Apple Television Set? Not So Fast, Says Bernstein

You may recall that last week, after the late Apple (AAPL) founder Steve Jobs’s biography went on sale, some notes from the Street circulated regarding what appeared to be Jobs’s fascination — nay, obsession — with re-inventing television.

These notes reiterated a prediction, made in the last year or so, that Apple will start selling a full-blown television set at some point.

Well, today, Sanford Bernstein’s Toni Sacconaghi writes that he’s not entirely convinced.

Yes, Sacconaghi writes, he can see the appeal, but wouldn’t it be better to just sell a version of Apple’s “Apple TV” with enhancements?

We see the potential for a television with a facile, voice user interface, enabled by Siri, that could control all facets of the television-watching experience � including zero-effort device configuration, intuitive content search, and channel switching and recording; cloud-based storage and synchronization of content [�] and the potential to eliminate cables and the STB (set-top box) [But] we note that the while the global flat-panel television market is large ($112B in 2012E revenues), it is forecast to decline overall, and has historically had low profitability. Moreover, virtually all of the benefits that we have outlined can be delivered by selling a box that connects with a user’s existing television.

If Apple does make an honest-to-goodness TV, don’t expect it to produce much in the way of profits, Sacconaghi concludes: “Even if we were to assume that Apple captures 3% unit share of flat panel televisions in FY13 (i.e. ~8M units) � which is likely aggressive given that it amounts to 11% revenue share, which is 50% that of market leader Samsung � a television offering would contribute <4% to Apple’s operating profits.”

And Sacconaghi observes that the cable and content people are recalcitrant: “Media companies appear fundamentally opposed to moving away from the current bundling model towards a pure � la carte model. Apple’s scale and reach may work against it in negotiations.”

Then again, I’d point out, these are the people who brought the music industry to heel.

Sacconaghi maintains an Outperform rating on Apple shares and a $575 price target.

Apple shares today are down $2.24, or 0.6%, at $400.83.