Analyst: Apple Ready to Lead In the Digital Living Room

March 15th, 2007 at 3:00 PM - Apple Stock Watch by Jeff Gamet

AppleTV hasnit shipped yet, but Piper Jaffray analyst Gene Munster thinks the home theater box is already poised to steamroll over Microsoftis Media Center. He commented "We believe iTunes is a Trojan horse media center, which will give Apple a significant early lead in the digital living room."

Mr. Munster estimates there are about 110 million iTunes users - the key market for AppleTV. In comparison, there are only about 12 million Windows Media Center users, even though the software is pre-installed on about 23 million PCs. Based on those figures, Apple already has a 10x head start over Microsoft in gaining control over digital home entertainment.

"With a wireless media streaming device simplicity is key, and Apple carried its focus on simplicity to this product," he said. "During our tests of AppleTV at Macworld we found it very easy to use with a simple remote and intuitive navigation."

That ease of use will likely translate into sales for Apple. Wall Street is estimating Apple will sell 4 million AppleTV units in calendar 2008, generating about US$1.2 billion in revenue.

Mr. Munster is rating Apple as "Outperform" with a target price at $124. Apple is currently trading in the pre-market at $89.40, down 0.17 (0.19%).

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