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Analyst: Apple TV May Grab a Third of the Set-top Market

Wednesday, February 21st, 2007 at 1:15 PM - by

The Apple TV, set to hit store shelves before the end of February, and could potentially sell two million units before the end of the year, according to Deutsche Bank analyst Chris Whitmore. Those sales could lead to a 20 to 30-percent slice of the living room entertainment box market in the next few years, reports Red Herring.

The US$26 billion set-top entertainment market already includes Sony and Microsoft, and Apple's entry onto the playing field will likely heat up the battle for market dominance.

Mr. Whitmore commented "Bill Gates laid out Microsoft's Xbox IPTV strategy at the Consumer Electronics Show in Las Vegas just days before the Apple TV debut, setting up a battle royal between Microsoft, Apple, and Sony."

Apple's set-top box will first lead to increased revenues from the existing iTunes user base, but will eventually start to chip away at DVD and CD player sales, he said.

The potential market for the Apple TV could drive a $5 billion to $7 billion incremental revenue for the company, and a $0.50 or higher EPS.

Apple Stock is currently trading at $88.83, up 2.93 (3.41%).

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A guest said: (hide)

Wed Feb 21, 2007 3:06 pm

I simply don't buy this assessment at all. First of all, unlike the x-box, DVD or sony, Apple Tv requires the user have a wireless network at home on top of thier high speed internet. And I simply dont buy that the install base for that is large enough that 2 million people will in next "few years" buy into this enough to boost Apples revenue 25% (whats a "few" exactly anyways?) I cry Bullsh*t on this. They are trying to drive apple up in short term so they can sell it later.

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Bosco said:

member since 03 Jun 2002 with 971 posts, unranked, send him a message or view his profile

Wed Feb 21, 2007 3:07 pm

Two weeks will tell. My bet is that they have their hands full with pre-orders. It was the smart way to manage a roll-out. Compare with Sony's PS3 which is still difficult to find. I ordered one. I really like the concept. I've got a new HDTV, a progressive scan DVD, and an HD DVR from my cable company. I'm sure that within 2 weeks, I'll have a good idea of how much I use each. The tradeoff between the DVD player and On Demand through the cable box right now is quality vs. price. For movies I watch once, it's $4 for TV quality, $15-$20 for DVD. I watch more movies thanks to On Demand, but if a keeper is out on widescreen DVD, I might buy it and watch it that way.

I DVR a bunch of shows and watch later. From iTunes Store, I've been buying South Park and BSG as they come out, along with a few others I was trying to watch before I got the DVR. I figure the DVR will mean buying only shows I want to keep from iTunes rather than buying shows I missed. Or maybe if I want to catch up on a show I ignored...

At any rate, we'll see where this thing fits in. One big problem it's up against is that the current crop of low to medium end HDTVs have just 2 HDMI connectors. HD Cable Box and Progressive Scan DVD. Had Apple slapped a DVD player in this thing, it would be a total no-brainer. Up against XBox and PS3 (if that's what it competes against), that lack of DVD player could be the deal breaker.

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A guest said: (hide)

Wed Feb 21, 2007 3:14 pm

Apple TV DOES NOT REQUIRE WIRELESS!!!! Why don't you take one tiny second out of your day and review the specs on the box. Notice the "10/100BASE-T Ethernet" line?! However, it is far less intimidating to tell people to connect via wireless than to tell people to run a cat5 line to their living room. Not to mention that many DSL modems/router have wireless built-in, and you can buy wireless routers for very little money.

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A guest said: (hide)

Wed Feb 21, 2007 3:22 pm

i need wireless if i want it to stream from my mac (where i supposedly bought my music/Tv movies with iTunes) to the AppleTV in my living room. So yes, it does need wireless. Why dont you take one tiny sec out of your day to use your brain.

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A guest said: (hide)

Wed Feb 21, 2007 3:52 pm

You need a home network for your Mac to talk to the AppleTV, but it doesn't have to be wireless. It can be wired, perhaps through your existing electrical wiring in your home (I've never tried this). You'd also need a router to set up the network. Wireless is just easier.

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A guest said: (hide)

Wed Feb 21, 2007 4:18 pm

Quote
Apple Tv requires the user have a wireless network

...followed by:

Quote
i need wireless if i want it to stream from my mac (where i supposedly bought my music/Tv movies with iTunes) to the AppleTV in my living room.

Apart from making the false implication that your needs are everyone's needs, why don't you make up your mind? In the first quote you complain that it "needs" wireless (untrue, but there you go...) and in the second you insist that you must have wireless.

Say what?

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mahuti said:

member since 09 Jan 2003 with 363 posts, TMO Staff, send him a message or view his profile

Wed Feb 21, 2007 4:46 pm

"Apple's set-top box will first lead to increased revenues from the existing iTunes user base, but will eventually start to chip away at DVD and CD player sales, he said."

Not unless it can actually PLAY cd's or DVD's. As far as I can recall, it can't do either, even if the media is currently in the drive in your computer. Please correct me if I'm wrong, I very well could be.

Anyway, I guess "EVENTUALLY" is the key word, but that's a long, long, long way away with the current setup as it has been described.

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A guest said: (hide)

Wed Feb 21, 2007 5:59 pm

It isn't going to do diddly unless it has built in DVR capabilities. No one wants one of these merely to be able to stream content from their computer (even if it is on the local drive). UNLESS it can also record and store. Anyone seen even something as friendly as a link to Eye TV from Front Row? No.

Consider the Video Recording market over the past 30 years. Did anyone want something MORE complex to operate?

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A guest said: (hide)

Wed Feb 21, 2007 6:48 pm

My larges creen TV (2+ years old) only has one HDMI connector and right now the DVD player is connected to it. To solve this issue with the Apple TV I got a cheap HDMI switch box with two connectors although you can get more. It was available from Monoprice.com for $28.93 or $32.98 with shipping. Most of the current crop of large screen TV have two HDMI connectors.

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A guest said: (hide)

Wed Feb 21, 2007 9:50 pm

Quote
Guest wrote:
It isn't going to do diddly unless it has built in DVR capabilities. No one wants one of these merely to be able to stream content from their computer (even if it is on the local drive). UNLESS it can also record and store.

So "no one" is filling Apple with a large number of pre-orders? Wow, the "no one" category apparently has a lot of "someones" in it.

What you are missing is that while people are not able to replace their DVR with AppleTV, but they ARE able to replace their DVR with AppleTV+iTunes store. Look at Bosco's post above. Instead of DVR'ing South Park and Battlestar Galactica, he buys them from the iTunes store. Which means they never get kicked off the DVR's hard drive, and he can have high quality without worrying about the effect of high quality compression on disk space on the DVR. If he needs more space for his permanent iTunes collection, he just upgrades the disk in the Mac. In addition, he doesn't have to wait for the DVDs to come out, because iTunes Store has this season's episodes right now.

There was an article out recently, which I can't find now, that pointed out that if you only watch a few shows, and the iTunes store has them, it's cheaper to buy them a la carte and buy AppleTV, than it is to buy a DVR and fork over $50+ a month for cable TV and your DVR subscription. (Of course, if you want to watch and record shows not on AppleTV, the numbers go the other way.)

So don't assume that just because AppleTV lacks recording, that it's useless. If you apply the right model with the right supplier, recording is not necessary.

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Rainy Day said:

member since 07 Jun 2005 with 607 posts, unranked, send him a message or view his profile

Thu Feb 22, 2007 12:37 am

Quote
Clueless wrote:
i need wireless if i want it to stream from my mac (where i supposedly bought my music/Tv movies with iTunes) to the AppleTV in my living room. So yes, it does need wireless. Why dont you take one tiny sec out of your day to use your brain.

No, TV does not need wireless. You can stream data from a Mac to TV via a wired network.

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Biff said:

member since 08 Apr 2004 with 1479 posts, unranked, send him a message or view his profile

Thu Feb 22, 2007 8:06 am

LOL. Yeah iTunes store replaces my cable? NOT. There's a slight difference in content there. Sorry. I like the argument about not having to worry about the DVR deleting your shows. Apparently AppleTV gives you more than 24 hours in a day? You won't have time to watch the shows from your DVR (since they will get deleted), yet if you buy them from iTunes you will suddenly have time to watch them all. Awesome!

I think I'll stick with my HD DVR and HD-DVD player thank you very much. More content and higher quality. But hey maybe my opinion of the AppleTV will change after I know a single person who is planning on buying one. Currently I don't. I'll wait for a future model that has a feature set which actually makes it useful.

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acdc1174 said:

member since 16 Apr 2004 with 668 posts, unranked, send him a message or view his profile

Thu Feb 22, 2007 12:43 pm

I preordered on the day that they were announced and cancelled that order a week later after the RDF field wore off. Mind you, I think this is an excellent addition to my bedroom TV setup. However, I am beginning to think that a Mac mini will be better. After all, I can achieve the exact same thing in terms of streaming my video content to the TV as the Apple TV, but with a Mac mini I can purchase FROM my television via the iTunes Store, play DVD content from the mini, and have access to Mac OS X right there. Now, what will change my mind is this- I have read a couple of rumors that Leopard may allow you to send your Mac's desktop to your Apple TV (i.e your TV operates as a remote monitor for your mac in the other room). If this is the case, I will seriously rethink my decision and likely purchase an Apple TV. Time will tell, but for me, right now, Apple TV 1.0 is just not quite there.

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A guest said: (hide)

Thu Feb 22, 2007 3:04 pm

I think the Apple TV is intriguing but not quite worth the money. If it had a bigger hard drive, the ability to download directly from the iTunes store, and the ability to function as an Airport base station, all for $300, I would buy one. Unfortunately Apple is unlikely to add those features because it would just cannibalize Mac mini sales.

Two million units seems unlikely but I guess anything is possible.

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