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Apple Inc. TV Failure Means Watching Repeats Through 2016

Apple inc (NASDAQ:AAPL) Apple TV
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Apple Inc. (NASDAQ:AAPL) is, if analysts like Brian White are to be believed, in the midst of a dramatic transformation. The firm is trying to change itself from a simple hardware maker into one of the world’s biggest services companies. If you looked at the firm’s progress in 2015 there was some hint of this, but on one of the most important fronts, TV, Tim Cook’s team fell flat. Now it looks as if we’re headed for a restart in 2016.

Apple inc (NASDAQ:AAPL) Apple TV

Digitimes reported on Friday that Apple was testing a new piece of Apple TV hardware to replace the unit it just released last September. The paper, which isn’t exactly the most reliable source for rumors, said that Apple would “dramatically improve the device’s hardware performance.” Those with shares in the firm may be more interested in the TV service that just hasn’t appeared.

Apple Inc. puts TV on repeat

Apple was rumored to be working on a TV service the whole way through 2015. Many of the rumors suggested that the firm would get its package, which would involve live streaming TV as well as other options like Netflix, onto the market last June alongside a revamped Apple TV set top box. Neither product arrived until September, when the new Apple TV was revealed, but without any mention of the service.

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Apple, as is usual, never confirmed or denied that it was working on a TV product, but the indirect information was just too strong to discount. The TV service talks were directly referenced by CBS CEO Les Moonves, and it became generally accepted that Apple would put it out there at some point.

It still hasn’t been confirmed that the service is coming next year, and despite the slew of stories about it, this rumor may be not be much different from the kind of things we heard that Apple was bringing to market in the past. If Apple did indeed plan to have the service ready by WWDC 2015, it’s clear that the problems with the talks were greater than the firm hoped.

Those problems aren’t likely to go away quickly, and the Apple TV service may be delayed for a lot longer than the most recent reports suggest.

Apple TV rumors keep circling

Before the strong indications that Apple was headed for the launch of its own TV service, we heard constant rumors, many furnished by Gene Munster of Wall Street research house Piper Jaffray, that Apple would soon release a full-blown TV to change the living room experience. That never happened, but the newfound focus on repeating TV service rumors may borrow something from it.

We haven’t heard much about the talks that Apple Inc. (NASDAQ:AAPL) engaged in on the TV front since August when Bloomberg reported that the firm just wasn’t meeting the content providers eye-to-eye. That outlet said that the service had been delayed until 2016.

In the information vacuum left behind, it’s likely that all sorts of rumors about the future of the Apple TV service are likely to burst forth in the coming months. Shareholders are worried about Apple, and the firm’s inability to get a working TV service up and running may call into question the idea that future growth is in services.

Apple is turning into a service firm

More than one voice on Wall Street has argued that services are where traders should look for growth from Apple. Brian White of Drexel Hamilton reckons that the firm’s collection of services will grow to become significant sources of revenue as well as major selling points for the firm’s hardware. Mr. White has the highest price target on Apple on Wall Street.

Just a few weeks ago investment vehicle Quarz Partners, sent an open letter to Apple boss Tim Cook requesting that the firm break down its sales numbers in order to show the massive growth in services. Apple made no response to the letter, but it’s clear that there is a growing awareness of the power of services to the firm’s future.

Apple is in the middle of turning Apple Pay into an effective service that can replace some functions of the modern bank, it already has a streaming service that stands toe-to-toe with the best alternatives, and it’s able to offer all sorts of third party services, for which it claims a hefty bounty, through its app store. Wall Street seems to think that video is the missing link.

We might see a new Apple TV in 2016 and, if the device is going to see full support, a new unit may arrive every single year, as happens with the firm’s other major products.

Watching repeats on the Apple TV

If Apple is working on new TV hardware we might see the device in June of next year at the firm’s WWDC. Digitimes said that it would enter mass production in the first quarter of the year, however, so a launch alongside the 4-inch iPhone isn’t out of the question.

For those with Apple stock, however, the TV service isn’t a great reason to buy into the firm or, at the very least, it’s no better than the car project or any number of other rumors. Until we hear some clear info on renewed talks about streaming, it’s not clear when it will arrive or if Apple is progressing toward its goal. While those rumors circle shares in the firm are staying stagnant.

Even without that service, however, the Apple TV set top box may be a great business for the firm in the years ahead. The market is becoming more and more active as more people cut the cord and begin relying on video entertainment streamed from the internet through their TV screens. Digitimes says that as many as 20 million units of the device may be sold in 2016.

For the time being, it looks like rumors about the Apple TV service may heat up in the months ahead. If there is indeed a new device in the works, we’re likely to see many more supply chain leaks heading up to the release of the device. Whether or not it will launch alongside a big Apple TV service remains to be seen, but the market is a tempting one for Apple given the sheer amount of money people are willing to spend to fill their TV with content.

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Stephen Rhodes

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