RBC Capital analyst Mike Abramsky recently met with a number of Apple executives, including CFO Peter Oppenheimer and iTunes VP Eddy Cue, and came away with a few nuggets of information that he recently passed along in a research note to investors.
As expected, Apple execs didn’t spill the beans on any forthcoming products, but they shed some light on Apple’s mindset regarding a number of issues, such as the online print media market and whether or not video content will be the next large growth area.
Regarding the online book and newspaper market, Apple executives were less than enthusiastic about its prospects, noting that in its present form, it has an “unattractive industry structure.” And you know Apple, their bread and butter is going in and putting their own take on ’unattractive’ business prospects. Apple, of course, has reportedly been trying to line up publishers for its rumored and upcoming tablet, with one report stating that Apple was planning to “redefine print” in much the same way it helped redefine music with its iPod and iTunes combo. Apple’s disdain for the current industry structure could very will be even more evidence that it’s planning to turn that industry structure on its head.
Abramsky also notes that while video content is “expected to be the next exploding opportunity”, he tempers that statement by pointing out the many roadblocks that might stunt video content growth.
After music, video content is expected to be the next “exploding” opportunity, but requires overcoming industry rights dysfunctionality, competing with subsidies (cable box, video), and developing the right consumer “offer”. Apple TV, while still a “hobby”, is well positioned to benefit from evolving market dynamics.
There have been a sprinkling of rumors over the past few months that Apple was toying with the idea of building their own branded HDTV. But with the competition in the HDTV market unbelievably fierce, it’s hard to imagine Apple getting into that low-margin market segment unless it had a huge trick up its sleeve.