One Swallow does not a Summer make, but finally a second US financial analyst has swallowed the idea that Apple is preparing to enter the connected TV space, with a device of its own. This one comes in the form of Morgan Stanley analyst Katy Huberty who delivered a research note to investors this week saying that there was evidence in Asia that Apple is working on a Smart TV prototype.
For about 30 months or more Piper Jaffray analyst Gene Munster has been banging on about something that is fine logic as far as we are concerned, that Apple would come to market with a TV brand ‘ complete with screen and not the $99 Apple TV set top device.
The timeframe Huberty set is 2012, which has more or less been Munster’s guess all along. There are two ways for Apple to dominate here, and they are both frightening to everyone in this eco-system ‘ first Apple could easily create a pairing between its TV and the iPad, and this would be a complete no-brainer if Apple delivers what it has secretly wanted for years ‘ a cable TV competitor, rather like the one that Sezmi has launched ‘ a bouquet of quality TV programming which could be bought in a low priced offering.
If Apple was to deliver such a series of TV channels it would immediately be a potential TV replacement for the 20 million homes or so in the US that still use free to air TV using antennas, and an immediately threat to low end pay TV subscriptions. But since it would all come over the internet, Apple would also be able to deliver it as easily to an iPad (and only an iPad, no other Tablet) as well as its own TV sets. Apple’s past method of working would be to protect such a set up with its own DRM ‘ a modified version of Fairplay, and have interactivity between multiple in-home tablets (iPads) and the TV set.
Outside of the US Apple could offer the same tools to existing pay TV providers or internet only OTT players, and partner with TV sets and iPads side by side.
The entire edifice of this story rests on the fact that Apple is one of the few major companies to have the gall to try something like this, that its disruptive nature suits Apple’s style and also the idea that around $4 billion has been made in pre-payments ‘ something acting CEO Tim Cook fessed up about this week, which some have speculated as prepaying for LG and Toshiba screens, which apparently includes screens between 27 inches and 50 inches, the largest of which Apple doesn’t use right now on its Macs.
The truth is that if Intel can make CE4100 chips and target them at TV sets and set tops such as Google TV and playing App Store class TV programs, then why can’t Apple deliver the finished article around the User Experience and its own screen/set top combination.
Huberty points out that Apple would also be able to take iPod Touch style gaming, DVR features and TV based FaceTime to market on the back of such a move. Again this makes perfect sense and we like this move.
And given the forecasts which most TV researchers are issuing around 200 million plus TVs marketed per annum, and how at least 50% are likely to be shipping as Connected TVs any year now, that means Apple would be launching at more or less the right time to take a top 5 spot in TV supply, and use it to spur Tablet sales. If its longed for cable TV bouquet deal could also be tied up at that time (maybe cable networks will never let Apple have their content, but don’t bet on it) then it would be set fair for success regardless of what happens to its market share in both smartphones and tablets, which are expected to rapidly lose ground to Android. Apple’s last recorded word on this market is that it has no plans to enter the TV market. Sure.