Will Apple TV be even bigger than iPhone?

Apple Store“The release of the Apple TV has driven Think Equity analyst Jonathan Hoopes to reiterate his ‘Buy’ rating on Apple, citing a $120 price target on the stock,” Jonny Evans reports for Macworld UK.

“Hoopes writes: ‘We think the Apple TV/iTunes combination could become as disruptive to legacy video purchase-and-consumption behaviour as the iPod/iTunes combination has been to the traditional music business model,'” Evans reports.

Evans reports, “He predicts that the device will achieve widespread adoption and enable Apple to explore film download, TV recording and games development through the device. The device is, ‘an ideal conduit for multiple services including DVR, paid-for content (such as video-on-demand), gaming, or advertising,’ he writes, adding, ‘we identify and value these business opportunities at $5.3-$11.4 billion.'”

Full article here.

David Haskin reports for Computerworld, “Some industry experts say Apple TV, due to be released this month, will be a huge iPod-like success, doing for digital video what the iPod did for audio. Some even think Apple TV could be bigger than Apple Inc.’s much-ballyhooed iPhone, which will be released in June.”

“‘Long term, strategically, Apple TV as a revenue-generating platform is much bigger than iPhone,’ said Jeff Heynen, directing analyst for broadband and IPTV for Infonetics Research. ‘It’s a $300 device that multimillions of people will put in their homes vs. a $500 device [an iPhone] in a market that’s saturated with BlackBerries and similar things,'” Haskin reports.

Haskin reports, “In addition, there are millions of video iPods already in circulation, which will boost the chances of success for Apple TV, Heynen said. Video iPod users can load their devices with videos downloaded to Apple TV… The result will not only be significant sales of Apple TV, but also dramatically increased sales for the iTunes store to the detriment of cable and satellite providers. ‘It’s already working somewhat,’ Heynen said. ‘Disney has said that iTunes downloads of its movie Cars have reached $25 million. Given the still-low penetration of digital video recorders at this point and the fact that on-demand is starting to take shape, the potential [for Apple TV] is huge.'”

Haskin reports, “Another potential benefit to Apple is that success for Apple TV could lead to increased sales of its Mac computers. Market share of those computers has increased significantly in the last couple of years – it now has about 7.2% of overall market share – and many observers give credit to the glow created by the iPod. Apple TV could even lead to increased sales of iPods, Heynen added.”

“Over time, all the experts agreed that, when lots of video content is available and the idea of using a product like Apple TV to manage that content is widely understood, consumer behavior will change significantly,” Haskin reports.

Full article here.

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43 Comments

  1. Apple TV has the potential to be massive. When you consider the number of people who have previously bought VCRs and DVD players to go with their TVs, it clear that the potential market is substantially higher than the market for a high-end mobile phone.

    However, that doesn’t mean that it WILL be massive. The hardware itself is of little consequence. The thing that will make it or break it will be the content that users can access through it and at what cost. If customers discover that buying an Apple TV allows them to conveniently access compelling content at an affordable price, then it will take off spectacularly. But if it only allows users to access a few Disney movies and a load of ancient TV shows, then it will be a waste of time.

    None of us know what sort of content will be on offer. Once we do, we’ll know what sort of success it’s going to be.

  2. @ TT

    I know about the options, I’m just after *simplicity*. One button to import, and available in iTunes/Front Row/iPod. I’m reluctant to start ripping my DVDs just yet because I think this is coming.

  3. Wade – You’re not alone. About 2 years ago, my wife and I bought a 32 inch 4:3, picture-tube TV by Sharp for $300. Not many bells and whistles but has a great picture. Last August, we each bought a first-generation Macbook with a pretty good discount from our local CompUSA which was closing. Buying either the new Airport Basestation or AppleTV now would be a waste of money for us. Truthfully, no one that I personally know owns a wide-screen, high-def television. Sure we will upgrade to AppleTV – the next time we are in the market for a new television. And we will upgrade to the new Airport basestation, once we own at least one computer that supports the “n” specification.

    Don’t get me wrong, I would love to have the latest and greatest but have we have a mortgage, bills to pay, and have a practical side.

    Peace.

  4. I think it’s more than just a component video connection to your tv. I have a tube tv with component video but I don’t think I can use AppleTV because my TV isn’t digital. I believe it’s the same reason you need a digital TV to get the benefits of a progressive scan dvd player. On the Apple site, it says “Apple TV works with widescreen, enhanced-definition or high-definition TVs capable of 1080i, 720p, 576p, or 480p resolutions, including popular models from these manufacturers.” A tube tv isn’t capable of any of these.

  5. I’ve been thinking for quite some time that Apple TV may be create a massive change in how content is delivered to our TVs.

    The key, it seems to me, is the Itunes store.

    1) A bazillion gazillion people use Itunes (numbers rounded down)

    2) Itunes has loads of content available now.

    3) Itunes has an almost unlimited capacity to expand it’s content offerings.

    With Apple TV, anyone who can use Itunes will be able to view anything on Itunes (including Podcasts, etc) on their TV.

    IF this is successful (and I’m not arrogant enough to believe that I can truly understand and fortell what market forces will do) – but IF this is successful, then Itunes will beome the “pipe” that delivers all digital content to our TVs. Think for one second of the power, the leverage, that that will give to Apple. They’ll be like Amazon or Ebay. There may be better stores than Amazon or better auction sites than Ebay, but they both have critical mass. No one can compete with Ebay because sellers know that there are millions of buyers looking for their products worldwide. And buyers know that almost anything they could wish for is available on Ebay.

    Likewise, if Apple builds that kind of critical mass with Itunes/Apple TV, then Apple will be able to impose it’s will on content providers.

    And TV viewers will think of Itunes as the new way to watch digital content on the TV – or computer or Ipod.

    The possibilities are mind boggling.

  6. Yes it will.

    Pro Apple TV

    First – Most people will be upgrading TV’s in the next three years for HD if they have not done so already, and TV’s are all going widescreen in the next couple of years. Tv shows are being shot in widescreen now but clipped for regular TV’s.

    Second – Just look at all the TV shows and movies being downloaded from iTunes. These people will keep the Apple TV going for years.

    Third – Add basic games and it will be even more content relying on it.

    Forth – Do the Math 4 to 5 million people buy one @ $299 will be revenue of 1.1 to 1.5 billion not counting all the revenues they get from iTunes downloads. The iPhone will sell a lot but at the current price of $499 they would have to sell over 2 million or so.

  7. Phones are THE biggest tech market. tv may have some popularity, but no way will it sell more than iPhone. I swear someone’s hyping it now to be some sort of sales phenomenon only to be able to call it a failure when it “undersells.”

  8. I think it could be since with the iPhone, regardless of popularity there will still be the issue of people with existing contracts waiting. Not just to see out a contract but also to see how it does. Apple tv is entirely new and adds on to existing products, it’s not replacing anything so could be massive. I suppose it depends how good it is on the windows side for managing pictures etc.

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