Today.Az » Weird / Interesting » Apple seeks to comeback with iTV
19 April 2013 [10:42] - Today.Az
There are three key reasons: Investors are concerned that the iPhone market has peaked in the western world, supply issues have plagued production of iPhones and iPads, and Apple's profit margins are falling at an alarming rate.
The margins problem grew worse last quarter as many customers opted to buy older iPhones and the cheaper iPad mini -- devices that are less profitable to Apple (AAPL, Fortune 500). Overall, the company's gross profit margin fell six percentage points over the year to 38.6%.
That's a scary slump, leading analysts to pile on concerns about Apple since last fall.
But perhaps Apple's biggest problem is an innovation gap.
Apple hasn't released a major new product since October's iPad Mini.
Many expected Apple to make some kind of gadget announcement in March, which the company has typically done for the past few years. But nothing came from the Cupertino brain trust last month.
That quiet March led Hudson Square Research analyst Daniel Ernst to dub the company's fiscal 2013, which ends in September, "Apple's lost year."
With all the negativity surrounding the company, expectations aren't high for Apple's second fiscal quarter earnings report next Tuesday. Analysts polled by Thomson Reuters expect earnings fell 18% over the year.
To get margins and earnings revved up again, Apple likely needs to launch a high-profile, disruptive product. The rumored "iTV" could be it.
Apple's TV ambition is the worst kept secret in Silicon Valley -- CEO Tim Cook told NBC's Brian Williams it's "an area of intense interest" -- but no device has yet emerged.
Apple already has an "Apple TV" set-top box, but the rumored iTV would reportedly offer much more -- all the content imaginable on one device.
An elegant product that brings together content from all TV studios, cable companies, broadcast networks and streaming content would be revolutionary. Today, searching for content you want is an absolute mess. Solving that problem could get Apple back to its history of radical innovation.
Speculation is rampant about what, exactly, the iTV will look like. Topeka Capital Markets analyst Brian White surveyed suppliers in China and Taiwan earlier this year, and he says the iTV will be a 60-inch set with gesture-control capabilities. The iTV will also include a smaller, iPad-like screen to watch content away from the living room, he says.
In a research note earlier this month, White said Apple's new TV could disrupt its market in the same way that the iPhone changed the mobile phone market and the iPod radically altered the music industry.
"The 'iTV ecosystem represents a major innovation for the $100 billion LCD TV industry that will revolutionize the TV experience forever," he wrote.
The iTV hopefuls will be looking to Apple's Worldwide Developers Conference next month, but they are likely to be disappointed. Rumors are swirling about minor products and updates: a new iPhone and iPad Mini, a streaming-music service, and an iOS powered smart watch.
Like the iPad Mini in October, those announcements would be fun and welcome news for Apple diehards. But they're hardly game changers like an iTV would be. Until Apple turns the TV world upside down, its stock may continue to slump.
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