Photo: via Ronald Heft on Flickr
When (if?) Apple releases a television, it will also send its “Genius” employees out on the road to install the televisions, says UBS analyst Maynard Um in a big note this morning.Um’s note is mostly on how Apple’s market cap can expand by another $100 billion in the coming years.
His theory: Apple will enter the TV market, add billions in sales, and sap the market cap of incumbent TV makers. PC and phone makers have seen their market caps drop as Apple has gained in the last few years, so Um thinks the same thing happens in the TV market.
He admits it’s not a “foregone conclusion” Apple makes a TV, but he believes it’s going to happen. Um doesn’t add too much to conversation on an Apple television, reiterating much of what we’ve already heard.
(He thinks Apple will spend some of its $65 billion cash pile to get more content for an Apple TV ecosystem.)
One newish idea from Um is that Apple will have to send out its geniuses to hook up Apple televisions in people’s homes. This would be another one of Apple’s competitive advantages, although Best Buy has a similar advantage.
Here are Um’s thoughts on the Geniuses:
“Although Genius Bar has been around since Apple opened its first retail stores back in 2001, the importance of this technology service has increased in recent years as Apple has introduced several new products beyond the original Macs, but more importantly due to the strong adoption and growth of Apple products among consumers. We believe a pay model for Genius Bar could generate up to $2 billion in annual revenues for Apple. As such, we don’t view Genius Bar as a major revenue driver, but tight integration among products, solid service capabilities and high customer satisfaction likely help drive sales of other Apple products (halo effect).
What we envision of Genius Bar is similar to the Geek Squad, which is fairly well known in the US as Best Buy’s service department to facilitate technology adoption – television set installations, wireless router installations, repair services, content transfer from one PC to another, file backup, set-up services, general troubleshooting, tutorials, etc. In many respects, Apple already offers a number of these services in-store. However, in our view, one primary difference between a Geek and a Genius is that a Geek has a car. If Apple ultimately enters the television set market, we believe it may have to offer some type of installation service (wall mounting, delivery, etc).
Although we believe a pay model could be likely (similar to Best Buy), we would not view the service itself as the primary revenue driver. With better integration of cloud services and content to Apple products, we believe the value proposition would be to install a host of Apple products to work together in thehome. For example, if a consumer came to Apple to purchase an Apple television set and have it installed by a Genius, that person may also choose to purchase an iPod Touch or iPad (to control the Apple television set) and an Airport wireless router or Time Capsule (to connect all the Apple products together) if it will already be included in the price of the install. Hence, the service could be “halo effect” driver for more Apple products.”