I have been accused by some (Melgross for example ) for bashing analysts. In this case, Gene Munster of PJafrray has been IMHO the most useful analyst these past few years.
In this case, unlike iSuppli's bollocks "iTV delay dulls holiday season" nonsense, Gene gives a balanced and *useful* analysis to a wide range of investors from those new to AAPL and the regulars.
Yes, very unlikely Apple would enter the Plasma/LCD cutthroat market - they only enter new markets where a high level of innovation is involved. Plasma/LCD HDTVs have become commodity-level consumer electronics now, "no-brand" stuff out of China is chewing at Phillips, Samsung, Sony, etc.'s market share. Apple would not want to play in this space.
Gene's breakdown into "growth segments" is a good overview. The 1st and 2nd, iPods and Macs, are the primary revenue and profit engines of AAPL, with growth opportunities there.
"Therefore, the iTV provides further integration between the Mac and iPod sales segments, by adding a 3rd significant growth driver to the mix."
"...Munster sees the device as the start of third product category called 'the digital living room,' which he believes will bridge the gap between the company's two main growth engines."
This is plausible, although the iTV alone is at best a neat accessory. In 2007 we will need to see more of these "bridge the gap" devices beyond iTV for it to really be a significant "3rd growth engine"
"Meanwhile, Munster sees a release of an iPhone in the next 6 months adding a fourth product sales driver, as part of Apple's continued goal of creating new ways in which media content stored on a computer is accessible to users "anywhere at any time."
This is again plausible as the most likely additional growth engine which could be much much more significant than iTV on-its-own.
Gene is trying to paint a picture for growth (not saying this is intentional or manipulative, not necessarily, it's about making some sort of hypothesis) -- But clearly Apple will do well in 2007 off the momentum of appealing Intel Macs and its continually sexy iPod range.
If we want to see bigger marketshare and mindshare gains for Apple, and for AAPL to hit $100, we would need to see clear "3rd" and "4th" "growth engines" emerge in 2007.
As a side comment, the Year-To-Date graph shows a clear buildup to Macworld 2007. Short term investors that got in on $60 to $65 would be able to sell at $80 just before Macworld and make a nice profit, then pick up on AAPL again when it slips slowly down back to $60. Why would it slip downwards after Macworld 2007? 1. Historical (1 year ago) trend. 2. Apple's "3rd and 4th growth engines" will only clearly emerge through the course of 2007 and strong delivery of Leopard. Hence there is too much hype going into Macworld 2007, the SteveNote WILL NOT, IMHO, WILL NOT meet the what would be, ridiculously high expectations going into Macworld 2007. Look at what he has to show to meet our best expectations:
1. iTV
2. iTV and MORE! digital home with Viiv (?)
3. Release Leopard 10.5
4. New MacBooks
5. New iMacs
6. 802.11-pre-N devices
7. Widescreen touch-iPod Video
8. More movies on iTunes store
9. iPhone with MORE THAN ONE US network provider
10. Product [Red] items such as MacBook RED, iMac RED
If radio'ing video to a TV becomes big enough, someone will put an iTV motherboard into a flat screen TV and eliminate Apple's middle-device. That company should be Apple.
So why should Apple make its own TV? It can get a TV in volume cheaper than you or I could. It could add the iTV board into the TV for less money than an external iTV would cost (okay, maybe on that considering labor), then it could sell it to you and I for less money than a TV and an iTV device and make even more money. So why not?
If radio'ing video to a TV becomes big enough, someone will put an iTV motherboard into a flat screen TV and eliminate Apple's middle-device. That company should be Apple.
So why should Apple make its own TV? It can get a TV in volume cheaper than you or I could. It could add the iTV board into the TV for less money than an external iTV would cost (okay, maybe on that considering labor), then it could sell it to you and I for less money than a TV and an iTV device and make even more money. So why not?
I still have not seen a convincing argument for iTV. Unless it eliminates the integration of the computer, I predict this product is DOA... unless Apple makes some really spectacular revisions before the release. Also, I'm betting movie sales thru iTunes are very sluggish.
I still have not seen a convincing argument for iTV. Unless it eliminates the integration of the computer, I predict this product is DOA... unless Apple makes some really spectacular revisions before the release. Also, I'm betting movie sales thru iTunes are very sluggish.
It doesn't eliminate the need for a computer. Obviously you have a computer. It does eliminate the need for a computer in the same room as your TV with wireless unlike the Media Center PC. It is also compatible with the Mac and PC.
It is obvious that movie sales will be sluggish since there is only Disney supporting Apple and with limited titles.
If radio'ing video to a TV becomes big enough, someone will put an iTV motherboard into a flat screen TV and eliminate Apple's middle-device. That company should be Apple.
So why should Apple make its own TV? It can get a TV in volume cheaper than you or I could. It could add the iTV board into the TV for less money than an external iTV would cost (okay, maybe on that considering labor), then it could sell it to you and I for less money than a TV and an iTV device and make even more money. So why not?
Nice idea. Personally i'd rather see the iPod Hifi evolving into a
device which could possibly hold the iTv board. A decend sound device
(iPod Hifi has still a lot of potential) and build in video/sound streaming
capabilities. We will see.
Btw, do you guys think that the iPod Hifi is a mere mayfly?
Or do you rather think Apple has something up their sleeves?
If radio'ing video to a TV becomes big enough, someone will put an iTV motherboard into a flat screen TV and eliminate Apple's middle-device. That company should be Apple.
So why should Apple make its own TV? It can get a TV in volume cheaper than you or I could. It could add the iTV board into the TV for less money than an external iTV would cost (okay, maybe on that considering labor), then it could sell it to you and I for less money than a TV and an iTV device and make even more money. So why not?
The problem with this right now is that the technology is in it's infancy, and will likely change quite a bit with each release for the first few years. Some of those changes may make the models released just 12 months earlier so obsolete that they are allmost unusable with the new devices/protocalls. It is a far easier sell to the consumer to replace a box that they bought for $300 with a newer one that is the same price or lower than it is to get them to replace a $2000-$4000 plasma or LCD TV. This is also why we did not see VCR's or DVD's integrated into TV's when DVD players were initially released, and will probably not see Blue Ray or HD DVD's integrated into TV's this year.
I still have not seen a convincing argument for iTV. Unless it eliminates the integration of the computer, I predict this product is DOA... unless Apple makes some really spectacular revisions before the release. Also, I'm betting movie sales thru iTunes are very sluggish.
The only revision that is required is HD playback. Movie sales though iTunes will be sluggish until after this XMas as the studios have indicated no one is rocking the Walmart/Target boat this year (except Disney and there not really).
That iTV is being launched after this holiday season is an interesting thing. You can attribute this to some problem with the box itself to delay release or that the general market wont be ready for its launch until early next year.
So the two missing pieces: HD and more movies should be solved via draft-802.11n and studios having a year to make nice with Walmart before next Christmas after releasing content on iTunes. If iTunes movie makes tons of sales, they can afford to play hardball with Walmart/Target. If not, they can back off and placate Walmart.
The only revision that is required is HD playback. Movie sales though iTunes will be sluggish until after this XMas as the studios have indicated no one is rocking the Walmart/Target boat this year (except Disney and there not really).
That iTV is being launched after this holiday season is an interesting thing. You can attribute this to some problem with the box itself to delay release or that the general market wont be ready for its launch until early next year.
So the two missing pieces: HD and more movies should be solved via draft-802.11n and studios having a year to make nice with Walmart before next Christmas after releasing content on iTunes. If iTunes movie makes tons of sales, they can afford to play hardball with Walmart/Target. If not, they can back off and placate Walmart.
I'm not sure that the movie studio's are going to be contained by a threat from WallMart or Target. There are plenty of other retail outlets for DVD's out there, and the other retailers don't have the clout to push the studios for the lower prices that WallMart does. Sure, they might be a little shy of offending them at first but this is more of a negotiating tactic for WallMart and Target to get lower cost DVD's or their own online service than a real threat to drop all DVD sales.
I think that a more important thing holding them back is the untried sales channel, and the power of the one company to dictate the sales model. Sure TV sales have been good for Apple, but at the last conference call I didnt see a number released for online Movie sales. Of course without the adoption of iTV by consumers they will be slow, add to that the minimal choices and slow release schedule and you don't have the greatest environment for Apple to sell a lot of movies through iTMS.
To succeed Apple is going to need to release real numbers on Movie sales to pressure the other movie studio's to sign on and to prove to them that they have a viable sales channel, to get the numbers up they are going to have to have more movies and iTV. They have a bit of a Catch 22 going right now, though they can point to success with their sales model both with Music an TV shows to help them make the sale.
Have you got a lot to learn! Talk about one company's dictating the sales model? That one company is Wal-Mart. Wal-Mart is the largest retailer of DVDs in America and, presumeably, the World. And it isn't just DVDs. Do you realize that no video game comes to market unless Wal-Mart approves it. This means that every title on sale at Electronics Boutique and every other video game store has been approved by Wal-Mart whether or not the title is available at Wal-Mart.
It will take a lot of courage for the major studios to enter a venture over Wal-Mart's objections. Courage is not a trait usually associated with American corporations. I am not a fan of the Walt Disney Company, but it gets nothing but praise from me for risking the ire of Wal-Mart. Let us hope that it leads the other major studios out of the darkness.
Have you got a lot to learn! Talk about one company's dictating the sales model? That one company is Wal-Mart. Wal-Mart is the largest retailer of DVDs in America and, presumeably, the World. And it isn't just DVDs. Do you realize that no video game comes to market unless Wal-Mart approves it. This means that every title on sale at Electronics Boutique and every other video game store has been approved by Wal-Mart whether or not the title is available at Wal-Mart....It will take a lot of courage for the major studios to enter a venture over Wal-Mart's objections. Courage is not a trait usually associated with American corporations. I am not a fan of the Walt Disney Company, but it gets nothing but praise from me for risking the ire of Wal-Mart. Let us hope that it leads the other major studios out of the darkness.
Once we are past this Christmas season, in the first half of 2007 we *will* see Apple progressively push hard on the near-DVD-quality iTunes Movies from a wide range of studios. I agree, Apple is not yet ready with 802.11 pre-N as they see fit alongside iTV strategies.
However, in the first half of 2007 alongside Leopard 10.5, Apple will try it's darndnest to deliver a solid range of iTunes Movies. They would not have ventured into movies or iTV if they only had Disney's backing. Other studios are waiting in the wings but they want a solid result for DVD sales for Christmas via Wal-Mart and Amazon and others before putting their necks out. But the other studios have lined up for the first half of 2007 - if nothing else, it's a channel that has proven successful for the music industry. Movies are next.
Apple is going to play hard, hard, hardball in 2007 to get a solid porfolio of TVshows, Music, Movies, *globally*. iTV is a strategy for convergence but also, with BluRay and HD-DVD and 802.11 pre-N still a mess, Apple is will take risks in 2007 to position itself for the next stage, HighDef content delivery - playback on Macs, PCs, or HDTVs.
2007 will continue to be a strong year off Macs, Mac laptops and iPods - Apple solidifies its position with Leopard OS10.5 to hand Microsoft its ass as Vista plods along and people figure out which of the fracking 6 versions of Vista to get and what hardware upgrades they need to make.
On this backing, Apple will make a play for convergence - it won't make its own TVs, but iTV and possibly a HDTV recorder (DRM'ed hard so you can only play it/ stream to a few other Macs), widescreen DVD-res touchscreen iPod video, and the high-risk but growth opportunity in iPhone and iTablet.
The caveat in my arguments is that if iTV only ends up being an accessory at best, and Apple still takes very slow but careful steps with 802.11n, then we will need to see what exactly is going to be the "third growth driver" for AAPL beyond Macs and iPods. So, if not the play for convergence of Macs/PCs with TVs, preparing for 802.11n-final and HighDef, we might have something either really quite stellar and surprising, or, business as usual as AAPL grows Macs and iPod revenues and profits. In this case we see a more of a "consolidation" move in the face of Microsoft's Vista and Zune nonsense, and in the face of BluRay/ HDDVD sorting itself out.
It will be clear that if the "consolidation" strategy is more the go for Apple in 2007, then AAPL will reach $80+ but lower down to $60/$50 through the year as people await the "next big thing" from AAPL. They did the iMac original. They did the iPod. Now, one more thing/ idea to take us to the end of the decade in classic Apple style and push marketshare of maybe 7% and share price of $100.
I don't think Apple itself knows clearly what is going to happen in 2007, with Steve Jobs considering the various options coming out of his very strong R&D team. We may be very pleasantly surprised, but with such a risk of overhype, I'm not holding my breath. I'll try to be as patient as possible and learn more about Apple as a business with its quite good wide portfolio of Mac/iPod ecosystem. And avoid getting caught up in the Christmas frenzy and focus on what might be in store for 2007....
I'm not sure that the movie studio's are going to be contained by a threat from WallMart or Target. There are plenty of other retail outlets for DVD's out there, and the other retailers don't have the clout to push the studios for the lower prices that WallMart does. Sure, they might be a little shy of offending them at first but this is more of a negotiating tactic for WallMart and Target to get lower cost DVD's or their own online service than a real threat to drop all DVD sales.
I think that a more important thing holding them back is the untried sales channel, and the power of the one company to dictate the sales model. Sure TV sales have been good for Apple, but at the last conference call I didnt see a number released for online Movie sales. Of course without the adoption of iTV by consumers they will be slow, add to that the minimal choices and slow release schedule and you don't have the greatest environment for Apple to sell a lot of movies through iTMS.
To succeed Apple is going to need to release real numbers on Movie sales to pressure the other movie studio's to sign on and to prove to them that they have a viable sales channel, to get the numbers up they are going to have to have more movies and iTV. They have a bit of a Catch 22 going right now, though they can point to success with their sales model both with Music an TV shows to help them make the sale.
WalMart sells almost 40% of all DVD's, at least during the holiday season. It's possible they sell the same percentage the rest of the year as well.
WalMart has almost $275 BILLION a year in sales. The entire film industries sales, theater, DVD, etc, is a small fraction of that. Walmart makes more profit in a year than the film industry's total sales.
THey could easily afford to freeze the movie companies out.
Once we are past this Christmas season, in the first half of 2007 we *will* see Apple progressively push hard on the near-DVD-quality iTunes Movies from a wide range of studios. I agree, Apple is not yet ready with 802.11 pre-N as they see fit alongside iTV strategies.
However, in the first half of 2007 alongside Leopard 10.5, Apple will try it's darndnest to deliver a solid range of iTunes Movies. They would not have ventured into movies or iTV if they only had Disney's backing. Other studios are waiting in the wings but they want a solid result for DVD sales for Christmas via Wal-Mart and Amazon and others before putting their necks out. But the other studios have lined up for the first half of 2007 - if nothing else, it's a channel that has proven successful for the music industry. Movies are next.
Apple is going to play hard, hard, hardball in 2007 to get a solid porfolio of TVshows, Music, Movies, *globally*. iTV is a strategy for convergence but also, with BluRay and HD-DVD and 802.11 pre-N still a mess, Apple is will take risks in 2007 to position itself for the next stage, HighDef content delivery - playback on Macs, PCs, or HDTVs.
2007 will continue to be a strong year off Macs, Mac laptops and iPods - Apple solidifies its position with Leopard OS10.5 to hand Microsoft its ass as Vista plods along and people figure out which of the fracking 6 versions of Vista to get and what hardware upgrades they need to make.
On this backing, Apple will make a play for convergence - it won't make its own TVs, but iTV and possibly a HDTV recorder (DRM'ed hard so you can only play it/ stream to a few other Macs), widescreen DVD-res touchscreen iPod video, and the high-risk but growth opportunity in iPhone and iTablet.
The caveat in my arguments is that if iTV only ends up being an accessory at best, and Apple still takes very slow but careful steps with 802.11n, then we will need to see what exactly is going to be the "third growth driver" for AAPL beyond Macs and iPods. So, if not the play for convergence of Macs/PCs with TVs, preparing for 802.11n-final and HighDef, we might have something either really quite stellar and surprising, or, business as usual as AAPL grows Macs and iPod revenues and profits. In this case we see a more of a "consolidation" move in the face of Microsoft's Vista and Zune nonsense, and in the face of BluRay/ HDDVD sorting itself out.
It will be clear that if the "consolidation" strategy is more the go for Apple in 2007, then AAPL will reach $80+ but lower down to $60/$50 through the year as people await the "next big thing" from AAPL. They did the iMac original. They did the iPod. Now, one more thing/ idea to take us to the end of the decade in classic Apple style and push marketshare of maybe 7% and share price of $100.
I don't think Apple itself knows clearly what is going to happen in 2007, with Steve Jobs considering the various options coming out of his very strong R&D team. We may be very pleasantly surprised, but with such a risk of overhype, I'm not holding my breath. I'll try to be as patient as possible and learn more about Apple as a business with its quite good wide portfolio of Mac/iPod ecosystem. And avoid getting caught up in the Christmas frenzy and focus on what might be in store for 2007....
Apple can't play hardball with the movie companies. While they got into the position with the music companies where they can do that, the movie companies don't want to get into the position of allowing Apple to do that. Apple has already compromised on pricing.
WalMart sells almost 40% of all DVD's, at least during the holiday season. It's possible they sell the same percentage the rest of the year as well.
WalMart has almost $275 BILLION a year in sales. The entire film industries sales, theater, DVD, etc, is a small fraction of that. Walmart makes more profit in a year than the film industry's total sales.
THey could easily afford to freeze the movie companies out.
So you believe that if Walmart stopped carrying DVDs that the American consumer would simply stop buying DVDs? Ummm...
Yes, the movie industry would get hurt if Walmart stopped carrying DVDs (or slectively purchased titles) but there still remains Target and other sources. Given the reports that Apple is paying $14 per video and there's no manufacturing, inventory or shipping costs if Apple has sufficient volume then DRM protected downloaded content is a good deal for the studios.
Plus it reduces the strength that Walmart has...granted it places it in the hands of Apple but Apple really only cares about selling hardware. As long as iTunes breaks even or makes a little profit the lions share goes to the studios and they don't have to fumble about trying to figure out how to make such a thing work.
So you believe that if Walmart stopped carrying DVDs that the American consumer would simply stop buying DVDs? Ummm...
Of course not. That number is given as a reason why the industry is wary of duking it out with WalMart during the holiday season, which is when a very large portion of the yearly sales of DVD's take place.
One of the problems is that WalMart is in areas where there are few other outlets. Often because WalMart has driven them out of business.
That makes it difficult for a large part of the population to go and buy a DVD as an impulse buy, as many of them are bought. It forces many people to make the decision to buy over the phone, or over the internet, which many are reluctant to do. That would restrict sales in those large, mostly rural areas of the country where it has been estimated that most DVD's are sold.
Here in NYC, it won't matter.
{quote]
Yes, the movie industry would get hurt if Walmart stopped carrying DVDs (or slectively purchased titles) but there still remains Target and other sources. Given the reports that Apple is paying $14 per video and there's no manufacturing, inventory or shipping costs if Apple has sufficient volume then DRM protected downloaded content is a good deal for the studios. [/quote]
In the long run you would be right. But, right now Apple has no sales of any significance, while Walmart sells a few billion dollars of them each year. Target is important. But, they have also threatened the industry, as has been reported.
So, that's a double whammy. You can't look to them as a white knight. They are in the same camp as Walmart.
Now, that covers even more areas of the country, and possibly brings the total percentage to 50%. It's possible other companies might follw, making the situation even worse.
Quote:
Plus it reduces the strength that Walmart has...granted it places it in the hands of Apple but Apple really only cares about selling hardware. As long as iTunes breaks even or makes a little profit the lions share goes to the studios and they don't have to fumble about trying to figure out how to make such a thing work.
Vinea
As I said, I don't disagree about that in the long term?if it ever gets off the ground.
But, I would rather have the slightly better quality of a DVD, as well as having all of the extras, as well as the ability of bringing it elsewhere.
I can give a good example of that.
October 28th, there was the showing of "The Rocky Horror Picture Show". Now a Halloween classic. The theater in the Village here does this every year.
People come down dressed as the characters, throw rice, etc.
12 kids from my daughters school, as well as a few others met at the theater 11 o'clock at night. I, and a couple of other fathers, was there with them.
Some group had bought out a large block of tickets, and for the first time, it was sold out. People were milling around the theater.
It was agreed that we would all (that is, my daughters friends and fathers), come to my house.
One of the girls had the DVD at home. She picked it up on the way back, and we viewed it at my house. They acted out, and then went to the specials, watched some of those, and acted that out as well.
If the film was gotten from iTunes, it wouldn't have been as good, and wouldn't have had the extras they all wanted to view, and act out. Her friend couldn't have brought it to my house to play. I would have had to buy it myself, just for the occasion.
Until Apple can, or wants to include those, it won't be as good.
It also simply doesn't look as good on my 65" hi def screen, though on my 32" is seems fine.
There's a way to go yet before it can evenly compete.
WalMart sells almost 40% of all DVD's, at least during the holiday season. It's possible they sell the same percentage the rest of the year as well.
WalMart has almost $275 BILLION a year in sales. The entire film industries sales, theater, DVD, etc, is a small fraction of that. Walmart makes more profit in a year than the film industry's total sales.
THey could easily afford to freeze the movie companies out.
Except they would be giving up all the money they make on 40% of all DVD sales. For the film industry or Apple to placate WalMart, is to admit they don't have the guts to think different. They might as well sell out to Microsoft now.
WalMart won't shoot themselves in the foot. The movie industry just doesn't want to rock the boat or take the temporary hit on stock prices that they would need to take to move the business model. They signed contracts with the big dog and they are making enough money to swallow their pride. That is one of the problems with the incestuous nature of the current corporate business models. Short-term profits are more important than long-term price structures. If one company can cause this much instability, then there is no real "free" market. But just like in politics and everything else, it is the perception of power that influences board rooms and the public, not actual power.
Except they would be giving up all the money they make on 40% of all DVD sales. For the film industry or Apple to placate WalMart, is to admit they don't have the guts to think different. They might as well sell out to Microsoft now.
If you read the part I wrote earlier about WalMarts $275 billion a year in sales, you would see why they could easily afford to take that chance. DVD sales, in total, for all outlets, during the entire year, is about $5 billion. A drop in the bucket for WalMart and other retailers the size of Target and larger. So WalMart sells about $2 billion worth of DVD's a year. Nice, but not critical for a short period.
If WalMart cut back on sales, they would lose some profit now, but if that could convince the studios to do what they want, it could result in them not losing sales in the future. That would be far more important to them.
Like unions who strike when they don't get what they want. The members give up some wages now, for increased wages and benefits in the future.
WalMart and Target, as well as any other retailer who thinks they will lise out if theis happens, they could be willing to make this threat because the studios have far more to lose.
Quote:
WalMart won't shoot themselves in the foot. The movie industry just doesn't want to rock the boat or take the temporary hit on stock prices that they would need to take to move the business model. They signed contracts with the big dog and they are making enough money to swallow their pride. That is one of the problems with the incestuous nature of the current corporate business models. Short-term profits are more important than long-term price structures. If one company can cause this much instability, then there is no real "free" market. But just like in politics and everything else, it is the perception of power that influences board rooms and the public, not actual power.
Comments
In this case, unlike iSuppli's bollocks "iTV delay dulls holiday season" nonsense, Gene gives a balanced and *useful* analysis to a wide range of investors from those new to AAPL and the regulars.
Yes, very unlikely Apple would enter the Plasma/LCD cutthroat market - they only enter new markets where a high level of innovation is involved. Plasma/LCD HDTVs have become commodity-level consumer electronics now, "no-brand" stuff out of China is chewing at Phillips, Samsung, Sony, etc.'s market share. Apple would not want to play in this space.
Gene's breakdown into "growth segments" is a good overview. The 1st and 2nd, iPods and Macs, are the primary revenue and profit engines of AAPL, with growth opportunities there.
"Therefore, the iTV provides further integration between the Mac and iPod sales segments, by adding a 3rd significant growth driver to the mix."
"...Munster sees the device as the start of third product category called 'the digital living room,' which he believes will bridge the gap between the company's two main growth engines."
This is plausible, although the iTV alone is at best a neat accessory. In 2007 we will need to see more of these "bridge the gap" devices beyond iTV for it to really be a significant "3rd growth engine"
"Meanwhile, Munster sees a release of an iPhone in the next 6 months adding a fourth product sales driver, as part of Apple's continued goal of creating new ways in which media content stored on a computer is accessible to users "anywhere at any time."
This is again plausible as the most likely additional growth engine which could be much much more significant than iTV on-its-own.
Gene is trying to paint a picture for growth (not saying this is intentional or manipulative, not necessarily, it's about making some sort of hypothesis) -- But clearly Apple will do well in 2007 off the momentum of appealing Intel Macs and its continually sexy iPod range.
If we want to see bigger marketshare and mindshare gains for Apple, and for AAPL to hit $100, we would need to see clear "3rd" and "4th" "growth engines" emerge in 2007.
As a side comment, the Year-To-Date graph shows a clear buildup to Macworld 2007. Short term investors that got in on $60 to $65 would be able to sell at $80 just before Macworld and make a nice profit, then pick up on AAPL again when it slips slowly down back to $60. Why would it slip downwards after Macworld 2007? 1. Historical (1 year ago) trend. 2. Apple's "3rd and 4th growth engines" will only clearly emerge through the course of 2007 and strong delivery of Leopard. Hence there is too much hype going into Macworld 2007, the SteveNote WILL NOT, IMHO, WILL NOT meet the what would be, ridiculously high expectations going into Macworld 2007. Look at what he has to show to meet our best expectations:
1. iTV
2. iTV and MORE! digital home with Viiv (?)
3. Release Leopard 10.5
4. New MacBooks
5. New iMacs
6. 802.11-pre-N devices
7. Widescreen touch-iPod Video
8. More movies on iTunes store
9. iPhone with MORE THAN ONE US network provider
10. Product [Red] items such as MacBook RED, iMac RED
Quite a hefty request list.
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So why should Apple make its own TV? It can get a TV in volume cheaper than you or I could. It could add the iTV board into the TV for less money than an external iTV would cost (okay, maybe on that considering labor), then it could sell it to you and I for less money than a TV and an iTV device and make even more money. So why not?
If radio'ing video to a TV becomes big enough, someone will put an iTV motherboard into a flat screen TV and eliminate Apple's middle-device. That company should be Apple.
So why should Apple make its own TV? It can get a TV in volume cheaper than you or I could. It could add the iTV board into the TV for less money than an external iTV would cost (okay, maybe on that considering labor), then it could sell it to you and I for less money than a TV and an iTV device and make even more money. So why not?
I still have not seen a convincing argument for iTV. Unless it eliminates the integration of the computer, I predict this product is DOA... unless Apple makes some really spectacular revisions before the release. Also, I'm betting movie sales thru iTunes are very sluggish.
I still have not seen a convincing argument for iTV. Unless it eliminates the integration of the computer, I predict this product is DOA... unless Apple makes some really spectacular revisions before the release. Also, I'm betting movie sales thru iTunes are very sluggish.
It doesn't eliminate the need for a computer. Obviously you have a computer. It does eliminate the need for a computer in the same room as your TV with wireless unlike the Media Center PC. It is also compatible with the Mac and PC.
It is obvious that movie sales will be sluggish since there is only Disney supporting Apple and with limited titles.
It doesn't eliminate the need for a computer.
Yes, I know how it works. That's the problem.
If radio'ing video to a TV becomes big enough, someone will put an iTV motherboard into a flat screen TV and eliminate Apple's middle-device. That company should be Apple.
So why should Apple make its own TV? It can get a TV in volume cheaper than you or I could. It could add the iTV board into the TV for less money than an external iTV would cost (okay, maybe on that considering labor), then it could sell it to you and I for less money than a TV and an iTV device and make even more money. So why not?
Nice idea. Personally i'd rather see the iPod Hifi evolving into a
device which could possibly hold the iTv board. A decend sound device
(iPod Hifi has still a lot of potential) and build in video/sound streaming
capabilities. We will see.
Btw, do you guys think that the iPod Hifi is a mere mayfly?
Or do you rather think Apple has something up their sleeves?
Lemon Bon Bon
If radio'ing video to a TV becomes big enough, someone will put an iTV motherboard into a flat screen TV and eliminate Apple's middle-device. That company should be Apple.
So why should Apple make its own TV? It can get a TV in volume cheaper than you or I could. It could add the iTV board into the TV for less money than an external iTV would cost (okay, maybe on that considering labor), then it could sell it to you and I for less money than a TV and an iTV device and make even more money. So why not?
The problem with this right now is that the technology is in it's infancy, and will likely change quite a bit with each release for the first few years. Some of those changes may make the models released just 12 months earlier so obsolete that they are allmost unusable with the new devices/protocalls. It is a far easier sell to the consumer to replace a box that they bought for $300 with a newer one that is the same price or lower than it is to get them to replace a $2000-$4000 plasma or LCD TV. This is also why we did not see VCR's or DVD's integrated into TV's when DVD players were initially released, and will probably not see Blue Ray or HD DVD's integrated into TV's this year.
I still have not seen a convincing argument for iTV. Unless it eliminates the integration of the computer, I predict this product is DOA... unless Apple makes some really spectacular revisions before the release. Also, I'm betting movie sales thru iTunes are very sluggish.
The only revision that is required is HD playback. Movie sales though iTunes will be sluggish until after this XMas as the studios have indicated no one is rocking the Walmart/Target boat this year (except Disney and there not really).
That iTV is being launched after this holiday season is an interesting thing. You can attribute this to some problem with the box itself to delay release or that the general market wont be ready for its launch until early next year.
So the two missing pieces: HD and more movies should be solved via draft-802.11n and studios having a year to make nice with Walmart before next Christmas after releasing content on iTunes. If iTunes movie makes tons of sales, they can afford to play hardball with Walmart/Target. If not, they can back off and placate Walmart.
Vinea
The only revision that is required is HD playback. Movie sales though iTunes will be sluggish until after this XMas as the studios have indicated no one is rocking the Walmart/Target boat this year (except Disney and there not really).
That iTV is being launched after this holiday season is an interesting thing. You can attribute this to some problem with the box itself to delay release or that the general market wont be ready for its launch until early next year.
So the two missing pieces: HD and more movies should be solved via draft-802.11n and studios having a year to make nice with Walmart before next Christmas after releasing content on iTunes. If iTunes movie makes tons of sales, they can afford to play hardball with Walmart/Target. If not, they can back off and placate Walmart.
Vinea
I think you're 100% correct.
I think that a more important thing holding them back is the untried sales channel, and the power of the one company to dictate the sales model. Sure TV sales have been good for Apple, but at the last conference call I didnt see a number released for online Movie sales. Of course without the adoption of iTV by consumers they will be slow, add to that the minimal choices and slow release schedule and you don't have the greatest environment for Apple to sell a lot of movies through iTMS.
To succeed Apple is going to need to release real numbers on Movie sales to pressure the other movie studio's to sign on and to prove to them that they have a viable sales channel, to get the numbers up they are going to have to have more movies and iTV. They have a bit of a Catch 22 going right now, though they can point to success with their sales model both with Music an TV shows to help them make the sale.
It will take a lot of courage for the major studios to enter a venture over Wal-Mart's objections. Courage is not a trait usually associated with American corporations. I am not a fan of the Walt Disney Company, but it gets nothing but praise from me for risking the ire of Wal-Mart. Let us hope that it leads the other major studios out of the darkness.
Have you got a lot to learn! Talk about one company's dictating the sales model? That one company is Wal-Mart. Wal-Mart is the largest retailer of DVDs in America and, presumeably, the World. And it isn't just DVDs. Do you realize that no video game comes to market unless Wal-Mart approves it. This means that every title on sale at Electronics Boutique and every other video game store has been approved by Wal-Mart whether or not the title is available at Wal-Mart....It will take a lot of courage for the major studios to enter a venture over Wal-Mart's objections. Courage is not a trait usually associated with American corporations. I am not a fan of the Walt Disney Company, but it gets nothing but praise from me for risking the ire of Wal-Mart. Let us hope that it leads the other major studios out of the darkness.
Once we are past this Christmas season, in the first half of 2007 we *will* see Apple progressively push hard on the near-DVD-quality iTunes Movies from a wide range of studios. I agree, Apple is not yet ready with 802.11 pre-N as they see fit alongside iTV strategies.
However, in the first half of 2007 alongside Leopard 10.5, Apple will try it's darndnest to deliver a solid range of iTunes Movies. They would not have ventured into movies or iTV if they only had Disney's backing. Other studios are waiting in the wings but they want a solid result for DVD sales for Christmas via Wal-Mart and Amazon and others before putting their necks out. But the other studios have lined up for the first half of 2007 - if nothing else, it's a channel that has proven successful for the music industry. Movies are next.
Apple is going to play hard, hard, hardball in 2007 to get a solid porfolio of TVshows, Music, Movies, *globally*. iTV is a strategy for convergence but also, with BluRay and HD-DVD and 802.11 pre-N still a mess, Apple is will take risks in 2007 to position itself for the next stage, HighDef content delivery - playback on Macs, PCs, or HDTVs.
2007 will continue to be a strong year off Macs, Mac laptops and iPods - Apple solidifies its position with Leopard OS10.5 to hand Microsoft its ass as Vista plods along and people figure out which of the fracking 6 versions of Vista to get and what hardware upgrades they need to make.
On this backing, Apple will make a play for convergence - it won't make its own TVs, but iTV and possibly a HDTV recorder (DRM'ed hard so you can only play it/ stream to a few other Macs), widescreen DVD-res touchscreen iPod video, and the high-risk but growth opportunity in iPhone and iTablet.
The caveat in my arguments is that if iTV only ends up being an accessory at best, and Apple still takes very slow but careful steps with 802.11n, then we will need to see what exactly is going to be the "third growth driver" for AAPL beyond Macs and iPods. So, if not the play for convergence of Macs/PCs with TVs, preparing for 802.11n-final and HighDef, we might have something either really quite stellar and surprising, or, business as usual as AAPL grows Macs and iPod revenues and profits. In this case we see a more of a "consolidation" move in the face of Microsoft's Vista and Zune nonsense, and in the face of BluRay/ HDDVD sorting itself out.
It will be clear that if the "consolidation" strategy is more the go for Apple in 2007, then AAPL will reach $80+ but lower down to $60/$50 through the year as people await the "next big thing" from AAPL. They did the iMac original. They did the iPod. Now, one more thing/ idea to take us to the end of the decade in classic Apple style and push marketshare of maybe 7% and share price of $100.
I don't think Apple itself knows clearly what is going to happen in 2007, with Steve Jobs considering the various options coming out of his very strong R&D team. We may be very pleasantly surprised, but with such a risk of overhype, I'm not holding my breath. I'll try to be as patient as possible and learn more about Apple as a business with its quite good wide portfolio of Mac/iPod ecosystem. And avoid getting caught up in the Christmas frenzy and focus on what might be in store for 2007....
I'm not sure that the movie studio's are going to be contained by a threat from WallMart or Target. There are plenty of other retail outlets for DVD's out there, and the other retailers don't have the clout to push the studios for the lower prices that WallMart does. Sure, they might be a little shy of offending them at first but this is more of a negotiating tactic for WallMart and Target to get lower cost DVD's or their own online service than a real threat to drop all DVD sales.
I think that a more important thing holding them back is the untried sales channel, and the power of the one company to dictate the sales model. Sure TV sales have been good for Apple, but at the last conference call I didnt see a number released for online Movie sales. Of course without the adoption of iTV by consumers they will be slow, add to that the minimal choices and slow release schedule and you don't have the greatest environment for Apple to sell a lot of movies through iTMS.
To succeed Apple is going to need to release real numbers on Movie sales to pressure the other movie studio's to sign on and to prove to them that they have a viable sales channel, to get the numbers up they are going to have to have more movies and iTV. They have a bit of a Catch 22 going right now, though they can point to success with their sales model both with Music an TV shows to help them make the sale.
WalMart sells almost 40% of all DVD's, at least during the holiday season. It's possible they sell the same percentage the rest of the year as well.
WalMart has almost $275 BILLION a year in sales. The entire film industries sales, theater, DVD, etc, is a small fraction of that. Walmart makes more profit in a year than the film industry's total sales.
THey could easily afford to freeze the movie companies out.
Once we are past this Christmas season, in the first half of 2007 we *will* see Apple progressively push hard on the near-DVD-quality iTunes Movies from a wide range of studios. I agree, Apple is not yet ready with 802.11 pre-N as they see fit alongside iTV strategies.
However, in the first half of 2007 alongside Leopard 10.5, Apple will try it's darndnest to deliver a solid range of iTunes Movies. They would not have ventured into movies or iTV if they only had Disney's backing. Other studios are waiting in the wings but they want a solid result for DVD sales for Christmas via Wal-Mart and Amazon and others before putting their necks out. But the other studios have lined up for the first half of 2007 - if nothing else, it's a channel that has proven successful for the music industry. Movies are next.
Apple is going to play hard, hard, hardball in 2007 to get a solid porfolio of TVshows, Music, Movies, *globally*. iTV is a strategy for convergence but also, with BluRay and HD-DVD and 802.11 pre-N still a mess, Apple is will take risks in 2007 to position itself for the next stage, HighDef content delivery - playback on Macs, PCs, or HDTVs.
2007 will continue to be a strong year off Macs, Mac laptops and iPods - Apple solidifies its position with Leopard OS10.5 to hand Microsoft its ass as Vista plods along and people figure out which of the fracking 6 versions of Vista to get and what hardware upgrades they need to make.
On this backing, Apple will make a play for convergence - it won't make its own TVs, but iTV and possibly a HDTV recorder (DRM'ed hard so you can only play it/ stream to a few other Macs), widescreen DVD-res touchscreen iPod video, and the high-risk but growth opportunity in iPhone and iTablet.
The caveat in my arguments is that if iTV only ends up being an accessory at best, and Apple still takes very slow but careful steps with 802.11n, then we will need to see what exactly is going to be the "third growth driver" for AAPL beyond Macs and iPods. So, if not the play for convergence of Macs/PCs with TVs, preparing for 802.11n-final and HighDef, we might have something either really quite stellar and surprising, or, business as usual as AAPL grows Macs and iPod revenues and profits. In this case we see a more of a "consolidation" move in the face of Microsoft's Vista and Zune nonsense, and in the face of BluRay/ HDDVD sorting itself out.
It will be clear that if the "consolidation" strategy is more the go for Apple in 2007, then AAPL will reach $80+ but lower down to $60/$50 through the year as people await the "next big thing" from AAPL. They did the iMac original. They did the iPod. Now, one more thing/ idea to take us to the end of the decade in classic Apple style and push marketshare of maybe 7% and share price of $100.
I don't think Apple itself knows clearly what is going to happen in 2007, with Steve Jobs considering the various options coming out of his very strong R&D team. We may be very pleasantly surprised, but with such a risk of overhype, I'm not holding my breath. I'll try to be as patient as possible and learn more about Apple as a business with its quite good wide portfolio of Mac/iPod ecosystem. And avoid getting caught up in the Christmas frenzy and focus on what might be in store for 2007....
Apple can't play hardball with the movie companies. While they got into the position with the music companies where they can do that, the movie companies don't want to get into the position of allowing Apple to do that. Apple has already compromised on pricing.
WalMart sells almost 40% of all DVD's, at least during the holiday season. It's possible they sell the same percentage the rest of the year as well.
WalMart has almost $275 BILLION a year in sales. The entire film industries sales, theater, DVD, etc, is a small fraction of that. Walmart makes more profit in a year than the film industry's total sales.
THey could easily afford to freeze the movie companies out.
So you believe that if Walmart stopped carrying DVDs that the American consumer would simply stop buying DVDs? Ummm...
Yes, the movie industry would get hurt if Walmart stopped carrying DVDs (or slectively purchased titles) but there still remains Target and other sources. Given the reports that Apple is paying $14 per video and there's no manufacturing, inventory or shipping costs if Apple has sufficient volume then DRM protected downloaded content is a good deal for the studios.
Plus it reduces the strength that Walmart has...granted it places it in the hands of Apple but Apple really only cares about selling hardware. As long as iTunes breaks even or makes a little profit the lions share goes to the studios and they don't have to fumble about trying to figure out how to make such a thing work.
Vinea
So you believe that if Walmart stopped carrying DVDs that the American consumer would simply stop buying DVDs? Ummm...
Of course not. That number is given as a reason why the industry is wary of duking it out with WalMart during the holiday season, which is when a very large portion of the yearly sales of DVD's take place.
One of the problems is that WalMart is in areas where there are few other outlets. Often because WalMart has driven them out of business.
That makes it difficult for a large part of the population to go and buy a DVD as an impulse buy, as many of them are bought. It forces many people to make the decision to buy over the phone, or over the internet, which many are reluctant to do. That would restrict sales in those large, mostly rural areas of the country where it has been estimated that most DVD's are sold.
Here in NYC, it won't matter.
{quote]
Yes, the movie industry would get hurt if Walmart stopped carrying DVDs (or slectively purchased titles) but there still remains Target and other sources. Given the reports that Apple is paying $14 per video and there's no manufacturing, inventory or shipping costs if Apple has sufficient volume then DRM protected downloaded content is a good deal for the studios. [/quote]
In the long run you would be right. But, right now Apple has no sales of any significance, while Walmart sells a few billion dollars of them each year. Target is important. But, they have also threatened the industry, as has been reported.
So, that's a double whammy. You can't look to them as a white knight. They are in the same camp as Walmart.
Now, that covers even more areas of the country, and possibly brings the total percentage to 50%. It's possible other companies might follw, making the situation even worse.
Plus it reduces the strength that Walmart has...granted it places it in the hands of Apple but Apple really only cares about selling hardware. As long as iTunes breaks even or makes a little profit the lions share goes to the studios and they don't have to fumble about trying to figure out how to make such a thing work.
Vinea
As I said, I don't disagree about that in the long term?if it ever gets off the ground.
But, I would rather have the slightly better quality of a DVD, as well as having all of the extras, as well as the ability of bringing it elsewhere.
I can give a good example of that.
October 28th, there was the showing of "The Rocky Horror Picture Show". Now a Halloween classic. The theater in the Village here does this every year.
People come down dressed as the characters, throw rice, etc.
12 kids from my daughters school, as well as a few others met at the theater 11 o'clock at night. I, and a couple of other fathers, was there with them.
Some group had bought out a large block of tickets, and for the first time, it was sold out. People were milling around the theater.
It was agreed that we would all (that is, my daughters friends and fathers), come to my house.
One of the girls had the DVD at home. She picked it up on the way back, and we viewed it at my house. They acted out, and then went to the specials, watched some of those, and acted that out as well.
If the film was gotten from iTunes, it wouldn't have been as good, and wouldn't have had the extras they all wanted to view, and act out. Her friend couldn't have brought it to my house to play. I would have had to buy it myself, just for the occasion.
Until Apple can, or wants to include those, it won't be as good.
It also simply doesn't look as good on my 65" hi def screen, though on my 32" is seems fine.
There's a way to go yet before it can evenly compete.
WalMart sells almost 40% of all DVD's, at least during the holiday season. It's possible they sell the same percentage the rest of the year as well.
WalMart has almost $275 BILLION a year in sales. The entire film industries sales, theater, DVD, etc, is a small fraction of that. Walmart makes more profit in a year than the film industry's total sales.
THey could easily afford to freeze the movie companies out.
Except they would be giving up all the money they make on 40% of all DVD sales. For the film industry or Apple to placate WalMart, is to admit they don't have the guts to think different. They might as well sell out to Microsoft now.
WalMart won't shoot themselves in the foot. The movie industry just doesn't want to rock the boat or take the temporary hit on stock prices that they would need to take to move the business model. They signed contracts with the big dog and they are making enough money to swallow their pride. That is one of the problems with the incestuous nature of the current corporate business models. Short-term profits are more important than long-term price structures. If one company can cause this much instability, then there is no real "free" market. But just like in politics and everything else, it is the perception of power that influences board rooms and the public, not actual power.
Except they would be giving up all the money they make on 40% of all DVD sales. For the film industry or Apple to placate WalMart, is to admit they don't have the guts to think different. They might as well sell out to Microsoft now.
If you read the part I wrote earlier about WalMarts $275 billion a year in sales, you would see why they could easily afford to take that chance. DVD sales, in total, for all outlets, during the entire year, is about $5 billion. A drop in the bucket for WalMart and other retailers the size of Target and larger. So WalMart sells about $2 billion worth of DVD's a year. Nice, but not critical for a short period.
If WalMart cut back on sales, they would lose some profit now, but if that could convince the studios to do what they want, it could result in them not losing sales in the future. That would be far more important to them.
Like unions who strike when they don't get what they want. The members give up some wages now, for increased wages and benefits in the future.
WalMart and Target, as well as any other retailer who thinks they will lise out if theis happens, they could be willing to make this threat because the studios have far more to lose.
WalMart won't shoot themselves in the foot. The movie industry just doesn't want to rock the boat or take the temporary hit on stock prices that they would need to take to move the business model. They signed contracts with the big dog and they are making enough money to swallow their pride. That is one of the problems with the incestuous nature of the current corporate business models. Short-term profits are more important than long-term price structures. If one company can cause this much instability, then there is no real "free" market. But just like in politics and everything else, it is the perception of power that influences board rooms and the public, not actual power.
As I said above, I don't agree.