Apple’s rumoured entry into the connected HDTV market would bring as much as $50 to $100 billion to its market cap, according to a new report from analyst Maynard Um of UBS Investment Research—if Apple can gain enough market share to catch HDTV leaders like Samsung and Phillips.
The growth of several convergent sectors—IP set-tops, flat screens—gives Apple an unparalleled opportunity to enter the market with a differentiated product that leverages iTunes and the rest of he Apple walled garden, Um noted: "We believe Apple is most likely to target the fusion of TV and (set-top box) market, the connected TV, as it enables Apple to add value through its innovative hardware/ease of use, iTunes ecosystem and provide a better overall consumer experience.”
He added, "Our view is that 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.”
Piper Jaffray analyst Gene Munster believes an Apple HDTV set will start shipping in 2012, based on the fact that Apple has been filing for patents for browsing and DVR functionalities, and a recent large component investment. The category would be worth $2 billion in revenue for 2012, $4 billion for 2013, and $6 billion for 2014, he said.
"Recent developments in Apple's strategy, including the component deal we believe could secure up to 50" LCD displays, bolsters our confidence that the company remains serious about the connected living room,” he wrote in an investor note
“We believe that Apple's recent $3.9-billion, two-year component investment largely relates to the displays used in its portable devices, Macs, and possibly for an Apple television in the future. Based on recent meetings in Asia (not with component suppliers), we believe Apple is investing in manufacturing facilities and securing supply for LCD displays. These displays could range from 3.5" mobile displays to 50" television displays."
Like, Um, Munster also believes Apple’s ecosystem would be a big advantage. The iCloud digital locker would enable a multiscreen play for video; and, developers would leap at the chance to write for an iOS-based television set.
The benefits to Apple don’t stop there. Um also speculated that Apple could expand its Genius Bar support services to include home install, which would open the door for add-on sales of ancillary products like its existing wireless networking products, and home control technologies down the road.
“The market for home automation today is fragmented and a number of standards would have to come together for this to likely become more feasible,” he wrote. “However, we can envision a home where the television set or tablet, becomes the central console to control the home (lights, security cameras/alarms, audio, video, home theater, HVAC/climate control, door locks, appliances, et al) and that can be accessible from outside the home via a Web browser or iPhone application (facilitated through a service from its data center). This, in our opinion, would drive further halo effects or bundled sales of Apple's products, particularly if the company transfers its ease of use to these systems.”