Apple television could double US household spending on Apple products
Analyst Katy Huberty with Morgan Stanley explained in a note to investors this week that Apple's U.S. household spending doubled following the launch of the original iPhone, from $150 per year in 2007 to $295 in 2010. She expects that the iPad will double that spending again, to an average of $635 per household, per year by 2013.
"Given a 97% TV household penetration and a 61% broadband household penetration in the US along with an expected high price (and value) point, an Apple TV is likely to generate a similar increase in average household spend, with some help from iPad and iPhone growth," Huberty wrote.
Her projections call for the average U.S. household with at least $10,000 in disposable income to spend about $888 on Apple products by the year 2015, which would be double the $444 average spent per year in 2011.
If Apple were to take a 10 percent share of global spending on televisions, including hardware, subscriptions and advertising, it would represent $60 billion per year, or an incremental increase of $64 per household, per year globally.
While the initial impact of an Apple television on average household spending would likely be seen mostly in the U.S., Huberty noted that Apple's real growth potential remains outside of the U.S. Ten years ago, Apple generated about 56 percent of its revenue from the U.S., but in its most recent fiscal year, that number fell to 39 percent.
Still, as of last year the average U.S. household spent $444 on Apple products as compared to just $113 for non-U.S. households that have at least $10,000 in disposable income. Huberty noted that in order to hit global household spending on part with U.S. levels today, non-U.S. household spending on Apple products needs to grow 36 percent annually through 2015.
To reach those goals, she believes Apple needs to forge deals with more carrier partners internationally. Huberty noted that 77 percent of carriers in Asia, 78 percent in Eastern Europe, and 88 percent in Africa have no access to the iPhone.
"The combination of new carriers, introduction of a TV, and just our base case assumptions for the remainder of the business build-up to $393 global household spend annually," Huberty wrote. "We assume 10% market share of the global TV market (including hardware, accessories, content, advertising), 40% penetration of addressable (not total) subscribers at major new carriers and regions, low penetration of the remaining subscribers currently with no access to iPhone, and modest growth relative to historical run-rate in current iPhone carriers, iPad, Mac and other businesses."