The thought of an Apple iTV powered by Siri and iOS with access to hundreds of thousands of applications and media content has us salivating, but our opinions aren’t reflected on Wall Street where at least one analyst thinks the television could be a big business mistake for Apple. In a more stunning revelation, research firm Strategy Analytics also revealed that a large percentage of consumers may not be willing to pay more than $1,000 for the TV set.
In a recent note to clients, Andy Hargreaves from Pacific Crest said that an investment in an Apple TV “makes little sense without a unique TV content offering.” Hargreaves also said that he doesn’t believe cable networks are going to jump at the chance to provide content for Apple’s television, either, if the content “risks cannibalizing existing revenue.” As such, the analyst argues that a “unique Apple service and an Apple television unlikely.” Bloomberg on Tuesday reported, however, that Disney “would consider” providing ESPN content to the set.
Hargreaves doesn’t stop there, though. He also argues that Apple desperately needs the retail space for selling its other products. “An Apple television would be a terrible use of retail space relative to iPhone, iPad or the Apple TV set-top box,” Hargreaves argued. “A 46″ Apple television would likely generate less than 1/200th the gross profit per cubic foot as an iPhone at retail, and less than 1/50th the gross profit per cubic foot of an iPad. We believe this is critical given the limited inventory space at many Apple and partner stores.” To counter his argument, we believe Apple could sell its television through other retailers such as Best Buy or strictly through its website, which would help alleviate any concerns about gross profits per cubic foot in Apple Stores.
There’s demand for an iTV, too. Strategy Analytics recently published the fingins from its 2012 ConsumerMetrix survey, which concluded that “nearly half” of Apple’s current iPhone customers would be “very or somewhat likely” in the market to purchase an iTV. It can’t cost too much, however. The same survey found that only 35% of those polled in the U.S. would be willing to spend 1,000 or more for the television set and just 14% were willing to cough up $1,600 or more.
We may have a bit to wait until the product comes to fruition. While one analyst believes Apple is preparing to launch the device during the fourth quarter of this year, another analyst doesn’t think such a product will exist until 2014.
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