Analyst: Apple to Boost Bottom Line with Genius Squad

| Apple Stock Watch

Apple may start its own Genius SquadApple may be planning on launching its own “Genius Squad” to offer on-site customer support, according to UBS analyst Maynard Um. He expects the new customer support options, along with a push into the TV set market, could be in Apple’s plans as the company moves forward.

“While Apple still has growth potential in its existing markets, we believe entry into new areas (TV sets, “Genius Squad”, et al) present market cap growth opportunities,” Mr. Um said. “We expect Apple to enter the TV set market and if it achieves similar success as in the handset and PC markets, we see potential for an incremental $50 to $100 billion in market cap.”

Mr. Um added that much of Apple’s increasing value is coming at the expense of its competitors. “While Apple’s increase in market capitalization is partially a function of the industry growth, the greater majority appears to be from a shift in market value away from incumbent vendors. This appears to be true particularly for the handset market but also evident in the PC market,” he said.

The need for a “Genius Squad,” as Mr. Um calls it, would be to offer on-site customer support and product installation. Specifically, he sees the service as an important component for a push into the television market to handle TV deliveries, set up and wall mount installation.

These mobile Geniuses would also handle on-site repairs, network setups, training, troubleshooting, and other customer service related needs.

Mr. Um likens these mobile Geniuses to Best Buy’s Geek Squad. “In our view,” he said, “one primary differencebetween a Geek and a Genius is that a Geek has a car.”

While there isn’t any evidence that Apple is planning on launching its own Genius Squad, there are at least hints that the company could be slowly moving in that direction.

Apple, for example, used to act as a liaison to connect Apple Consultant Network members with potential customers. Now, however, Apple controls the entire process, and even curtails the contact ACN members have when interacting with the customers they connect with under their own business name.

The changes Apple has made to its ACN to customer connection system could be the first step in the move to a Genius Squad. It could also, however, simply be another way Apple is trying to control the overall customer experience.

Mr. Um is expecting Apple will move into the TV market by teaming up with an existing manufacturer to add Apple TV features to highlight services like the iTunes Store. He also expects Apple won’t be releasing its own branded TV any time this year. Instead, he sees Apple focusing on gathering more entertainment content before jumping into the TV market.

“In time, we expect Apple to secure enough content (TV shows, movies, etc) to enter the television set market with enough differentiation without having to rely on others for content,” Mr. Um said. “In fact, we would look to its current Apple TV product as the precursor to a television set — only when Apple TV matures and grows in functionality and content do we believe it could make its way into an actual television set.”

Mr. Um is maintaining his “Buy” rating and $510 target price for Apple’s stock. Apple is currently trading at $356.84, down 2.87 (-0.80%).

Comments

Lee Dronick

They probably won’t be driving VW Beatles. Probably Chevy Volts, Teslas or something like that.

ibuck

Would Apple’s mobile geniuses be as busy as a Maytag repairman?

; )

ViewRoyal

I can’t see a “Genius Squad” being a smart move (or much of a money-maker) for Apple.

In the Windows world, this type of service makes most of it’s money from cleaning up virus-ridden PC’s.

Since there is no need for that with Macs, a major source of income would be invalidated.

Also, Windows PCs tend to slow down or crash after a while, especially after doing third-party installs, and need a service to “tune up” those PCs. But this is not a prevalent problem with Macs.

Apple’s walk-in service at its stores are sufficient for most people. Having this service in the store is an added benefit for customers at Apple Stores… but Apple could not make much of a profit by having this service only.

Chandra Coomar

If Apple has even modest plans for the spread of OS X and OS X Server in the SME/Large Enterprise markets, it’s a good idea to develop the necessary infrastructure and resources now.
Played right, there is a lot of money to be made in ASS (!). No, not that. After-Sales Services.

diverreb

I can see Apple developing it’s own iViruses, since they are so into controlling the user experience.  They would only be a minor PITA, just enough to make you want to call the Genius Squad to get it cleaned up.  It would likely contact the Squad on it’s own, set up the appointment, then automatically charge your Apple Account.  Very elegant….  grin

russell

So what you mean is that Um erred…

R.

Lee Dronick

Good one Russell

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