“In December, Richard Gardner, formerly of Citigroup, warned that ‘Apple has not even defined specs yet,’” Philip Elmer-DeWitt reports for Fortune. “In February, Barclays’ Ben Reitzes suggested that Apple was focused more on lining up TV content partnerships than on the production of a TV set.”
P.E.D. reports, “Now Pacific Crest’s Andy Hargreaves has poured what may be the coldest water yet on the idea… in a note to clients issued Monday.”
Investment in Apple television makes little sense without a unique TV content offering. An Apple television could drive substantial profitability if it helped Apple capture service provider profits. However, we do not expect U.S. broadcast or cable networks to provide Apple content if it risks cannibalizing existing revenue, which makes a unique Apple service and an Apple television unlikely.
An Apple television would be a terrible use of retail space relative to iPhone, iPad or the Apple TV set-top box. A 46″ Apple television would likely generate less than 1/200th the gross profit per cubic foot as an iPhone at retail, and less than 1/50th the gross profit per cubic foot of an iPad. We believe this is critical given the limited inventory space at many Apple and partner stores.Analyst Andy Hargreaves, Pacific Crest Securities