Bernstein Research’s electronics analyst Mark Newman today describes what he calls a “deep dive” into the economics of the television business, in which he sees Apple (AAPL) potentially changing the landscape of the industry if it decides to offer a full-blown television set, following on its existing “Apple TV” set-top device.
Overall, despite continuing innovation, such as “smart TVs,” inflation-adjusted prices have continued to decline over the years, notes Newman.
The introduction of more and more software functionality will change the required competency of TV makers, writes Newman, and Apple’s entrance could lead to changes in who are the winners and losers, he believes, even though it won’t change the economics of the business:
While Smart TV adoption should not have a significant impact on ASPs or units sold, it does have the potential to change the industry’s competitive dynamics. The vastly different competencies required of a successful Smart TV platform will create winners and losers, and may enable new entrants. We are particularly concerned what impact a potential integrated AppleTV offering (integrated with screen) could have on other TV makers.
Newman writes that Samsung Electronics (005930KS), whose shares he rates Outperform, may be relatively well set up to go head to head with Apple’s software and content assets in the TV business, while others are less well prepared:
Samsung has also built similar functionality into their Smart TV offerings and Galaxy smartphones and tablets. Although many competitors claim to have similar technology in development, Samsung benefits from the broadest product portfolio and highest market share in several categories (#1 in TV, #1 in handsets, #1 in Smartphones, #2 in Tablets, #6 in Laptops). LGE and Sony are also relatively well positioned here but second tier Japanese and Chinese brand TV makers generally fall behind the leaders in this regard.
Newman even offers a table of the competitive landscape:
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