Jefferies believes Apple Inc. will launch a new video-focused cloud-based service called iTV in the second half of calendar 2012.
Quotes from Steve Jobs' leaked biography noted that he believed he had 'finally cracked' how to make integrated TVs easy to use. Our recent checks point to further confirmation that an iTV launch is planned in the second half of calendar 2012 with initial builds of 5 million to 10 million-plus, said Peter Misek, an analyst at Jefferies.
Biographer Walter Isaacson wrote, Steve Jobs very much wanted to do for television sets what he had done for computers, music players, and phones: make them simple and elegant. No longer would users have to fiddle with complex remotes for DVD players and cable channels.
I’d like to create an integrated television set that is completely easy to use, Jobs told Isaacson. It would be seamlessly synced with all of your devices and with iCloud. It will have the simplest user interface you could imagine. I finally cracked it.”
Misek said his checks provide additional confirmation of planned iTV. He believes Apple will launch a new video-focused cloud-based service. In addition to subscription revenue, he believes Apple could potentially benefit from a halo effect that increases units and average selling prices for its existing products and provides a foundation for the launch of an iTV. He believes initial builds will likely be in the 5 million to 10 million-plus range.
Misek finds it difficult to believe that Apple TV is the best Apple can do. Certainly there has been chatter for a new TV effectively integrating all set-top box functionality, console functionality, and Apple TV functionality into the TV set.
While a simple TV is certainly possible, Misek just believes Apple wants to do something completely different. Given Apple's historical preference to innovate a new category, could Apple's introduction of the iTV allow it to launch a premium-priced piece of hardware?
Aside from incorporating Apple TV-type functionality, what else could Apple include in the iTV? Misek believes a full browsing experience potentially incorporating an iPad, iPod Touch or iPhone as remote control or input device is very possible. He believes Apple could provide an extremely elegant solution effectively allowing the user to move content between the multiple screens.
Our checks also point to a calendar second quarter iPhone 5 launch and calendar first quarter iPad launch, said Misek.
Misek said the iPhone 4S is selling beyond expectations with a 3-4 week component backlog in some areas. Apple had been targeting a calendar second quarter iPhone 5 launch with March as a stretch goal.
But because of the iPhone 4S strength, he believes a March iPhone 5 launch is now off the table as Apple does not feel the need to rush the new device. Since the price cuts, the iPhone 3GS has seen a re-acceleration in sales. He believes the wholesale price is $350 in volume.
Misek said iPad 3 is in trial production. His checks indicate initial yields of 25 percent to 30 percent. If yields improve to 80 percent-plus in the next four weeks, then a January launch is possible. Otherwise a March launch is likely.
The brokerage reiterated its buy rating on shares of Apple with a price target of $500.
Apple stock closed Friday's regular trading down 0.62 percent at $392.87 on the NASDAQ Stock Market.