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Analysts back away from Apple's 'iTV'

Dan Graziano
May 15th, 2012 at 1:15 PM

Despite a slew of rumors and speculation that Apple plans to enter the TV business, analysts are beginning to back away from the idea of an “iTV,” Fortune reported. Richard Gardner, formerly of Citigroup, warned in December that “Apple has not even defined specs yet.” Barclays’ Ben Reitzes in February suggested that Apple was focused more on lining up content partnerships than on the production of a full-fledged television set. And now, Analyst Andy Hargreaves of Pacific Crest called the idea “a terrible use of retail space.” 

“Investment in Apple television makes little sense without a unique TV content offering. An Apple television could drive substantial profitability if it helped Apple capture service provider profits,” Hargreaves wrote in a note to investors. “However, we do not expect U.S. broadcast or cable networks to provide Apple content if it risks cannibalizing existing revenue, which makes a unique Apple service and an Apple television unlikely.”

The analyst continued by saying, “An Apple television would be a terrible use of retail space relative to iPhone, iPad or the Apple TV set-top box. A 46″ Apple television would likely generate less than 1/200th the gross profit per cubic foot as an iPhone at retail, and less than 1/50th the gross profit per cubic foot of an iPad. We believe this is critical given the limited inventory space at many Apple and partner stores.”

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