As per a survey concerning ‘Smart TV’ , there exists a significant potential from the launch of an iTV, with consumers willing to pay over 20 percent premiums, for the TV from their favorite brand Apple Inc. (NASDAQ:AAPL). Also, consumer’s interest level is “more than twice the initial interest in purchasing an iPhone and iPad”. The survey included 1,568 heads of US households and was conducted in September.
The survey reveals that 3 percent of the respondents were unaware if they have a Smart TV and “those that do, actually use their TV to connect to the Internet less than those without a Smart TV”. Highlighting the fact that many users were unhappy with their current TV sets, they were ready to pay a hefty premium for an Apple-branded Smart TV. The survey points out a massive 13 billion unit opportunity in the US. With a premium of 20 percent, or $1,060 on average, “representing an incremental $13B revenue opportunity and $4.50 EPS at corporate margins, while global success could increase the opportunity by 4 xs”, says the report.
47 percent of the respondents were interested in buying an iTV, which is more than twice the 23 percent and 21 percent interested in purchasing an iPhone and an iPad, initially. As per the survey, a user who owns at least one Apple device is four times more likely to buy an iTV than those who do not use any Apple devices. Compared to 27 percent of iPhone and 23 percent of iPad users, which are “extremely interested” in purchasing an iTV, only 5 percent of the non-owners of Apple devices are interested in buying an iTV.
The recent patent filings, supply chain data points, and CEO’s statements, all hint on possible work on a TV platform. The iPhone maker has several options to enter the market, but the report from Morgan Stanley believes the strategy could focus less on content and more on the operating system – including search, ease of use, interaction with and control of TV sets.
The foray into the TV industry is not without challenges. TV’s have a nine-year average replacement cycle. The life cycle of TVs is significantly higher than any other industry Apple Inc. (NASDAQ:AAPL) currently competes in: desktops and notebooks have a roughly a four-year useful life, tablets – three, and phones – two. Another concern for Apple Inc. (NASDAQ:AAPL) will be the thin margins that the TV industry offers. The market leaders in the industry, LG Electronics Inc. (KRX:066575) and Samsung Electronics Co. Ltd. (LON:BC94) (KSE: