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The bigger you get, the bigger markets you need to attack to keep growing. That makes an Apple television set all but inevitable, and it's an open secret in Silicon Valley that Apple has been quietly toying with the idea for years. So how big is the opportunity, exactly? In a note to investors Friday, Peter Misek at Jeffries does a few calculations:
- Factoring in the cost of building a set and consumer's price sensitivity, Apple should be able to build a product that can grab about 25% gross margins, somewhat below Apple's company wide gross margin now.
- The bill-of-materials for a well-equipped Apple television set -- including a hard drive, enough processing power to support voice commands or gesture-based controls, and the usual complement of interactive television features -- should come to about $896, allowing Apple to sell sets for about $1200.
- The global television market is about 250 million units a year, but only about 10 million televisions costing more than $1000 are sold each year. Misek figures Apple will be able to entice a lot of people to pay more: so he figures Apple will have an initial addressable market of about 50 million units a year.
- If Apple sells about 5 million of these sets in 2013 Apple could add $6 billion in revenues to the consensus estimate of $166 billion and between 69 cents and $1.03 to the consensus per-share earnings estaimte of $38.34.
