AAPL: Get long ahead of iTV

August 25, 2010

ANT believes that the rumours will soon (re: Sept 7) prove true and Apple will release a revamped iTV product.  The rumours point towards a low cost device (~$99) which looks like an iPhone without the screen.  This device plugs into an HDTV and allows you to run iOS, thereby enabling consumers to use apps on their TV.  There is also expected to be a TV/Movie video rental services.  Ideally Apple was hoping for a subscription based service at $30 per month.  The studios dont want to risk the golden cow (i.e. cable revenues) so it looks like this product will launch with an option to rent shows at $0.99 per show.

ANT believes the long term play is in disrupting the cable business but the key here is that apps are the TROJAN HORSE.  Consumers won’t buy a new living room device that doesn’t have video roughly equal to cable and studios won’t sell content to a device that hasn’t scaled up (i.e. >50m users).  This is a catch 22 for most companies looking to break into the living room.  For Apple, apps will let them get into living rooms and then have negotiating leverage with the studios to get video on those boxes.

ANT just bought Apple at $239.  Will hold atleast until the early September demo of iTV and will likely hold until well after the release of the product.

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