Tuesday, December 11, 2012

If Apple Does Sell an "Internet TV," How Much Would You Pay for It?

A survey conducted by AlphaWise and Morgan Stanley suggests at least some consumers are willing to pay a 20-percent premium for a hypothetical "Apple TV," compared to other standard TVs.

The survey found that 11 percent of respondents said they would be "extremely interested" in purchasing a so-called "iTV" from Apple, while 36 percent said they are "somewhat interested."

Some 46 percent of respondents said they are willing to pay over $1,000, while 10 percent are willing to pay over $2,000.

On average, respondents said they would pay $1,060 for an "iTV," which is a 20 percent premium over the $884 paid for the current average television set. Respondents ages 18 to 29 showed the most willingness to invest in an Apple television, indicating they would pay a 32 percent premium for such a device. 

With the caveat that consumers often say they will do things they actually do not, the survey suggests Apple continues to have a "cachet" for many consumers. 

The survey polled 1,568 heads of U.S. households regarding the "smart TV" market and found that just 18 percent of homes have a smart TV, while 13 percent of respondents said they didn't know whether their TV is considered "smart," the study found.

The poll also shows that those who own smart TVs connected to the Internet actually spend less time accessing Internet content through their TV than those who do not own a smart TV. That presumably suggests an "ease of use" problem that Apple likes to solve.

The question is whether the TV interface is a big enough irritant to convince lots of consumers to buy an appliance that promises much-better ease of use. The reason is that "content" is a huge part of the TV experience, and unless Apple can dramatically change that part of the end user interaction, the benefits might not be so large as Apple might hope.

It might be one thing to ease navigation between "broadcast" or "linear" TV and online sources, or to make "finding" interesting online content easier. It might not be so easy to revolutionize the TV experience if Apple cannot change the way Hollywood licenses programs. 

If a hypothetical Apple TV or iTV enables viewing and purchase of single TV shows, at reasonable prices, that would be a huge deal.  But Hollywood is unlikely to license content on such terms, at least not now. 

For that reason, some of us are not so sure Apple can transform the TV experience as much as it changed music consumption or the mobile phone experience or PC interface. 

Morgan Stanley

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