TV – In a recent open letter to Apple’s CEO Tim Cook, investor and billionaire Carl Icahn describes what he expects from Apple. Owning roughly 53 million shares in the company, his number one goal will always be to increase the shareholder value of Apple and his own wealth.
Nevertheless, he also looks at other companies and sees that the TV landscape is changing, allowing other companies to get a piece of the home entertainment business of the future. His goal is to make Apple one of these winners.
So far, this is all just wishful thinking, unless owning 53 million shares of Apple gives you some inside information.
In his letter, Icahn expects that Apple will come out with a 4K UHD TV by 2016. He expects that Apple will sell them at a premium, in line with the overall Apple profit margins and he also put some numbers behind this idea. Icahn expects Apple to sell 12 million 4K TVs in 2016 and 25 million in 2017 and he believes that the selling price for the Apple TVs will be around $1,500 for the 55″ and 65″ model. This may be possible for some other brands, but if you want to sell at a good profit margin this price range seems a little low. In addition, Apple would reach roughly 10% market share of the TV market in the second year of offering a product. This seems a little optimistic as well.
When we listen to Sharp and other TV industry source in Japan, 8K is not far behind the 2017 time frame and may shake up the home entertainment markets again.
From an industry perspective, TV is not a strong growth business and will most likely stay that way for the next decade or so. In my opinion, the real value of entering the TV business lies in the access to content no matter what resolution. The drivers in this field are companies like Netflix and Amazon. The real question behind all these changes is how the content creators will deal with these changes? Who will put up money for content creation if it is unclear on how to make money from our investment? The only company that has walked this path so far is Sony and the results have not been very encouraging in the last decade.
As Tim Cook already said, Apple has a good deal of interest in the TV space, but the most difficult decisions for Apple are always what not to work on. TV maybe one of those. – Norbert Hildebrand