An Apple TV: Impact on revenue

The latest rumor to make the rounds is that Apple will be coming out with a TV screen next year. If you follow my theory that the battle for technology supremacy will be fought over 4 different screens: computer, phones, tablets, and TVs, it makes sense that the company would expand in this field.

But how much would such an effort add to the bottom line?

Looking at the overall market

Looking at Display Research Data, the TV market seems to be around 50 million units per quarter on a global basis. Flat panel displays account for roughly 47 million quarterly units. So, on an annualized basis, it is fair to say that we’re looking at somewhere around 200 million new TV screens being bought globally across the industry as a whole.

On the revenue side, the market seems to be around $105-110 billion per year. So if we average things out, TV prices seem to average around $500 per unit globally. While sizes and features will change those price point, a quick look at your averag

e retail store shows prices ranging from $200-$2000 which clusters around certain sizes. For example, 32 inch screens, which tend to retail for around $300, are still popular, probably driving overall prices down.

How much could Apple capture?

But while those figures are for the full market, it is important to look at a breakdown of the current players. Today’s market is largely dominated by Samsung (with over a quarter of the market) and LG (with around 15% of the market). Here’s a high level breakdown of the top players, according to DisplaySearch:

Rank Brand Q1’12 Share Q2’12 Share Q/Q Growth Y/Y Growth
1 Samsung 25.9% 28.5% 18% 18%
2 LGE 14.6% 15.2% 12% 0%
3 Sony 9.4% 8.3% -5% -33%
4 Panasonic 5.3% 6.8% 38% -32%
5 Sharp 6.5% 5.0% -17% -32%
Other 38.3% 36.3% 2% -3%
Total 100.0% 100.0% 8% -6%

Source: NPD DisplaySearch Advanced Quarterly Global TV Shipment and Forecast Report

Now, let’s take a look at Apple’s market share capture when it first launches a new product. The iPhone, in 2007, captured 2.73 percent of the market and grew to represent 8.29 percent by its second year. Could Apple do similar numbers? Judging by how the different players are currently working out, this could put it in fourth place by year two, a goal that is not entirely impossibly to reach.

Let’s say, for simplification that Apple would capture 8-9 percent of the market. This would mean it would add between $8-9 billion per year to its top line revenue by doing so, creating a relatively small bump in its bottom line but in line with the way the iPhone grew (it made $10 billion in its second year on the market).

Could Apple then achieve the kind of meteoric growth that the iphone and ipad have seen? Possibly but the company will find itself, again, in competition with Samsung, a company that has been making its fight for smartphone supremacy more difficult.

What kind of TV?

The next question in assessing Apple’s potential position is how much it could charge for its offering. One of the consistent driver in Apple’s approach to markets is that it sees itself and wants to maintain the image of a premium brand. Thus, it makes it unlikely that the company would offer a 32″ TV as the price point for those has largely fallen into the commodity arena. And TVs in the sub-47″ range seem to price below $1000.

However, the 50-55″ world seem to be priced around $1500-2000, a price point that makes it comparable with the pricing for a high end 27″ iMac. As a result, I would not be totally surprised to see the company roll out a product line that would start at 50″ and expand to 60″ with price points ranging from $1,999 to $2,999.

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About the Author

Tristan Louis

Writing and working on the internet since 1993, I've launched 6 companies, of which 2 (internet.com and Earthweb) went public and two were sold (Net Quotient and MoveableMedia). My latest, Keepskor provides tools allowing anyone to develop mobile and connected TV games without writing a line of code. This is my personal site and all opinions here are mine.

  • http://cimasmetablog.tumblr.com Cima

    Good article! I was drawn to it partly because we just bought a new TV set this year but we haven’t fully maximized its smart TV functions yet. Maybe that’s where Apple could take advantage in order to command a price premium, making it easier and more enticing to use a smart TV.

    There seems to be something wrong with your layout. The title and search bar are floating over the text. I refreshed the screen and the problem’s still there.Just wanted you to know about it.

    • http://www.tnl.net Tristan Louis

      Thanks for letting me know. What browser are you using?

      • http://cimasmetablog.tumblr.com Cima

        Google Chrome.

        • http://www.tnl.net Tristan Louis

          Hmmm. That’s odd as it’s the browser I’m using too. Could you send me a screenshot and I”ll try to debug from that.

      • http://cimasmetablog.tumblr.com Cima

        Hope this helps, I’ve uploaded a screen capture.

        Also, I’d like to wish you and your readers a happy holiday season! .

        • http://www.tnl.net Tristan Louis

          Thanks. Fixed :)