A new study shows that while consumers are eager to purchase
) first television set, the company may not be able to charge
more than $1,000 for the unit. According to
, consumers who are willing to pay the most (roughly 32 percent
more than the current TV set they own) are within the 18 to
29-year-old demographic. Consumers within the next demo (ages 30
to 44) are willing to pay 15 percent more.
Older consumers (ages 45 to 64) are willing to spend an
additional 22 percent. Those who are 65 or older would spend 18
percent more than the cost of their current TV. Collectively,
consumers said they would spend an average of 20 percent
In breaking down the numbers, however, it seems that Apple is
still hundreds of dollars away from achieving the premium pricing
structure it desires from the television market. The study, which
was conducted by AlphaWise and Morgan Stanley, found that
consumers typically spend less than $1,000 on a TV.
Thus, when 18 to 29-year-olds said that they would spend 32
percent more for an Apple television set, they also revealed that
their current TVs retail for less than $800. The average TV price
among all consumers surveyed is somewhere around $900. With a 20
percent premium, consumers say they are willing to spend $1,080
for a new Apple television set -- just $81 more than the cost of
This creates the same kind of pricing dilemma that Apple faced
with the iPad Mini. Prior to its unveiling, Apple unveiled the
third-generation iPad for $499, lowered the price of the iPad 2
to $399 and released a new iPod Touch for $299. Older iPods were
being sold for $199 to $249. This left very little room for Apple
to price the iPad Mini without cannibalizing sales of an existing
If Apple charged less than $300 for the iPad Mini, consumers
would buy it instead of the iPod Touch. However, if Apple charged
more, then consumers might be tempted to ditch the Mini and go
with an iPad 2 instead. Apple decided to risk the latter scenario
and attached an MSRP of $329 for the 16GB Wi-Fi version of the
iPad Mini. In addition to the reduced memory, Apple also dropped
the Retina Display from the Mini -- likely to save money, but
also to prevent the Mini from diminishing the value of other
Now Apple is facing a similar -- if not greater -- challenge
for its first television set. First it must deal with the
challenge of its existing products. If Apple charges less than
the Cinema Display, sales of the Mac monitor will come to a
screeching halt. If Apple charges more, consumers may be less
interested in buying a new TV.
Apple must also address the size issue. While it is possible
that Apple will offer a 27-inch TV for those who want a smaller
set, the average consumer demands a screen that measures
at least 36.6 inches
diagonally. That size is expected to jump to 38.8 inches in 2013.
This means that Apple is likely to focus on making TVs that are
larger than the Cinema Display.
However, if Apple decides to charge $1,000 for a 37-inch set,
it would not simply diminish the value of the Cinema Display --
it would be the most expensive 37-inch TV available.
less than $700
for a 37-inch Smart TV. Sony (NYSE:
) charges $799 for
. Samsung produces a
of small Smart TVs that range from $419.99 to $739.99.
(c) 2012 Benzinga.com. Benzinga does not provide investment
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