February 14, 2013

Analyst: Apple to Refresh TV, iPhone Strategy in 1H 2013


Apple will hold an event in March to unveil a developer initiative to foment the creation of an App Store for the Apple TV set-top box, according to Jefferies & Co. analyst Peter Misek. And, expect the iPhone 5S and lower-cost iPhones to be on their way in June, too.

"We don't actually expect a TV announcement. We think it's a software development kit (SDK) for the existing set-top box, and we think there will be some other product event and we don't know what it is, but we're pretty sure it's not an iPhone or iPad," said Misek, speaking on CNBC's Squawk on the Street.

"We think there is a huge developer opportunity in the living room, utilizing the existing Apple TV set top box, which may or may not be in advance of an actual television," he added. "We think developers are clamoring for an opportunity to get access to that."

It’s clear that Apple is ready to take its TV dreams to the next level. The only question remains is how. Options include making an HDTV itself, branching out into smart monitors and peripherals, buying a TV company as it is rumored to be considering with Loewe, or issuing a new STB strategy, perhaps partnering up with pay-TV operators to become the middleware for operator-issued STBs. The latter is a rumor the Wall Street Journal explored last year.

"When I go into my living room and turn on the TV, I feel like I have gone backwards in time by 20 to 30 years," Apple CEO Tim Cook told NBC News anchor Brian Williams in an interview in December. "It's an area of intense interest. I can't say more than that."

Misek in the past has predicted that if the thus-far-mythical Apple HDTV does launch, it will likely launch in the fall. And, it will be in the 42- to 55-inch range, starting at the overall modest cost of $1,500.

Meanwhile, Samsung’s success, especially overseas, is forcing Apple’s hand when it comes to pricing, he said. So, he expects a lower-cost iPhone to make its way to market this summer.

"Apple is starting to lose more market share from Samsung, particularly in Europe, and that's because they don't have a big enough screen size and that mix shift is causing margin pressure and suppliers to cut production," Misek said. "We do expect to see an iPhone5S and a lower cost iPhone introduced in June."

He expects margin pressure to eat into revenue. Apple will see “between 200 to 300 basis points of additional margin pressure," he said, with gross margins for the company hitting 35 percent.

"We don't think the street is ready for that," he said. Misek has a 'hold' rating on Apple stock with a price target of $500.




Edited by Rich Steeves



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