Analyst: Apple to Launch Video “Assault on Living Room”

| Apple Stock Watch

Apple TVApple is planning to launch a video-based “assault on the living room” that includes delivery of premium network content and other video offerings, according to Jefferies & Co. analyst Peter Misek. The analyst believes Apple will unveil a disruptive product and/or service to market that could bring both subscription revenue and new hardware sales to the company.

In a research note to clients covered by The International Business Times, Mr. Misek said that he spent the last several weeks checking with “developers and content providers,” and believes that Apple is negotiating with those content providers to bring content to its devices, and possibly to a new TV he dubbed “iTV.”

“We believe Apple is about to launch a new video-focused cloud-based service. In addition to subscription revenues, we think Apple could potentially benefit from a halo effect that increases units and average selling prices for its existing products and provides a foundation for the launch of an iTV-like device,” Mr. Misek wrote.

To that end, he believes Apple’s North Carolina data center is set to go live soon, if it hasn’t already, and he also wrote that he believes Apple is in the process of developing additional data centers in the U.S. and Europe.

He said that he found development plans for several such centers well under way, and that while he could not specifically trace them back to Apple, he found they were similar to the center Apple is building in North Carolina.

He believes that developing such a network of data centers will allow Apple to fully implement cloud-based services that will bring customers to its mobile products and keep them there, and that this will allow Apple to maintain a higher-than-expected average selling price (ASP) for its tablets and smartphones.

Steve Jobs and The One Last Thing

Mr. Misek believes that Apple CEO Steve Jobs is working on a “final hurrah” in his tenure at Apple before stepping aside. He thinks that Mr. Jobs wants to do to video and TV what he did to music (iTunes) and smartphones (iPhone), which is completely disrupt them by revolutionizing the industry.

“We would find it easy to believe that Steve Jobs’ final hurrah before turning the reins over would be to revolutionize video much in the same way Apple has transformed the mobile, computing, and music world,” Mr. Misek wrote. “It is also notable that his authorized biography is due in 2012.”

To that end, he thinks that Apple is negotiating directly with content providers to license their content for a streaming service being handled by its data centers.

“We find it notable that the content companies, citing a lack of domain license, asked Cablevision to remove channels from its iPad app,” he wrote. “We believe these same companies are negotiating some sort of deal with Apple.”

Apple could be planning to deliver this content to the living room via a new piece of hardware he called the iTV (he didn’t address why Apple wouldn’t simply use its existing hobby of the Apple TV to do so). The iTV would be an Apple-built TV that brings the Internet to the living room, but does so by using the iPad and iPhone as a remote control and input device.

He wrote, “We believe a full browsing experience potentially incorporating an iPad, iPod Touch, or iPhone as remote control or input device is very possible. We think Apple could provide an extremely elegant solution effectively allowing the user to move content between the multiple screens.”

In Short

Though he didn’t put it this way, Mr. Misek believes that Apple is going to be competing with both the cable companies and its own streaming partner, Netflix, and bring streaming subscription TV to the living room. Apple would take its usual 30% cut from subscription revenues, and reap additional hardware sales from existing products and what could be a new TV.

By The Numbers

To put numbers to all this, he upped his estimates for fiscal 2012 to a range of $150 billion to $171 billion in revenue, up from $134 billion. Consensus estimates currently have Apple at $118 billion for 2012. That makes Mr. Misek a raging bull, for those keeping score at home.

EPS for 2012 he is now estimating at $32 to $36 per share, up from his previous estimates of $28.50 per share and consensus estimates of $26 per share. He reiterated his “Buy” rating on the stock and a price target of $450.

Shares in Apple traded higher Tuesday. In the later afternoon session, shares were trading at $331.99, up $1.19 (+0.36%), on moderate volume.

*In the interest of full disclosure, the author holds a small share in AAPL stock that was not an influence in the creation of this article.  

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16 Comments Leave Your Own

Lee Dronick

Sounds plausible. It might prompt me to replace at least one of my CRT television sets.

mhikl

I don’t see a TV by Apple, Sir Henry. Would you then be able to use his service only on your iTV? Also, there would have to be a variety of sizes to fill all needs and so many people have already transitioned. These are pocket challenged times we live in.

However, AppleTV 2 software updated or a new iteration? That seems possible. If such proves popular, maybe the TV industry will choose to incorporate it into their TVs. But Apple making a TV. It isn’t in Apples interest to enter a saturated market.

But something is up. Something has been planned or been in the planning stage for some time. Data centres and cloud-based services seem to be on the horizon by every man and his uncle so Apple must have a strategy to set itself apart from and to guide all the others.

We live in exciting times and Apple seems to be in charge of the script.

Maybe Steve will leave Apple in the good hands of others. What is his next world project to wow and amaze us with? I don’t think he has the bucks of Gates nor does he need to buy his way into the better side of the history books but I am sure a Steve dime spent will outflank a Wile E. Gates dollar any day. Maybe that should be a nickel.

Lee Dronick

I don?t see a TV by Apple, Sir Henry

No I don’t either, that would not be a good move on their part, all of the TVs my house are analog. Well except for the Elgato eyeTV Hybrid connected to my iMac and even then I don’t yet have HD cable service.

Terrin

I don’t know why. Apple is a hardware company. To increase business it needs to sell more hardware and go into new markets.

Making a TV would be easy compared to a computer. Further, it already has relationships with all the flat panel companies.

An Apple TV would likely be beautiful. It probably would integrate well with all other Apple products. It wouldn’t have to offer more then two sizes. If the price wasn’t too outlandish, I would buy one. Especially if it had a retina like display.

My TV is eight years old. I keep think of replacing it with a flat panel of some sort. Then this rumor of an Apple TV pops up, and I hold off.

There are some people who will buy anything Apple makes. I think it would be a good move by Apple.

I don?t see a TV by Apple

ibuck

Does the $99 Apple TV device work only with digital TV’s? Or HD TV’s? And there’s no adapter for CRT TVs without HDMI input?

Lee Dronick

Does the $99 Apple TV device work only with digital TV?s? Or HD TV?s? And there?s no adapter for CRT TVs without HDMI input?

I don’t know about adapters to my TVs, but regarding the Apple TV this is from their their tech specs:

Compatible with high-definition TVs with HDMI and capable of 720p 60/50Hz,2 including popular models from these manufacturers: Hitachi, JVC, LG, Mitsubishi, NEC, Panasonic, Philips, Pioneer, Samsung, Sony, Sharp, Toshiba, Vizio, Westinghouse

The price is coming down on those new fangled flat panels, but I am not yet ready to get one. My wife is working full time and and going to college full time so she doesn’t have much time to watch TV. I am rereading the classics as well new books, and trying my best to be an eccentric artist.

There are few shows that we both enjoy, but it seems that our cable TV service is progressively moving them to HD so this Apple story is of interest to me.

cb50dc

These are pocket challenged times we live in.

True?and we may even move into another low phase before solidly emerging from this. That said, let’s assume it is a new TV, or more likely the new “why-didn’t-anybody-else-do-that” service, either of which will likely carry Apple’s typical higher initial cash outlay. Their goal would emphasize, as the analyst suggests, dumping a bucketload of WOW and ^$&$&#*@!! on the would-be competition, as with the iPod, iPhone, and iPad. Again they take the lead, and everyone else again starts scrambling with their me-too-and-cheaper crap.

Having once again established the lead, I can envision Apple being content with low output and sales for, say, the next 2-3 years; it won’t hurt ‘em. When the market comes back, they’ll already have moved into the 2nd or 3rd gen of whatever this one-more-thing is. They’ll have the rep again reinforced; they’ll have the faster-better tweaks; as the economy eventually and inevitably cycles back into bull mode, they’ll be READY for people who’ve been postponed the new purchase until they pass the 90-day probation for that new job.

Gonna be fun to watch, methinks.

jfbiii

I don’t see the TV part, either. The services part, absolutely…they’re already putting content reception devices in people’s hands. Those devices as the terminus of more and expanded services makes a lot of sense. Being able to to stream from those devices to a TV makes a lot of sense. But the TV itself just seems like a loser for Apple.

Lee Dronick

I just a thought. If Apple plans to deliver video content over the internet then that means bandwidth on our DSL and Cable services Both of them off their own video content and are also rattling sabers about tiered service.

mhikl

Gonna be fun to watch, methinks.

Ye & methinks the same.

Except:

. . . ; they?ll have the faster-better tweaks; as the economy eventually and inevitably cycles back into bull mode, they?ll be READY for people who?ve been postponed the new purchase until they pass the 90-day probation for that new job.

I’m really worried cbsofla. I just watched the documentary narrated by Matt Damon, Inside Job and it looks like your president has the same people back as consultants and in important positions on the economy and regulating markets. Those who made tens, hundreds and thousands of millions, not one has gone to jail and unlike Europe (following Canada’s and Australia’s lead) have not and will not be bringing in regulations. Now it seems to be the 1% of America’s wealthiest vs 99% other. Will there be a future for a prosperous America? I’m watching it again tonight. I hope I am wrong in my concerns.

This part of fun and games is about as much fun as watching one’s own hanging. Thank goodness for the Apple distraction.

Dean Lewis

AppleTV is an iOS device, so ostensibly it could be opened to app development. Therefore, ATV could have individual “channels” and app services, both paid and free, just like Roku, Boxee, and other devices currently have. I would suspect this is what Apple would do before starting its own service again.

I’m in the market for one now—preparing to cut my Cable TV and go ala carte with Netflix, stream rentals, purchases, and watching shows streamed via the TV channels’ own websites. If I bought today, I’d go Roku, even with the cool streaming from computer and iPad I can do with the ATV. If I was certain Apple was going to bring the apps to ATV, I’d wait for that. I’d much prefer Apple-vetted apps to downloading things willy-nilly and risking Roku or Boxee corruption/viruses (if they exist smile )

xmattingly

Mr. Misek believes that Apple CEO Steve Jobs is working on a ?final hurrah? in his tenure at Apple before stepping aside.

100% postulation, Mr. Misek. But thanks for playing.

FlipFriddle

Maybe Apple can work some magic with the only thing keeping many people tied to cable: live (especially local) sports.

I could see them changing the name of iTunes, or creating a separate app to handle video content. I’m sure the fact that a service they have named iTunes has a lot more than just music, is a little detail that nags at Steve.

FlipFriddle

I do agree that Apple is the only big tech company that has the R&D muscle and balls to roll the dice on something new and potentially disruptive. That’s not to say some small company out there is not going to change the scene like TiVo did. But the other big boys are too afraid of failure.

cb50dc

I?m really worried cbsofla. I just watched the documentary narrated by Matt Damon, Inside Job and it looks like your president has the same people back as consultants and in important positions on the economy and regulating markets… Now it seems to be the 1% of America?s wealthiest vs 99% other. Will there be a future for a prosperous America?....

Agreed on the concerns. much of this (definitely NOT all, mind you) looks too similar to politics as usual. Even professional economists and other astrologers don’t agree on all these kinds of things; I won’t pretend to have an adequate analysis of the numerous interacting variables that create this situation. The only factor I do see as fairly constant is was highlighted in four words by the philosopher*  Robert Plant in ca. 1968: “Good Times Bad Times” (Track 1, Side 1 of the processed petroleum product, for those who frequent Nostalgia Lane).

In other words, yeah, it’s all cyclical. The specific highs and lows will vary?and who knows, the long-term (say, 50-100 years) may indeed slope downward on average. That warrants its own thread, in a different context, so I’ll wrap up by responding to the proper focus here:

... Thank goodness for the Apple distraction.

Ah, where it counts most, wethinks the same. Thou art indeed a scholar.

* Or “philostopher,” for the true cogniscenti wink

cb50dc

Mr. Misek believes that Apple CEO Steve Jobs is working on a ?final hurrah? in his tenure at Apple before stepping aside.

100% postulation, Mr. Misek.

I see some plausibility here, as one whose cancer diagnosis gave me a statistical expiration date of February 2009 (but I never was good at following directions): I can imagine Steve realizing that yeah, he *may* be around to bring iHologram to market, but, given knowledge private to only his doctors and himself, maybe he also knows a pragmatic likelihood of at least declining health, enough to inhibit his participation.

No two cases are alike, of course, but given that I’m already two years beyond my bell curve expectation, it’s no surprise that in the last six months my numbers have finally begun increasing steadily (and that’s bad). Chemo may be slowing it, but the steady inclince continues. So realistically I don’t expect to be around for more than another year or two, if that much. Meanwhile, my wife and I have been more actively pursuing possible “last hurrahs” of travel and other interests while we can.

No, I’m not a doctor, and I haven’t even played one on TV, but I have slept many nights at Holiday Inn Express, AND I was a diligent watcher of “ER” and “St. Elsewhere.” That level of medical expertise does not warrant my presuming to diagnose/prognose (?) Steve’s condition. I can appreciate the very plausible outlook, though.

My preference? That 20 years hence, Steve christens the first iStarship, taking Terabit Internet to new worlds, new galaxies, where no bandwidth has gone before. :D

(Of course I saw “Contact” and so I know we’ve been sending out all kinds of signals for decades now! ! Gimme a little artistic license, OK?)

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