Apple's Possible Entrance Into TV Market Could Boost Market Cap by $100 Billion
Maynard Um of UBS Investment Research estimated in a report yesterday that if Apple were to enter the HDTV market it would raise their market capitalization by $100 billion.
Um and UBS do not give a timeline for Apple to enter the HDTV market, but there view is "Apple is unlikely to enter the television set market without a core level of differentiation. We believe that differentiation will be its iTunes ecosystem and, in particular, its content."
The problem with this differentiation is getting customers to pay for a television, and adopt the rather unfamiliar Apple TV, and iTunes intergration when it comes to television. People are creatures of habit, and unless the Apple TV's present some game changing innovations breaking into the market could prove difficult.
Another hurdle for Apple is HDTV's typically sell with a 10-15% profit margin. This pales in comparison to Apple's usual product profit margin of 30-40%. While they do have the necessary cashflow to support a project like this, it won't be an overnight success like the iPhone, iPad, or iPod. The access point for consumers would likely be too expensive as well preventing rapid growth. As expensive as iPhones and iPads are, they still are available in more affordable configurations and pale in comparison to the price of a high-end LED or plasma television.
Um further proposes is that Apple's Genius Bar could evolve into a Genius Squad much like Best Buy's Geek squad. They would be used to provide in home services like setting up Apple's wireless networking solutions, and if Apple's cloud based services take off, Apple based home automation services could be included as well. Plus setting up HDTVs if the rumors prove true.
Um's vision is grounded in reality, and serves up some lofty ideas for the future of Apple products and services, but it appears to be educated speculation of a distant Apple dominated future where every part of our home is run through a Cupertino device.
I can't wait for the day when I order my Apple servant-bot to get something out of my Apple branded fridge, via my iPhone. Welcome to Apple's consumer vision of Singularity.