A Market Segment Analysis | Apple Television (iTV)


Published on

R2 Labs supports many of the world's most recognized brands.

R2 Labs is a leading provider of research and strategy consulting services to many of the world's most recognized brands including the leading institutional investors and equity capital fund managers, the top global strategy consulting firms and institutions, as well as global enterprise leadership teams across a wide range of industries and verticals.

Services include operations, technology and strategy consulting, management and decision sciences, and market segment and information technology research advisory services.

R2 Labs
R2 Labs supports many of the world’s most recognized brands.
Info@R2Labs.net | www.R2Labs.net

Published in: Business
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

A Market Segment Analysis | Apple Television (iTV)

  1. 1. A Market Segment Analysis | Apple Television (iTV)Introduction: R2 Labs is a leading providerof research and strategy consultingservices to many of the worlds mostrecognized brands including the leadinginstitutional investors and equity capitalfund managers, the top global strategyconsulting firms and institutions, as well asglobal enterprise leadership teams across awide range of industries and verticals.Services include operations, technology Get Startedand strategy consulting, management anddecision sciences, and market segmentand information technology researchadvisory services. R2 Labs | R2 Labs supports the worlds most recognized brands Ph 404.433.9500 | Info@R2Labs.net | www.R2Labs.net
  2. 2. Apple + TelevisionA PLATFORM FOR INTEGRATING, ALIGNING & MANAGING A PERSONAL APPLE ECOSYSTEMATV + iCloud + Retina Display = Apple Television (iTV)
  3. 3. Id like to create an integrated televisionset that is completely easy to use. It wouldbe seamlessly synced with all of yourdevices and with iCloud. It will have thesimplest user interface you couldimagine. I finally cracked it. - Steve Jobs to Walter Isaacson
  4. 4. Imagine a 40 or 50-inch iPad, a system thatunderstands voice commands, using Apples new Sirivirtual assistant, and spares you the trouble of fumblingwith a clunky remote that always gets lost between thesofa cushions. If you want to watch an obscure movie,or play a game, or record the Titans game on Sunday,ask and the system will find it. No more finding thebuttons to switch manually between video sources; theTV will put it on the screen for you. Anyone whomanufactures a high-end TV will get hammered. - Gene Munster, Piper Jaffray & Co.
  5. 5. Elements Introduction Apple’s iTV Ecosystem, News & Risks Smart TV Demand Connected TV Shipments vs. US Smart TV Shipments & Forecast R2 Estimates for Production Volume & BOM Costs US Smart TV Adoption Curve & Apple’s Entry Point Ramp Up & Production Forecast Retina Display Cost Smart TV Manufacturing Trends Shoring Up Materials R2 Questions? Levels of Production Integration, Installation, Content, etc. R2 Next Steps for iTV & Apple Computer? Robotic, Automobiles, Utilities, Defense & other Industry Penetration?
  6. 6. iTV Ecosystem Revolutionary in terms of its Human Interface Siri (‘The simplest interface you could imagine’ - S. Jobs) Retina Display (‘With a 2880-by-1800-pixel resolution, the new MacBook Pro has 3 million more pixels than an HDTV’ - Apple on Retina Display). Formfactor - a mix of Art, Design & Technology
  7. 7. iTV Ecosystem Designed by Apple in California
  8. 8. iTV Ecosystem A Better Entertainment Management System Steve Jobs’ ‘Best of TV’ Bundled Programming OTT Content (Hulu Plus, Netflix, etc.) Version 2.0 of Internet Channel Integration (Facebook,Youtube, etc.) A Game Portal (140K US Game Publishers, 750K Apps as of March 12, 2012) Apple Programs (Garageband) Games (Apps) Massively Multiplayer Online Role-playing Game (MMO) iTunes U (Education Integration) Colleges & University Course Integration Continuing Education, Government Services & Professional Ed. (Lynda.com) Local content delivery: High Schools, Religious, Programming Apps for Productivity Management Energy Management Services Integration (Nest.com’s Smart Thermostat) Realtime Consumption Management & Control Home Security & Surveillance Other Distributed Control & Management of Home Systems & Services
  9. 9. News Foxconn has Received Apple TV Orders: Currently in Pilot Production, May 28, 2012 Sources told Business Daily, Fuji Kang Longhua factory in Shenzhen has received orders for the Apple TV currently in trial production. Apple Stalls Apple TV Shipments, Feb 29, 2012 Partners and channel members have seen Apple push back deliveries each consecutive week by one additional week -- a practice that almost always foreshadows a formal discontinuation of a product ahead of new models. Likely for A5X for greatly expanded set-top box functionality, namely AirPlay which allows users to mirror their Mac display on an HDTV. 55" Apple LCD TV for About $2,000 Seen as Matter of when, Not if Jun 1, 2012 Gene Munster with Piper Jaffray sees Apples full-fledged television set retailing between $1,500 and $2,000, with screen sizes between 42 inches and 55 inches. Such a product would add between 4 and 8 percent to Apples calendar year 2013 revenues, he believes.
  10. 10. News Apples focus on display tech is driving it to make an HDTV, July 14, 2012 Raymond Soneira, CEO of Displaymate Technologies believes Apple will continue to adopt Retina across all "premium" products, including the Apple TV. But its less about the intrinsic Retina technology than it is about consistency, he believes. Apple is said to have selected a key supplier for television set, Feb 17, 2012 Genesis is reportedly expected to supply LED chips to LCD panel maker Sharp for Apples anticipated television. The partnership between Sharp and Genesis is expected to grow in 2012, as Genesis is said to have received certification for its LED chips. That could pave the way for Genesis to be a crucial component in Apples rumored television set lineup.
  11. 11. Risks Production Capacity & Material Wage Pressure at Foxconn / General Unrest in China Display Quality (Yield & Lead Times) Data Delivery / Infrastructure Bandwidth / Capacity Limitations Cable Usage Based Pricing Premium Price In Excess of 300G/Mo Consumption is Accelerating esp. for Households w/ Multiple Streams Local (In-the-home) Storage (Movie Watchers need 2TB Min) Premium iCloud Storage Upgrade Options (5GB Free) $10 for Additional 5GB. Country & Political Risks Cable Country Infrastructure: International Level of Service Downloads? Great Firewall of China (and now Russia, etc.)? Competitive Risk Not Open Source Like Some Competitors, ‘getting locked in’. I’d Rather Own Than Rent? Preplanning Aspect of What to Watch? Game Console Compatibility & Experience? Is It ‘Green’ Enough?
  12. 12. Risks Market Demand “’Smart TV’ has not achieved the consumer acceptance or market expectation… that was forecasted over the last couple years. In addition, consumer spending for Smart TV’s in general has experienced a significant slow down as the economy has slowed. Our current strategy is to stay involved with the various technology developments and consider them in the future as they become available.” - Viewsonic on Boxee-powered Smart TV
  13. 13. Total Connected TV Shipment Estimates Total Connected TV Shipment Est. 30% Compound Annual Rate 300 270.2 225 207.87 Units 159.9 (000) 150 123 94.61 75 2013 2014 2015 2016 2017 Source for Total Connected TV Shipments: Display Search (30%, 123M for 2014)
  14. 14. US Smart TV Shipment (Est.) US Households w/ at Least One Internet-Connected TV (Actual) Smart TV - Connected via a video game, Blu-ray player, an Apple TV or Roku set-top box and/or the TV set itself. 70% 52.5% 38% 35% 30% 24% 17.5% 2010 2011 2012 2013 2014 2015 2016 Source: Leichtman Research, US Smart TV Shipment Estimates 2010, 2011 and 2012.
  15. 15. US Smart TV Shipment Estimates & Apple Entry Point US Households w/ at Least One Internet-Connected TV (Actual) Projected 12% Growth Projected 15% Growth Projected 25% Growth 70% 52.5% 38% 35% 30% 24% 17.5% Source: Leichtman Research, US Smart TV Shipment Estimates 2010, 2011 and 2012. 2010 2011 2012 2013 2014 2015 2016 Smart TV - Connected via a video game, Blu-ray player, an Apple TV or Roku set-top box and/or the TV set itself.
  16. 16. R2‘s iTV Production Forecast R2’s iTV Production Forecast, 6.26M Units (2013) 12% 15% 25% R2 70 52.5 Units Shipped (000) 35 17.5 16 16 14 11 6.62 2013 2014 2015 2016 2017 Source for Apple Shipments: R2 (7%, 8%, 9%, 2%, 2% = 28% Marketshare by 2017) Source for Total Connected TV Shipments: Display Search (30%, 123M for 2014)
  17. 17. iTV $1,999 Estimated Average Selling Price $1,499 *BOM Cost $64.00 $999 $599 $99 Apple TV* Mac Mini LED Cinema 27” iTV 42” iTV 55” Cinema
  18. 18. R2‘s Retina Display Cost Estimate for 42” & 55” Retina Displays @ 75% Discount $666 Extrapolated Retina Display Cost @ 75% Discount $388 $160 MacBook Pro w Retina Display iTV 42” (753.79sq) iTV 55” (1,296sq) 14.3x5.44 = 77.79 sq
  19. 19. Smart TV Manufacturing Trends Shoring Up Materials (Competitive Demand) for Tablet Components & Displays Supply Chain Execution; ‘Blocking & Tacking’ Apples television set will most likely feature an LCD screen, rather than next-generation OLED display technology OLED panels remain too costly for large screen sizes for Apple to adopt. Increased Application of 3D Simulation Technologies All Industries including Manufacturing Design; Simulation; Speed to Market. Japan Culture Change w/ Respect to Collaboration w/ China Sharing of Design Competencies w/ Foxconn; Tablet Display Yields, Quality. Enterprise Spending on Tablets Enterprises Forgoing new PC’s for Tablets?
  20. 20. Questions Level of Physical Product Integration? (ATV + Apple Extreme + iTV + Cinema Display) Content Offerings Version 1.0 Same as Current Content Offerings? OTT Transactional V Subscription Model? (iTunes Store, Amazon, etc.V Hulu Plus, Netflix) Will Additional Server Platform Connectivity Be Integrated or Recommended? Airplay likely, Additional Connectivity Unknown? (e.g. Apple Extreme) Delivery & Setup Partners Apple Experts? Separate Apple iTunes Store for iTV? Separate Games, Music,Video & other Content? Interaction with iTV? All Apple Devices, Siri, Motion Capture Built into the Display?
  21. 21. iTV 2.0 iTV for the Enterprise, Small Business, Non-Profit, Education & Government Display Marketing Industry Penetration Local content delivery: High School Programming College & University Courses Government Services (Voting, DMV, Taxes, etc.) iTV for Virtual Lifestyle Management Professional Certifications and Professional Training (Lynda.com) Refined Internet & Social Channel Integration (Facebook,Youtube, etc.) Financial Service Portals Bundled Programming Unbundled Channels and More Options?
  22. 22. Next for Apple Computer? Apple Entering the Robotics Space? A new category, substantial innovation, leveraging Apple’s intuitive interface which now includes Siri, knowledge and brand influence, and competencies in engineering, design, software development and manufacturing. E.g., Nest, Extending Apple into Energy & Appliances Smart Cars Connected to the Internet Global OEM connected car system penetration is expected to increase from 11.4% in 2012 to 60.1% in 2017. While penetration in the US and Western Europe will exceed 80% by 2017. Energy & Utilities Management (Nest Thermostat, water usage, etc.) US Manufacturing Incentives to near-shore manufacturing? Higher Political Risks Abroad? Energy Costs? Economic Labor Benefits at Home? Risk Management. Internet Security & Apple’s History of a Strong Defense Multi-Industry Security?
  23. 23. Get Started R2 Labs Ph 404.433.9500 | Info@R2Labs.net | www.R2Labs.net R2 Labs supports the worlds most recognized brands San Francisco | Los Angeles | Boulder | Atlanta | London R2 Labs | R2 Labs supports the worlds most recognized brands Ph 404.433.9500 | Info@R2Labs.net | www.R2Labs.net