Sure, iPods are shiny and cool, but some investors and analysts hope that Apple TV will steal the spotlight at Apple's (AAPL) press conference in San Francisco on Wednesday.
While many industry watchers anticipate the press conference will involve a refresh of the iPod line, Bloomberg BusinessWeek reported Tuesday that Apple is getting ready to announce a new set-top box with programming from Netflix (NFLX). And insiders say Apple would be wise to also issue an update on its TV plans. After all, the segment holds great potential for driving growth at the company and it's also an area where competitors are circling in.
"IPods are a saturated category in a saturated market and most of the sales are for replacements," says Stephen Baker, an industry analyst with the NPD Group. "If I were an investor, I would be interested in anything having to do with the iTV rumors. They don't have much of a footprint or solution [device] in that market. Any money they can take away from the cable companies and other operators by selling programming should be of interest."
In the last couple of years, revenues from Apple's iPod line have been less impressive that those from its other segments. In the first nine months of this year, iPod sales grew 4% from the year-ago period to $6.8 billion. That's after revenue dropped 12% last year, over the previous year, to $8 billion. Meanwhile, Apple's other music-related products and services -- a category that includes Apple TV, for some reason -- have steadily grown by double digits since 2007.
TV Competition Heats Up
The Apple TV device can stream content, such as rented or purchased TV shows and movies, to a user's television. Apple sells the device for $229 and it costs between $2.99, to rent a movie, and $9.99, to buy a movie, from Apple's iTunes service.
On the eve of Apple's mysterious announcement, The Wall Street Journal reported that competitor Amazon.com (AMZN) is developing an online subscription service to deliver unlimited access to TV shows and movies. Under Amazon's proposal to media companies like NBC Universal, Time Warner (TWC), News Corp. (NWSA) and Viacom (VIA), consumers would be able to watch the shows over TVs connected to the Internet or to Microsoft's Xbox 360 videogame console, according to the story. Amazon currently sells TV shows by the episode, but apparently is aiming to generate a steadier revenue stream with subscribers.
Apple's arch-rival Google (GOOG), meanwhile, is reportedly exploring a pay-per-view video service via its YouTube. Last May, Google already unveiled its Google TV amid hoopla and hype. The set-top box, which it's developing with hardware partners, is intended to marry the Internet and TV once and for all. But finding content suppliers has reportedly been tricky, with networks wondering if they'll come out ahead on such a deal.
One analyst questions whether Apple -- or any technology company, for that matter -- will succeed with its TV efforts. "Microsoft TV was a failure. Apple has already tried it twice before but it's been a failure. Our estimates is they've sold less than 500,000 of these [TV device] units. Google and Intel have tried it but no one is familiar with it," says Trip Chowdhry, a Global Equities Research analyst.
Still, he adds that if Apple TV does fail, it won't be because of Amazon. The Internet retailer can't be taken seriously when compared to Apple, Chowdhry says, pointing to the success of Apple's iPad and the market share its stolen from Amazon's Kindle e-book reader.