Piper Jaffray analyst Gene Munster made some comments about a rumored TV built by Apple. Among them:
Gene thinks Apple TVs will come in a range of sizes, in contrast to most Apple products, which are one-size-fits-all. Part of Apple’s goal here, Gene says, will be to appeal to young Apple fanatics who can’t afford or don’t have room for a 50-inch flat screen.
Gene thinks Apple’s TVs will be priced at TWICE the prevailing market price for a normal TV: $1,600, for example, for a TV of a similar size from another manufacturer that might cost $800. (If this is really the case, Apple will be able to preserve its extraordinary profit margins).
I had to read these two quotes three times to make sure that I wasn’t missing something…
How can you say that Apple’s target is young Apple fanatics who can’t afford a 50-inch flat screen, then say that they will charge twice (actually, “TWICE“) as much? Aren’t those conflicting statements?
Even if Apple’s goal is to match “its extraordinary profit margin” with a TV, they wouldn’t need to double the price. Apple’s gross margin for the first three quarters of 2011 has been between 38.5% and 41.7%. Even if Apple includes all the components from an Apple TV inside their TV set, they could still maintain their standard margin with a markup of about 50%. Not that I think they would feel the need to maintain that margin with TVs1.
Also, I’m not sure I understand the purpose of the TV if it still requires me to subscribe to a TV provider like cable or FiOS. I don’t see much of a benefit over the current Apple TV device unless the Apple TV set can take in, and more importantly, control the feed from the cable/FiOS. Even then, what’s the benefit over the current Apple TV?