Revenue Density, Supply Chain, Retail Stores and ?cracking? the TV

  • Posted: 08 May 2012 08:16 AM #16

    Burgess - 08 May 2012 05:34 AM
    gliderplane - 08 May 2012 04:28 AM

    Burgess, it’s clear Apple would make nice margins with ATV. But I don’t think that’s the issue. Fifty percent margins don’t move the needle for Apple if they only sell 10 million ATVs per year (ATV could not reach anywhere near the volumes of iPhones and iPads). So basically, there’s no reason for Apple to introduce the full ATV (or at least for shareholders to care) unless Apple can make money from ATV in some indirect way. Am I missing something?

    10 million units in year one x $1250 ASP = $12.5 billion in revenue. assuming your (admittedly generous) 50% Margin, it would be 6.25 billion in gross profit, good for about $5 EPS. That would be a far larger market than the ipod currently is, and would continue to grow in future.

    I can’t think of too many other markets apple could enter and gain $10 billion+ in high margin revenue in such a quick time, which is why I think its a lock in for a release soon.

    Ancilliary revenue will be like that of other apple devices, with apple taking a cut of apps/content like it already does for little to no profit. perhaps there is a chance apple could also sell some high margin bluetooth game controllers, but it seems unlikely (then again it sells very high margin iPad smart covers, & iphone bumpers with success).

    Point taken. Still, an additional $12B in revenue represents about 6% of Apple’s revenues next year, which isn’t enough to move the needle. Plus, there won’t be small-device-like growth given the long upgrade cycle of TVs and that TVs are a one-per-household, rather than a one-per-individual, type of product. (Or maybe not. Can it somehow be a one-per-room product?)

         
  • Posted: 08 May 2012 10:29 AM #17

    Hi all,

    Great site, first post. I’m a noob so quick question before I start. What does “WS” refer to that I see in posts all the time?

    One thing I never see mentioned in discussions about the new iPanel is audio. Except for people saying SIRI wouldn’t work because when other people are in the room there’d be too much noise for it to work. On the website TED there’s a speech by an inventor who invented directional audio. With his device/invention you could lie in bed beside your sleeping wife and put the tv at full volume and only you would hear it. If that was reversible, you could interact with SIRI and it wouldn’t matter about all the noise around you. I wouldn’t put it past Apple to have been in touch with this guy or to have been working on something similar. It’s very cool technology.

    I’ve racked my brain trying to imagine what this new TV would be like but other than all the regular stuff that’s always mentioned I’m stumped (but then that’s why I don’t work for Apple). grin The one thing I’ve read though that I thought might have some merit, was having the TV subsidized by all the major carriers in the same way that Iphones are. This would make an expensive TV more affordable for the masses and make more profit for Apple. It would also be good for the carriers because they could lock you into a contract. But I think that would only work, if they unbundled their programming. In the end Apple’s usual secrecy about new products really works in building up anticipation and demand without knowing what the final product will be like. Can’t wait.

         
  • Posted: 08 May 2012 10:37 AM #18

    zzmac - 08 May 2012 01:29 PM

    Hi all,

    Great site, first post. I’m a noob so quick question before I start. What does “WS” refer to that I see in posts all the time?

    One thing I never see mentioned in discussions about the new iPanel is audio. Except for people saying SIRI wouldn’t work because when other people are in the room there’d be too much noise for it to work. On the website TED there’s a speech by an inventor who invented directional audio. With his device/invention you could lie in bed beside your sleeping wife and put the tv at full volume and only you would hear it. If that was reversible, you could interact with SIRI and it wouldn’t matter about all the noise around you. I wouldn’t put it past Apple to have been in touch with this guy or to have been working on something similar. It’s very cool technology.

    I’ve racked my brain trying to imagine what this new TV would be like but other than all the regular stuff that’s always mentioned I’m stumped (but then that’s why I don’t work for Apple). grin The one thing I’ve read though that I thought might have some merit, was having the TV subsidized by all the major carriers in the same way that Iphones are. This would make an expensive TV more affordable for the masses and make more profit for Apple. It would also be good for the carriers because they could lock you into a contract. But I think that would only work, if they unbundled their programming. In the end Apple’s usual secrecy about new products really works in building up anticipation and demand without knowing what the final product will be like. Can’t wait.

    Very interesting idea. In areas with cable TV competition, telcos could sign up customers to multi-year contracts in exchange for a subsidized ATV. Without telco competition (which describes many geographic areas), telcos have no incentive to lock in customers to multi-year contracts. I don’t know what fraction of the US has telco competition (TW has a monopoly in my area). Perhaps telcos offer cable TV subscriptions and ATVs following the smartphone model? Is this plausible?

    (And WS=wall street, btw.)

         
  • Avatar

    Posted: 08 May 2012 11:03 AM #19

    zzmac - 08 May 2012 01:29 PM

    Hi all,

    Great site, first post. I’m a noob so quick question before I start. What does “WS” refer to that I see in posts all the time?

    One thing I never see mentioned in discussions about the new iPanel is audio. Except for people saying SIRI wouldn’t work because when other people are in the room there’d be too much noise for it to work. On the website TED there’s a speech by an inventor who invented directional audio. With his device/invention you could lie in bed beside your sleeping wife and put the tv at full volume and only you would hear it. If that was reversible, you could interact with SIRI and it wouldn’t matter about all the noise around you. I wouldn’t put it past Apple to have been in touch with this guy or to have been working on something similar. It’s very cool technology.

    I’ve racked my brain trying to imagine what this new TV would be like but other than all the regular stuff that’s always mentioned I’m stumped (but then that’s why I don’t work for Apple). grin The one thing I’ve read though that I thought might have some merit, was having the TV subsidized by all the major carriers in the same way that Iphones are. This would make an expensive TV more affordable for the masses and make more profit for Apple. It would also be good for the carriers because they could lock you into a contract. But I think that would only work, if they unbundled their programming. In the end Apple’s usual secrecy about new products really works in building up anticipation and demand without knowing what the final product will be like. Can’t wait.

    What if, you used your iPhone/iPad/AppleTV remote as an input device for Siri? The TV wouldn’t need Siri, but the AppleTV box would. Just a thought.


    :apple:

         
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    Posted: 08 May 2012 02:58 PM #20

    Lots of good ideas and discussion here.  I’ll throw in my two cents.

    I’ve seen it mentioned on TMO, but missing in this thread: current TVs are horrible black boxes when you’re trying to get pixel-for-pixel content shown on the screen, thanks to the legacy “over scan” functionality.  Each TV has a different overscan percent.  In theory, the HDMI spec should allow for passing over scan information and even asking for it to be off, but no one seems to implement that.  If Apple made their own TV they could fix this.

    Apple doesn’t necessarily need to make their own TV if they can partner with people who will make TVs up to Apple’s quality standards, and then have a “Made for AppleTV” logo.  You can then attach an AppleTV box and the box would take over all the TV controls, eliminating the need for complex remotes, using Apple’s interface to control viewing of content.  They’d have to add an interface to the AppleTV’s UI for handling cable, DVD, etc. inputs, but it’ll still be better than the myriad UIs that exist on current TVs.

    I like the idea of a subsidized AppleTV, but as mentioned, that would need carrier competition.  In my case I can’t choose cable company, but I choose instead to not have cable at all and use only the internet.  Apple could focus on this market if they want.  I can choose internet providers between the cable company, DSL, or satellite.  Cable and DSL are comparable quality, so at least I can choose between those.  So if the subsidized TV idea is to work, then maybe it could be ISPs locking customers into TV content subscriptions over their internet connections.  Netflix or Hulu?

    Going after only the top 5-10% of the market sounds more like an older incarnation of Apple.  The iPad incarnation of Apple makes products that can reach many more consumers.  I would be extremely disappointed if the Apple HDTV was targeted only at people who cared to spend lots of money on a TV setup.  I would not be in that group.

    If Apple only makes the small AppleTV box and partners with people to allow it to connect to “made for AppleTV” panels, then Apple retains the revenue per volume ratio it currently has, as mentioned in the original post.  Affiliates like Walmart and Best Buy can put the ATV boxes right next to the associated 3rd party HDTVs in their stores and promote them as a combo.  The only thing that bothers me is that Apple might not like the idea of an extra cable that customers have to connect.  When the original iMac came out, one of the first things I noticed when I removed it from the box was the brevity of the setup steps.  Today’s iMacs have even fewer, just the power cord needs connecting thanks to Bluetooth.  But it might work OK to connect TV -> power, AppleTV -> TV if they are made sufficiently compatible. (TV would have to let AppleTV control inputs, would have to pass power to AppleTV, etc.)