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Apple developing 'smart TV' prototype, analyst claims

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.


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By Electronista Staff
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Comments

  1. climacs

    Dedicated MacNNer

    Joined: Sep 2001

    +3

    I KNEW IT

    it's a total no-brainer

    Samsung is making smart TVs that I like a lot, they have downloadable apps from an app store

    Why the heck couldn't Apple do that? And do it right and blow the competition out of the water.

  1. Aeolius

    Fresh-Faced Recruit

    Joined: Feb 2006

    +6

    Not Interested

    That makes about as much sense as a combination printer/scanner/fax machine. When one part breaks, you lose it all (yes, I have one and yes, it's broken).

    I do not want an Apple-branded TV. It would just be a giant iMac. I would rather buy a TV of my own choosing, then hook an AppleTV onto the thing. Let the AppleTV be the media gateway, NOT the TV itself. Currently I have a 66" Sharp LCD. Imagine how much more that would cost, if Apple slapped a logo on the front.

  1. climacs

    Dedicated MacNNer

    Joined: Sep 2001

    +4

    makes sense to me

    There's one room in my house where I very much want to have an HDTV wired up to my computer and movie/music server. I don't need a smart TV for that.

    There's also a bedroom or two where I would MUCH rather not have additional boxes... just have downloadable apps for Netflix, Pandora, etc. The only catch is that I'd need AppleTV to stream my iTunes content, and it's only 720p at this time.

    The less boxes I have to buy and fuss with, the less clutter, the happier I am. And I am *not* shy about hooking up A/V equipment, I do it all the time. I HATE the clutter it creates.

    A smart TV with iTunes apps and tied in automatically to my iTunes library... now THAT would be a great device and I bet millions of consumers who aren't Aeolius would agree with me.

  1. bazaarsoft

    Fresh-Faced Recruit

    Joined: May 2005

    +3

    AppleTV Apps will happen first

    Before any new hardware appears, the AppleTV will get 3rd party apps and an App Store. It's the next natural step and Apple isn't going to build new hardware without a compelling app/content story.

    The problem they have to work out is content - that's always been a sticking point with Apple and video content. Unless Apple can figure out how to make finding/delivering/paying for content easy they won't do it. It's why the AppleTV hasn't really progressed significantly since it was introduced. They've traditionally had serious issues getting deals worked out with the traditional distributors of video content and have had to compromise on price and usage terms.

    But some hints to their plan are beginning to surface: the new NBA and MLB apps on the AppleTV might be showing the new strategy: go directly to the vertical content producers and build apps for them. This will build momentum on the platform that will eventually give them the market leverage to get better terms from the traditional content providers.

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