updated 10:00 am EDT, Fri March 25, 2011
Device long source of analyst speculation
Apple appears to be developing a "smart TV" prototype, according to Morgan Stanley's Katy Huberty. The analyst cites "checks in Asia," referring to Apple's suppliers. What Apple might be putting into the prototype is unknown; Huberty speculates, though, that a completed TV might merge "TV/Video content, gaming, DVR, as well as other features like apps and FaceTime into one product."
Huberty argues that a smart TV is "potentially the next new product category," and could give Apple an extra $4 billion per year for every 1 percent of the TV market the company takes by 2013. The concept has regularly been proposed by analysts, particularly Piper Jaffray's Gene Munster. Others have pointed out, however, that there are major obstacles to creating a TV in terms of production and design. Apple has moreover been resistant to supporting technologies that might reduce interest in buying from iTunes. Macs lack Blu-ray drives, while the Nano is the only iPod with an FM receiver; the only third-party video services on the Apple TV are Netflix and YouTube.
Turning attention to different matters, Huberty suggests that other potential growth drivers are Asia-Pacific sales, especially in China, as well as continuing dominance of the tablet market and the theoretical possibility of cheaper iPhones increasing Apple's smartphone share. Regarding Asia-Pacific the analyst forecasts 60 percent in annual revenue growth, such that the Asian portion of Apple's total revenue could hit 30 percent in 2013.
The company's iPhone strategy is expected to include an LTE model in 2012, with 3G devices being sold for less in poorer countries like China, India and Brazil. The iPad, meanwhile, is predicted to stay "well north of 50%" of the tablet market, based on low sales of current competition and mixed opinions of upcoming hardware.
Huberty is holding to a $410 price target for Apple stock. A proposed bull scenario might push the stock up to $540, though this assumes 55 percent iPhone growth and 74 percent iPad growth by November. In a worst case the stock might plummet to $270 if hurt by low margins and worries about Steve Jobs' health.