“Yesterday’s Wall Street Journal noted that companies like Office Depot, Home Depot, and RadioShack are branching out into flat-panel TVs.. With companies like Circuit City and Best Buy reporting robust profits driven by flat panels, we shouldn’t be surprised at these retailers suddenly embracing flat panels,” Carl Howe, principal analyst, writes for Blackfriars’ Marketing.
“But the recipe for flat panel HDTV success is complicated. Dell’s HDTV business, for example, has basically flopped because of poor quality and worse marketing. HP’s flat-panel business is similarly floundering,” Howe writes.
“But it is a different story for Apple, just as music and PCs were. Apple has design icon Jonathan Ive (among many other great designers), one of the best and most powerful brands in the world, incredible differentiation, and is repeatedly ranked number one for product support. It has a chain of 161 stores that generate 67% of the revenue of Best Buy with 10% of the floor space. And most importantly, Apple sells experiences, not low-priced hardware. They’ll offer two or three choices to avoid the tyranny of too much — and amaze everyone again by making more profits on fewer products,” Howe writes.
Howe writes, “In my view, it’s not a matter of if Apple will enter the flat panel market; the only question is when.”
Full article here.
[Thanks to MacDailyNews Reader “LinuxGuy and Mac Prodigal Son” for the heads up.]
Apple-designed and branded flat panel TVs with integrated “iTV” (or more?) make a lot of sense.
Related articles:
Cringely: Apple’s iTV strategy is iChat on steroids – September 22, 2006
The Motley Fool examines Apple’s iTV victims – September 22, 2006
Disney CEO Iger: Apple’s ‘iTV’ has ‘small hard drive on it’ – September 19, 2006
Disney sells 125,000 movie downloads via Apple’s iTunes Store in first week – September 19, 2006
The most exciting feature of Apple’s ‘iTV’ may be its USB port – September 15, 2006
Cringely: How Apple plans to own your living room – September 15, 2006
LA Times: With iTV+iTunes Movies, Steve Jobs stumbles over the last 100 feet – September 14, 2006
BusinessWeek: If anyone can make bridge the great divide, Apple can with ‘iTV’ – September 14, 2006
The Beeb asks: Would you buy the Apple iTV? – September 14, 2006
Three markets that are different today after Apple’s ‘It’s Showtime’ event – September 13, 2006
Cramer: Apple’s ‘iTV’ all about ease-of-use; Apple shares are going higher – September 13, 2006
Apple + Living Room = Logical Marriage + Boon for Stockholders – September 13, 2006
The Register: Apple event more like ‘No Show’ than ‘Showtime’ – September 13, 2006
The Telegraph: Steve Jobs’ genius making people desire gadgets for which they have absolutely no use – September 13, 2006
The Guardian: Steve Jobs needs ‘a charisma download, Apple risks being left behind’ – September 13, 2006
Mark Cuban: Things that are special about Apple’s announcements – September 13, 2006
Apple’s ‘iTV’ strategy – September 13, 2006
How will Apple’s ‘iTV’ work? – September 13, 2006
Apple eyes living room market with device codenamed ‘iTV’ – September 12, 2006
Analyst: Apple ‘s iTunes+iPod+iTV model ‘the gold standard for the digital home of the future’ – September 12, 2006
Analyst: Apple ‘s iTunes+iPod+iTV ‘will be hard for other players to match’ – September 12, 2006
Apple gives sneak peek of ‘iTV’ set-top box to debut Q1 2007 (with images) – September 12, 2006
Apple’s QuickTime stream of Steve Jobs special event now live – September 12, 2006
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Could do. But i think they should stick to what they know and let toshiba make the tv’s
Althought, apple is becoming more of an electronics company than just a computer company.
“It has a chain of 161 stores that generate 67% of the revenue of Best Buy with 10% of the floor space.”
Very telling. I just saw the new Nano and 24 inch iMac up close today. Is a strong want a justifiable need?
iTV incorporated into a Flat Screen would be huge, but its being done right now. Check out HP’s Media TV, a 37in Flat with wifi for streaming. Apple doesn’t have to be first just do it better.
Doubt it. Apple is not keen on becoing the next Sony– its hands into everything while losing focus. I think iTV suggests that Apple is seeking use the growth of HD tvs, but isn’t seeking to provide them.
Huh, that’s exactly the HP product that is “floundering.”
Anything new Apple does will likely be something that extends the digital hub strategy. Whether it’s their own products, like iPod and iTV or outside sources, all of them add value to the Mac experience. It’s a very smart move actually, if the fish bigger than you are taking up most of the pond then build your own, and have 100% pondshare all to yourself.
Fact is
Apple, brander of everything, maker of nothing.
Apple better figure out the next evolution of computers, something every buisness must have and shut M$ out for a good ten years.
The consumer market is already flooded and the Apple brainwashing only lasts for so long.
Jesus, I step foot into a Apple Store for the first time in all my life as a mac user and I felt like they were about to pass the kool-aid.
I was miffed.
The only way Apple might do this is if they can offer something other companies can’t.
I guess it’s possible, but I don’t think its likely… Apple goes into a market when they can offer something different – something with unique capabilities. And what capabilites are you going to add to a flat panel to make it a killer product that will reach a large audience in a reasonable amount to time?
However a separate box like iTV, having unique Apple technology, that can interface with every TV/flat panel out there makes perfect sense. The potential market is huge and it will be much easier to reach a wide audience!
67% of Best Buy’s revenue? Can that be right?
Holy schnikes – I had no idea…
Jeff – how about a nice flat-panel with an integrated iTV…
And a little blue apple on the frame somewhere that beams RDF waves at the viewers…
And a Kool-Aid dispenser for Old Mac Man…
Old Mac Man –
I bet you’re the guy who runs out on the porch in your gap-front boxers and a ratty bath robe to yell at kids to get off your lawn
(no offense, I plan to be just like that)
The iTV almost forces them into selling tvs. Why miss out on the associated sale?
There is absolutely no doubt this will happen. For the life of me, I can’t see Apple sitting on the sidelines regarding HDTV flat panels when they have created so many other parts of the puzzle for the digital hub. I believe Steve and the gang are banking on the fact that traditional TV’s and its antiquidated networks are going bye-bye sooner than anyone is realizing. In 10 years, it’s impossible to believe that we’ll all be sitting in the living room watching network television the way we always have. The internet, espcially in the last year, has become a ferocious promoter of video. You Tube, CNN, iTunes – you name it, it’s everywhere. It’s really not hard to imagine that as bandwidth continues to improve, so will the quality of the video. In less than 3 years, video will be offered at a minimum of 640×480 resolution everywhere. It just keeps getting better. And unlike network TV, the internet has millions of new videos being posted everyday. My gut tells me that this iTV thing is going to be astonishingly huge. What happens if OS 10.5 has a feature built into that streams the operating system – not just iTunes – to your Apple HDTV? Then the whole family can sit down and watch ABC’s streaming TV shows or iTunes, or surf the internet. To me, it’s just way too obvious that traditional TV and all its rules are gone. The internet is going to replace it completely before 2010.
67% mostly likely means on a per square foot basis, the usual metric for retail sales.
example. say BB makes $100 /sq.ft with 100,000 sq.ft of total space
Apple makes $67/sq.ft with 10,000 total sqft. ( all number strictly for illustration)
which works out to $670 /sq.ft if they had the same 100,000 sq.ft of space.
Holy schnikies indeed!
Now we know what pays for the big Cube.
I would just be happy if Apple put out a display that had multiple inputs. That’s the problem with their current line of diplays, no place to hook a standalone HDTV tuner to it and no A-B switch….
🙁
I just don’t see it.
Mitsubishi, Phillips, Sony et al. are quite strong in these markets.
Further, why compete in an area in which the price is dropping?
Just sell the extras tlike the iTV and related stuff, especiallly since many have some TV already.
Well… I heard from the sandwich guy at my local gas station that Apple was definitely going to sell TV’s. Must be true.
Peace.
whether apple sells tvs or not is a coin-flip. nice revenue filler, but can you hear all the cr*p about tv market share? if apple has their strategy right, the battle is not to turn your apple stores into the next sears, but to keep the expeience value proposition so far in front of everyone, that they can’t even see you.
they can do that with the end to end best of breed author to consumer experience. cut out as many middlemen as possible and redefine the home entertainment by raising the bar on user experience. that’s what they really did to music with itunes/ipod. hdtvs, while pricey now, will become a commodity in 5 years. instead of wrapping your product around some new technology, which is what most home entertainment vendors currently do, be the ultimate integrator. itunes/ipod is a good model for this. apple has to watch out not for someone capitalizing on the success of itunes, but making a quantum leap to an even better value model. if you look at what they do today from a value model perspective, vs exclusivity or closedness, you will see why they succeed and others fail.
watch out for the day when someone else figures that out. the pc war they lost in the 90’s was nothing but a skirmish. this is the main event.
don’t compare what sony, mitsu, or lg have done in the past, their capacity/marketshare today and whether apple can compete with them. today, apple is competing against apple and no one else. before itunes/ipod, people were comparing the ipod to cd players for heaven’s sake, not understanding what an ipod/itune does to change the music experience. it won’t be long that 50% of the people who enjoy listening to portable music won’t know what a cd case was (just like 80% of those today won’t remember an 8-track storage box). apple is going to do this in your living room/den. there will appear to be competitors, x-box 720, wii and the like, but so far none of these enterprises have shown they can integrate their nose hairs. they generally call extending their platform integrating. won’t cut it-again.
mw word: main as in this will be main event that defines apple as a company.
Apple is desperately needed in this space. The current situation doesn’t just involved flat panel tv’s, they are connected by a rats nest of wires to a miriad of complicated components each with different remotes. Even if you go out and buy a universal, the experience if far short of what Mac users are accustomed to and too complicated for most consumers to install. They need to come out with a 41 and 50 inch iMac which is an entire media experience all insidethe flat panel tv. Hook up the speakers and plug it in. Also, who wants DVR. That is so last century. I wan Apple to ramp up their tv offerings and offer a subscrition service so when I want to watch something, I can just find it on the list and stream it. No broadcast, record and replay.
Companies get into trouble when they get too far away from their core business.
Apple got into the MP3 player business for one main reason IMNSHO — because none of the existing MP3 players were compatible with Macs. They didn’t want to have their core customers go out and buy PCs so that they could carry around MP3 players, so they came up with their own. When Apple saw how successful the iPod was, they opened it up to the Windows world.
I’d much rather that Apple go more for the accessory route, in selling a system that will work with numerous TVs, than to go with a proprietary system that only works on a few sets (like their own). They’ve done a great job with the iPod and the Mac brand…but I don’t want to see them go too far afield. Make the world’s greatest set-top box…then concentrate on keeping the operating system great rather than going after the TV market.
Just my $0.02…
Apple is “field testing” first with iTV. If it and the concept of playing video content from a computer to TV is embraced, I think the next logical step is to introduce the complete TV package. But with large flat panel TV costing thousands of dollars, why not just incorporate a Mac mini into the design and make it a “MacTV.” The iTV device, with its “small hard drive” and Intel CPU is already sounding like a Mac mini.
Best Buy (from 2006 annual report):
924 Stores (all brands) in the USA & Canada.
34 million square feet of retail stores.
37,000 sq ft per store (approx avg)
$941 revenue per sq. ft.
$32 bn. revenue (total for the corporation)
25% Gross Margin.
Apple (extrapolated a bit because due to the stock scandal Apple hasn’t released earnings recently, nor at all since the New York Cube opened, and unlike Best Buy they don’t separate the numbers in a straightforward manner, but I expect that FY2006 will be close enough):
161 Stores in the USA, UK, Japan, and Canada
1.2 million square feet of retail stores (Extrapolated from 902,000 in FY2005 Annual report unless you believe 10% of Best Buy and 3.4 million total sq. ft).
7,200 sq ft per store (avg for 124 stores open in FY2005 Annual report, may be MUCH higher, however 10% of Best Buy would be an unlikely 21,000 sq ft per store)
$3,333 revenue per sq. ft.
$21 bn. revenue (total for the whole corporation)
$4 bn. revenue (total for the retail stores)
29.8% Gross Margin.
My guess is that the dumbshit reporter made two mistakes. First. he extrapolated the size of the New York Cube times all open stores for his total sq. figure turning 4% into 10%. Second he confused total Apple revenue with Apple Retail revenue turning 13% into 67%.
re: diversification-
I agree that companies often make the mistake of thinking that thier success means they can branch out into unrelated businesses (then we hear the inevitable “we’re getting back to our core business”).
But I have to believe that Apple knows what they are doing, an certainly, even on the face of it, it isn’t to difficult to see the corollary
First of all, I just want to say that there are some awesome posts here. Some of the best I’ve seen on MDN. Anyway… anybody remember that new display technology that Apple was working on.. I feel like that’s what we really need for true display innovation–a new way to interface with them.
It won’t be just a new display, I agree with EricN. Apple thinks before they act, and in no way are they going to over extend their reach by offering tv’s. That monitor is a damn monster as it is! 30″ flat panel? If you haven’t seen this thing in person, I don’t see why 20″ more will make a difference. But don’t think for a second that it won’t have integrated multi directional speakers that disappear into the bezel, an isight camera or somehting cool to communicate with other users, a wireless access point, and enough ports to land a boat in. It won’t be a tv, it will be the center of your damn life, and people will lust over it. For all the TV watchers in the world only a small fraction need to get on for it to be a successful product. Personally I don’t think it’s somehting for 2006, even for 2007! But I wouldn’t be too suprised.