Could Apple be at work on a TV set? That's a theory Piper Jaffray analyst Gene Munster has UBS Investment Research analyst Maynard Um with a report today about how the gadget maker could expand its market cap by delving into new services in the coming years, notably the TV set business and an expanded version of its tech support offerings.for years now. Joining him is
Um suggests that Apple's in a good position to boost its market cap by anywhere from $50 billion to $100 billion by getting into the business of making and selling connected TV sets. The group cites growth in both the flat-panel TV market, as well as Internet-connected set-top boxes. Whatever Apple would be creating would be a mix of those two that heavily leverages the company's existing media services, the report suggests.
"Our view is that Apple is unlikely to enter the television set market without a core level of differentiation. We believe that differentiation will be its iTunes ecosystem and, in particular, its content," the report says.
Um goes on to argue that Apple's big cash balance can make it more competitive when it comes to getting content for that ecosystem. That strategy could eventually give it an edge over existing players like Netflix with a bigger library and a delivery method that makes use of its growing data center capacity.
But what about selling such a device? Would customers just buy a big flat screen TV at an Apple store, take it home and plug it in? That's what they can do now with the Apple TV, Apple's $99 set-top box, along with its computers and mobile devices. Um suggests that Apple could expand its Genius Bar support services with a paid element (not to be confused with AppleCare, or ProCare--Apple's existing paid support options), to help the customer get it set up back at his or her home.
"What we envision of Genius Bar is similar to the Geek Squad, which is fairly well known in the U.S. as Best Buy's service department to facilitate technology adoption," the report says. "In many respects, Apple already offers a number of these services in-store. However, in our view, one primary difference between a Geek and a Genius is that a Geek has a car. If Apple ultimately enters the television set market, we believe it may have to offer some type of installation service (wall mounting, delivery, etc.)."
Um suggests that the same install from this "Genius Squad" visit could be used to help set up and install other Apple products like the company's wireless networking devices. That same service could also end up laying the groundwork for what Um suggests as another business Apple could deliver later on down the line, which would be home automation technologies:
The market for home automation today is fragmented and a number of standards would have to come together for this to likely become more feasible. However, we can envision a home where the television set or tablet, becomes the central console to control the home (lights, security cameras/alarms, audio, video, home theater, HVAC/climate control, door locks, appliances, et al) and that can be accessible from outside the home via a web browser or iPhone application (facilitated through a service from its data center). This, in our opinion, would drive further halo effects or bundled sales of Apple's products, particularly if the company transfers its ease of use to these systems.
A report by Dailytech last month cited an anonymous former executive at Apple suggesting that the company was hard at work on a TV set. That set is said to embed the existing Apple TV set-top box technologies alongside a modified version of iTunes. The report also suggested that such a device would actually be made by another manufacturer, and not Apple.
Apple rival/frenemy Googlelate last year with combination of set-top boxes and TV sets that include its Google TV software. Unlike Apple's Apple TV offering, which is primarily focused on delivering rented and purchased content from iTunes, Google's strategy is to blend in with TV content you watch through your cable operator and let users do Web searches while watching programming. Google has also approached game developers, urging them to design TV-friendly entertainment with compatible Web technologies.
Um notes that if Apple is indeed working on a TV set, it's not coming this year. In the meantime, he suggests that the company will be beefing up its content offerings and working on a more feature-filled version of its Apple TV set-top box.
Apple's last major release of the Apple TV was last September, with the company introducing a shrunken-down box that ditched the local storage and component plugs from the back of the unit. The newer version instead leverages the company's AirPlay technology to stream media from other networked devices.
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