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Is Apple (AAPL) Playing Games With TV?

 February 14, 2013 04:08 PM

(By Rich Bieglmeier) What's the deal with Apple (AAPL)? The stock has been abused, buyers getting out of the lane before getting posterized by sellers like LeBron James.  

The Big Apple, Tim Cook's moves become more curious as the day's go by. Instead of revolutionizing, the tech giant appears to be commoditizing its products. First, the dividend – a subtle admission that management doesn't know what to do with that pile of money? - iPhone 5 didn't differentiate enough from iPhone 4s to persuade buyers to switch from a Cadillac to Mercedes. Then, the iPad mini didn't move Apple's market-share needle for tablets. Instead, the smaller tablet helped reduce margins along with disappointing iPhone 5 sales.

[Related -Fusion-IO, Inc. (FIO): Can Fusion-IO Q2 Results Cheer Street?]

Today, Apple announced a $200 MacBook Pro laptop with "retina" display price cut, and, of course, there are the ongoing rumors that an iPhone mini is on the way. iStock doesn't see how competing at the lowest common denominator – price - with the likes of Samsung is a game changer. Rather, we see it as digging a hole in the sand, volume chasing price as margins roll back into the hole. Once the value proposition is transferred from innovative product to price, there is no going back.

Yeah, the watch will be nice, and turning wearers into Maxwell Smart could freshen Apple's taste for Wall Street once again. Wearable technology is hot, but we don't foresee the iWatch as the game changer.

No, the game changer will likely be Apple TV.

[Related -Google Inc (GOOG): Why Nest Labs Deal Is A Wakeup Call For Apple Inc.?]

Jefferies. Analyst, Peter Misek thinks consumers could get their first glimpse of the AppleTV as early as March, with the smartTV available for purchase by October/November. However, Apple insider Jim Dalrymple says, "nope."

Microsoft, co –xBox creator and name giver, Nat Brown wrote on his blog, "Apple, if it chooses to do so, will simply kill Playstation, Wii-U and xBox by introducing an open 30%-cut app/game ecosystem for Apple-TV." He added, "Maybe a "console-capable" Apple-TV isn't $99, maybe it's $199, and add another $79 for a controller. The current numbers already say a lot, even with Apple-TV not already an open console: 5.3M sold units in 2012, 90% year-over-year growth — vs. xBox 360 — about 9M units in 2012, 60% YoY decline."

The potential is huge. Grabstats.com posts, "80% of an expected 190 million households, 148 million households, with next generation video game consoles will have this console connected to the Internet." According to Geekwire.com, total video game sales were $14.80 billion in 2012. The online site says, like P.C.s, tablets and smartphones are eating into sales, and 2012's figure is down from $16.34 billion in 2011.

The ability to marry all content and deliver it to a smartphone to a tablet to a wearable technology  to a TV to… will serve as the razor and allow the razor blades to be commoditized.

It's our opinion, and we are sticking to it!



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