Friday, March 14, 2008, 08:00 am PT (11:00 am ET)
Report: DVR could turn Apple TV into multi-billion dollar businessBy integrating digital video recording (DVR) features into Apple TV, Apple stands to transform its niche media hub business into a serious growth driver worth over a billion dollars annually, according to one Wall Street analyst.
Reacting to a patent filing uncovered by AppleInsider on Thursday, American Technology Research analyst Shaw Wu said he sees DVR features like those portrayed in the filing cropping up in a third or fourth revision to Apple TV, turning the device into a real business rather than just a "hobby."
"We estimate AppleTV to be a very minor contributor today at ~0.3-0.4 percent of revenue or $100-125 million annually," he wrote in a note to clients. "We believe adding the ability to watch and record live TV could turn this into a billion dollar, if not multi-billion dollar business."
Wu said the cost of hardware components needed to equip the media box with DVR features is almost negligible, or about $12-15 in incremental cost per unit.
"We (as well as many others) have been clamoring for DVR and/or TV tuner capabilities since the introduction of Apple TV 1.0 in January 2007 and even Apple TV 2.0 with movie rentals in January 2008," he added. "We are pleased to see Apple listening to customers similar to what it has done with iPhone, with adding native access to Exchange server."
The analyst, however, took pause in his report to note that there have been patent filings from Apple in the past that have not come to fruition "yet." One example, he said, is Bluetooth stereo headsets which have yet to ship but "will at some point as cost of components decline."
Separately, he cited his own sources as saying that Apple and Sony appear to be in the final negotiation stages of bringing Blu-ray to Macs.
"Thus while near-term trends look difficult with a looming recession and a slow-down in consumer spending, we continue to believe Apple is well-positioned to weather the storm better than most with its strong fundamentals," he wrote. "[We] reiterate [our] BUY rating and price target of $175."
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