the living room in 2006."
While many of Apple's announcements on Tuesday had been anticipated by the Street, according to Munster, he believes the impact of the new products will act as catalyst to help drive the company's shares over the next three to four quarters.
Similarly, the analyst believes updates to the iPod nano and iPod shuffle will be sufficient enough to reverse the two-quarter decline Apple has seen with iPod sales.
Munster maintains an "Outperform" rating on Apple shares with a price target of $99.
Comments
I have my Tivo, TV, DVD player and Netflix. Simple.
I have my Tivo, TV, DVD player and Netflix. Simple.
Well, I can see the advantage coming from people who purchase their DVD movies over the iTunes store. If you have (will have) a big enough hard drive, it would be appealing to be able to have all of your movies on a hard drive, in opposition to a shelf. Whenever you wanted to watch one, it is convenient to click a button on a remote rather than changing discs. It had HDMI output as well, so it would also be visually appealing.
Don't forget changes will take place with the "iTv".
That said, Apple is bringing a new option into the fold of consumer electronics.
A lot of people have DVDs players. Some people are starting to hook their computer to the TV and cable to act as a PVR.
Both of these solutions at this point in time are extreme. DVD players are extreme in the sense that you're paying for something that does very little outside play music CDs, maybe video CDs, and DVDs and takes up a lot of room. The computer thing is extreme in the sense that you're hooking an entire computer to your TV...I mean, WTF? (apologies to those I have insulted with that comment) These people likely have another computer in the house hooked up to a normal computer monitor and in a room where you can actually get stuff done from a comfortable chair and a nice desk instead of a couch and two laps. It's a waste of money.
PVR also is a fairly new concept that started about 12 years ago but has only recently begun to catch on...but it's already an antiquated concept.
The future is on-demand content. Apple has the right idea coming out with a device that acts as a bridge between the computer and the TV.
Even the concept of the TV itself as a consumer electronic is going to disappear. It will eventually be replaced by extremely large and high resolution monitors.
Eventually phone, TV, etc. will be blended/tied into computers.
With iTV, Apple is securing its dominance...not a whole lot of people are ready to pay for computers (especially a Mac.) They're big investments. But the iPods are an easy buy because they're not that expensive and people love music. iTV most definitely won't be as big a hit as iPods are but it's cheap and a lot of people are trying to find an easy way to play their music or movies on a TV and a good stereo without the hassle of programming the PVR or subscribing to cable.
Like I said...an entire computer in the living room is extreme and a DVD player in the living room is becoming less of a necessity if on-demand movies are being offered (not saying DVD players are useless...I still like to own physical copies of movies and get all the bonus features.)
Yeah, and what's this portal music, anyhow? Sounds pretty crazy!
I think it's the Stargate theme, but that was written sometime in or before '94.
Well, I can see the advantage coming from people who purchase their DVD movies over the iTunes store. If you have (will have) a big enough hard drive, it would be appealing to be able to have all of your movies on a hard drive, in opposition to a shelf. Whenever you wanted to watch one, it is convenient to click a button on a remote rather than changing discs. It had HDMI output as well, so it would also be visually appealing.
Don't forget changes will take place with the "iTv".
Exactly...the goal is that the computer stores and organizes tons of music and movies and people can easily find what they want to listen or watch without the hassle.
I understand the need for physical copies...but there are people that have thousands of CDs and 75+ DVDs. This stuff takes up a lot of space. And you gotta find what you want to listen to or watch. If these CDs and DVDs aren't taking up shelf space so that they're neatly organized in alphabetical order or by genre or whatever, they're difficult to find.
The convenience of it all is what will make this thing a success.
I'll be able to stow the DVDs away like I did with my CDs and make shelf room for other things.
I really don't see myself buying an iTV. Why is Apple making watching a movie so damn complicated? And iTV doesn't even record. I just can't understand why Apple's first living room technology can't even touch a Tivo?
I have my Tivo, TV, DVD player and Netflix. Simple.
Apple is now an on demand content provider. They build software/hardware to distribute and consume content. A PVR scheme, like Tivo, is not the direction they are trying to go in. It's easy to see Apple's strategy. Buy from Apple, Download from Apple, watch it on Apple's stuff.
Why are people so hung up on the fact that iTV doesn't have a Hard Drive, Dual HD Tuners and is not a PVR?
I much prefer the iTV concept. Knowing Apple iTV will play the middle man in communicating between computer and TV leaving little else the consumer has to do to make it work.
Hopefully Apple will allow content to be streamed back to the computer. That way Elgato and others can make add ons for DVR capability.
Why are people so hung up on the fact that iTV doesn't have a Hard Drive, Dual HD Tuners and is not a PVR?
I agree DVR is a handy tool and I love Elgato's software.
At the same time people need to hang it up. Apple is not in the DVR market. They have an entirely different business model.
Because it would probably cost a grand. Right now, nobody can really touch a Tivo - the only way they can get it into houses is by tying it to cable TV and subsidizing a "free" box with monthy subscription fees.
The apple thing isn't really that complicated. But some people refuse to accept any option that doesn't work Just Like Tivo.
Tivo doesn't interest me at all, I don't want to pay a monthly charge and I don't want cable. Media center PC's are too expensive. I like the iTV idea because it's the best bang for the buck.
That is one big difference between iTV business model and MCE business model. With MCE you hook an entire computer to your television. The consumer deals directly with the frustration of making the two communicate with each other.
What I didn't know until recently is that MCE already has boxes like iTV for sale, they serve the same function so you can have the computer anywhere in the house, and just a simple box on the TV. So the iTV isn't even anything that new, it's just hopefully a better executed solution. MCE has been out for a while, but it has yet to catch on in a big way.
Let me repeat this.
The iTV has a USB 2.0 port.
What can you connect to a USB 2.0 port? A tuner perhaps, but what about storage? Well, that's where Apple could design a complimentary box, with tuner and 80+ GB hard drive for $200+ extra.
And/or, rework the MacMini to be a little more iTV friendly (cable card slot/tuner option?), and presto, the Mac DVR
Tivo doesn't interest me at all, I don't want to pay a monthly charge and I don't want cable.
Did they quit selling the models or upgrades that let you forgo the monthly charge?
Did they quit selling the models or upgrades that let you forgo the monthly charge?
I don't know, I couldn't find it on their website.
From what I found, they sell up to 3 years prepaid for $369.
Their new HD Tivo is EIGHT HUNDRED DOLLARS.
Let me repeat that. EIGHT HUNDRED DOLLARS. And you STILL have to pay a monthly fee on top of that. That's $1100 for three years use.
If that's where Tivo is headed, I don't think Apple needs to worry about making a tivo killer, tivo seems like they're just going to kill themselves.
I don't know, I couldn't find it on their website.
From what I found, they sell up to 3 years prepaid for $369.
Their new HD Tivo is EIGHT HUNDRED DOLLARS.
Let me repeat that. EIGHT HUNDRED DOLLARS. And you STILL have to pay a monthly fee on top of that. That's $1100 for three years use.
If that's where Tivo is headed, I don't think Apple needs to worry about making a tivo killer, tivo seems like they're just going to kill themselves.
TiVo's salvation will be it's software deals with big cable/satellite companies. Already Comcast and Cox have announced TiVo software will be available on their DVR's, possibly all of them, next year. This will bring a steady stream of dollars, less money per month, but from more users
Also, TiVo's patent portfolio may lead to more licensing/settlement deals from other DVR providers.
Why are people so hung up on the fact that iTV doesn't have a Hard Drive, Dual HD Tuners and is not a PVR?
funny thing is, i am betting that the next mac mini will compete with DVR's (for the adventurous who want to get it to do so), and sell it for about the same price as the tivo series3 (c. $800). but apple's not going to come out and SAY the mini is for this.
funny thing is, i am betting that the next mac mini will compete with DVR's (for the adventurous who want to get it to do so), and sell it for about the same price as the tivo series3 (c. $800). but apple's not going to come out and SAY the mini is for this.
I tend to agree with this. "Ladies and gentlement, you are all familiar with our oustanding, compact Mac mini... we'll now we'd like to introduce the all new, all improved... Mac miniDV.
"Another gadget, the Wireless Notebook Presenter Mouse 8000, is a four-in-one device that can be used as a mouse, a slide presenter, a laser pointer and a media remote. It comes out next month and will cost $99.95."
That is going to be one hot seller.