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Apple TV demand may drive Samsung-sapping sales

Cook, consumers keenly interested in iTelly

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The idea that Apple is working on some kind of smart TV refuses to die, the notion regularly refreshed by rumour and the occasional soundbite from senior company executives. CEO Tim Cook only last week expressed his “intense interest” in the evolution of the TV in a nudge, nudge, wink, wink interview with US TV channel NBC.

The latest contribution to this ‘will it, won’t it’ debate comes from Katy Huberty of Morgan Stanley, a financial services firm. The gist of Huberty’s report is that a significant number of US families are very interested indeed in owning an Apple-branded television.

Specifically, 11 per cent of Huberty’s 1568 survey sample - folk who claimed they head their household - identified themselves as “extremely interested” in buying an Apple gogglebox. A further 36 per cent said they would be “somewhat interested”.

Ignoring the latter - figure they like the idea, but may yet decide the product is too pricey or doesn’t do as much as they’d like it to do - and you’re looking at a potential market of 13 million sets in the States alone. If the others decide to buy too, that could add a further 43 million sets to Apple’s telly tally.

It goes without saying, people who already own Apple kit are more likely to want an Apple-branded TV too. However, rather a lot of respondents - 56 per cent - indicated they were willing to pay more for it than they had for their current set.

While only ten per cent said they’d cough up more than $2000 (£1240), 46 per cent said a price of $1000 (£620) or more would be acceptable. The average price paid for respondents’ current sets is, the survey reveals, $884 (£548).

That suggests not only a real interest not only in an Apple TV, but also an assumption that such a product will do sufficiently more than those of rival suppliers to justify a price premium.

Let’s say Apple prices its TV at $999, a nice, round number of the kind favoured by Apple. That’s $13-43 billion the company could reasonably anticipate making in sales revenue out of the product, Huberty concludes. And that’s in the US - you could probably double the total for global sales.

Of course, it’s easy to express interest in a non-existent but exciting product concept, rather harder to put down your credit card for one when you also have real bills to pay. But while the world TV market is undoubtedly in decline - sales fell during Q3 2012 by seven per cent year on year, the market’s fourth consecutive quarterly fall - US sales are “steady, if not exciting”, says NPD DisplaySearch, a market watcher.

Some 58 million TVs shipped in Q3 2012. Most estimates put 2012’s total telly sales at around 210 million units. Not all of those are smart TVs, of course, but if Huberty's responses were to translate into real sales it would give Apple a share of between 6.2 per cent and 20.5 per cent, guaranteeing it a place in the list of top-five vendors and potentially putting it second only to Samsung, according to Q3 2012 market share figures from DisplaySearch.

Currently, Samsung (28.5 per cent) is followed by LG (14.0 per cent), Sony (7.0 per cent), Sharp (6.5 per cent) and Panasonic (6.2 per cent). Most, if not all, of these companies’ TV divisions are losing money, and both Sharp and Panasonic are particularly troubled.

Sharp has taken $121 million from Qualcomm, and is said to be talking to Dell and Intel for more. Apple has also been rumoured to be a suitor, not least since Sharp’s IGZO LCD technology was once suggested as the basis for Apple’s TV development work. It could buy into an ailing Japanese giant, but maybe the Mac maker would be better off waiting for one or more of these firms to fall. That’s certainly more its style.

Apple does appear to be playing a waiting game. With the market in the doldrums, it can afford to wait while it gets its proposition right - perhaps by winning content deals first - or for the market conditions to begin to improve. Disrupting a market - or being perceived to disrupt a market - is much easier to do when the established brands are in difficulty.

None of this, of course, shows that Apple is developing a TV set, only that, if it releases one, there will be buyers and there will be a fair few of them. For any manufacturer, knowing you have customers willing to cough up money for a product is a powerful commercial incentive. That's cash that Tim Cook is also extremely interested in. ®

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