Apple: Are TVs really its next big thing?

Apple: Are TVs really its next big thing?

Summary: Apple's TV prospects are moving to the front of the analyst chatter again---talk surfaces almost quarterly---and signals once again point to a big living room move.

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TOPICS: Hardware, Apple, Mobility
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Apple's TV prospects are moving to the front of the analyst chatter again---talk surfaces almost quarterly---and signals once again point to a big living room move.

Piper Jaffray analyst Gene Munster said in a research note that it appears that Apple will replace its Apple TV set-top box will a real TV. Signs pointing to Apple TVs are:

  • Patents in May and January for TV broadcast menus and other technology.
  • iCloud makes media storage easier and could be the enabler of Apple TVs. It's not a big leap to add a TV to the slide to the right.
  • Apple has prepaid for components (likely for displays).
  • An App Store for TV is likely should these efforts launch in late 2012.

Munster said:

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. We estimate that of the 220m flat panel TVs sold in 2012, 48% or 106m units will be internet-connected, of which Apple could sell 1.4m units. We believe an Apple Television could add $2.5b or 2% to revenue in CY12, $4.0b or 3% in CY13 and $6.0b in CY14.

The idea is plausible and it's not a stretch to see Apple moving into the connected living room in a big way. Munster has been championing the Apple TV cause for months.

But there is another other side of the TV story.

Barclays analysts Ben Reitzes on Friday penned a long research note about Apple's prospects. Apple shares have generally lagged rivals and the broader market in recent months. Part of the problem: There may not be a "next big thing."

Reitzes wrote:

One of the most attractive things about investing in the Apple story since about 2005 has been that it was pretty easy to envision the “Next Big Thing” – i.e., phones or a “big iPod Touch” were easy guesses. We didn’t know how the specifications would look or all the details, but you get the idea. Now there are camps that think the next big thing after the iPad is now an integrated TV system – and some who think there isn’t anything. We think the next big thing is really a combination of China (the next US or bigger?) and increasing the utility of the iPhone with 4G connectivity – creating the next “mega upgrade cycle” (usability that fuels 200 million units/year like volumes) – we think Apple is laying the foundation for this type of cycle to start in mid-CY12 with new partners in China and new iPhone products. We are hesitant to say it is TVs given the issues of having cable companies involved. Perhaps TVs running iOS and Apple TV software are coming in the near future, but we just can’t nail down the impact and are uneasy about anointing TVs as the next big thing. We believe the biggest opportunities for Apple moving forward include the enterprise opportunity and China.

The funny part here is that China and the enterprise are the keys to Apple's revenue and earnings growth. The problem is that those categories aren't all that sexy. Apple 50-inch TVs capture the imagination a bit more. As far as real business returns though, enterprise and China look way more fulfilling.

Topics: Hardware, Apple, Mobility

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  • RE: Apple: Are TVs really its next big thing?

    Interesting! Thanks...

    How about... "iPhone home" (ok that sounds like something ET might buy :)" I don't know about you - but my phone at home is a pretty boring and stupid device. How about the merger of a phone & broadband wifi modem - apple have all the cool bits for this on the shelf...

    or for wannabe jamesbonds - how about iWatch (a smart watch with bluetooth phone built in)

    I still believe in Apple's ability to turn things on their head again!
    tquila_ben
  • RE: Apple: Are TVs really its next big thing?

    a TV thats 2/3rd's build by samsung lol
    5FingerDiscount
    • RE: Apple: Are TVs really its next big thing?

      @5FingerDiscount And your point is?
      non-biased
  • Making dumb things smart

    I think this is a -very- good guess. If we look at Apple's breakaway successes since Jobs returned, they basically consist of the application of computer technology to what had been relatively "dumb" consumer electronics devices.

    The iPod is basically what happens if you digitize and computerize the transistor radio and Walkman markets.

    The iPhone is the same trick done to cell phones.

    These are the best kinds of innovations, because they address uses that people have already proven they want and will pay for. Replace the "portable" CD player with something one-fifth the size and weight, and watch the money roll in. Really, truly apply digital electronics to the cell phone to make it do all sorts of neat and fun stuff, and again... the money rolls in.

    The living room television is the obvious Next Thing to get "smartened up" by Apple.

    What Apple (or is it just Jobs?) seems to do better than anyone else is apply all this computer technology without turning the resulting devices into computers. The industry has really struggled with this issue when it comes to televisions. Never mind the set-top boxes, most people couldn't even set the clocks on their VCRs. It will be very interesting to see how Apple "computerizes" the television while still leaving it useable by average consumers.

    One thing is for sure: we'll have dozens of geeks here on ZDNet proclaiming that it sucks because it doesn't have enough buttons and switches.
    Robert Hahn
    • RE: Apple: Are TVs really its next big thing?

      @Robert Hahn

      Others have already beaten Apple to the punch. See Samsung and Sony.
      snoop0x7b
      • Have you ever used the internet capabilities?

        Most are pretty crappy, to almost unusable.
        @snoop0x7b
        GoPower
      • Perhaps the same story all over again?

        @snoop0x7b
        Not so fast! You *could* have said exactly the same thing about personal audio players; Sony and others beat Apple to the punch by many years, yet the iPod won the race.

        Personally, I can't easily imagine what Apple could bring to the TV space; but I am very curious to see it, whether or not I consider buying it. (For instance, I am not interested in buying a 3D TV, but the technology is interesting.) The more features and technology that various manufacturers bring to market, the better off we all will be, both in terms of choice and competition.
        rahbm
      • RE: Apple: Are TVs really its next big thing?

        @snoop0x7b They may have beat Apple to the punch but Apple could still beat them to releasing a successful and popular product.
        non-biased
      • RE: Apple: Are TVs really its next big thing?

        @snoop0x7b
        Yah, but neither of them had the 'i' mark, so there's still room for revolutionary copies
        MrElectrifyer
    • Not really accurate

      @Robert Hahn
      [i]Replace the "portable" CD player with something one-fifth the size and weight, and watch the money roll in[/i]

      Then how did Apple miss the CD craze as they replaced bulky tape players and record players. That was more the natual evelution, nothing more.

      The diffeence with this is the competition itunes will face from Cable companies - why would I want to buy a show on iTunes when I get to watch it free through on demand as part of my cable subscription?

      I also don't see people in a hurry to ineteract with their TV's

      Sure Apple will sell a ton of these to the Apple geeks who really feel they need to own everything Apple, but AppleTV has shown they have a long way to go in this area.
      Will Pharaoh
      • There is a total worldwide market for perhaps five computers

        You have certainly mastered the art of thinking inside the box. Four of them in one note: impressive.
        Robert Hahn
      • RE: Apple: Are TVs really its next big thing?

        @Will Pharaoh
        "why would I want to buy a show on iTunes when I get to watch it free through on demand as part of my cable subscription?"
        maybe if you put a second neuron in gear you will understand how stupid your statement is...
        theo_durcan
      • Your MS spelling checker is faulty!

        @Will Pharaoh
        Just like most of your illogical, ideological rants.

        To paraphrase:
        I also don't see people in a hurry to interact with their Xboxes by waving their arms in the air, but Microsoft will sell a ton of these to the Microsoft geeks who really feel they need to own everything Microsoft, but Windows 7 has shown that it has a long way to go in this area.

        Oh wait, they DID! So the geeks and bigots and devotees slavishly buy whatever their deity company produces; so what? In other news, the sun came up this morning!
        rahbm
      • RE: Apple: Are TVs really its next big thing?

        @Will Pharaoh <br>The CD craze? 1988? I had more on this, but it was fairly sarcastic, and what's the point?<br><br>As for cable, good point. It is a problem that has to be addressed by Apple's strategy. I don't think it's surmountable today. I don't think an Apple tv set is imminent. As to the novelty or exoticness of the thought, sometimes in the box is the smart place to be.<br><br>This leads us to the Apple geek point. First of the 125 million Apple tech owners, the ratio is 4:1 iOS to OS X, according to a slide from WWDC. So, can't just be Apple consumers consuming more Apple products, right?<br><br>Even if one expands the definition of an Apple geek to someone who likes their iPod, then what you are saying is that Apple uses its branding and customer satisfaction to launch new products.<br><br>Well, yeah. That's exactly why you grow and nurture a brand.<br><br>Also, if you sell a ton of stuff, you still have sold a ton of stuff. And, in the hypothetical case of tv sets, that's a ton of tv sets the other guys didn't sell.<br><br>I'm skeptical about Apple and television sets, mainly because I don't think they would get a lot of cross-selling from current customers and more importantly, Apple can't cook up a story about what their tv has that the consumer is lacking. What's the case? You have the remote [iPad] now get the set? <br><br>But you really have to retire the "Apple only sells to its customer base" assertion. It just doesn't add to your arguments about why Apple wouldn't succeed with a product line.
        DannyO_0x98
      • RE: Apple: Are TVs really its next big thing?

        @Will Pharaoh I agree that I wouldn't buy/rent from iTunes if my cable provider has the show on demand but the cable companies need to offer more than they do now in their on demand. I can see the price tag being the one thing that could hold them back in this area. The AppleTV at $99 is cheap enough that it's no big deal to give it a try but if a 32" Apple TV cost $1K why would I want that when I can get a 50" + AppleTV for that price. If they can use their buying power to keep that price down I can see potential.
        non-biased
    • YEAH!! ROBERT!! YEAH!!!

      @Robert Hahn
      Another thing for sure is that we'll have hundreds of Apple fans like you and me here on ZDNet proclaiming that Apple, and everything they do, is the best thing EVER!! YEAH!!!
      woulddie4apple
      • Just like the MS trolls

        @woulddie4apple
        who infest these blogs proclaiming that everything Microsoft does is fantastic, and that everything Apple or Linux is, ipso facto, rubbish. If only they would all cancel out each other, then this site would be so much more pleasant to read!

        Do, please, TRY to grow up.
        rahbm
      • RE: Apple: Are TVs really its next big thing?

        @rahbm woulddie4apple is a small minded Apple hater that has nothing better to do than troll the talk backs posting over the top fanboy drivel in the attempt to make Apple fans look bad. Of course most people are intelligent enough to see right through the childish game.
        non-biased
    • RE: Apple: Are TVs really its next big thing?

      @Robert Hahn
      ...and the original Mac a GUI version of a dumb CLI. Apple best skill is taking existing technologies and improving them.
      observer1959
      • Fairly common failing

        With Bell Labs gone, who besides IBM is even doing the kind of basic research that produces totally new technologies?
        Robert Hahn