More AAPL thoughts

17Apr09

Some more thoughts on AAPL as we come up on the Quarter. One area where I believe AAPL will look to capitalize in the near term is HD video capabilities. It has already been revealed that the summer iPhone 3.0 update will very likely include video recording and editing capabilities – essentially an iphone version of final cut. It has also been speculated that the next gen iphone will include both a much higher resolution digital camera as well as improved 3G performance. Why is this significant? In recent M&A activity,Cisco  announced acquisition of Flip for approximately $600M. Flip produces cheap ($100-$300) HD recorders in a cellphone or iphone type form factor,  generating annual revenue in the order of $200M. Put this valuation and application in the context of AAPL; The addition of HD into the iphone/itouch portfolio, a platform vastly superior to flip in terms of connectivity (wifi/3G enabled), display, multitouch- we see a opportunity that dwarfs that of Flip. One piece of the puzzle that does remain fuzzy is video content/publishing. Would AAPL open up itunes to user generated video and music type content? I would guess it is unlikely given that itunes is there primarily to drive revenue (app store, songs, videos etc) and the potential liability and optics issues surrounding copyright material – video content showing up as both for purchase and free via user contributed content would be confusing to consumers. A slightly better approach maybe through content sharing apps down-loadable via theappstore. I also love the HD video concept as it obviously builds additional momentum for Mac sales down the road — at which time we would look to new MACs include  the superbe FInal Cut video editing applicaiton to further support adoption.

Finally, the above speculation does not bode well for CSCO/Flip. The technology’s window is probably in the 6-12 month realm before AAPL and other cell manufactures introduce similar HD technology and render such standalone video devices obsolete. There is little CSCO will be able to do in such a short time frame to slow or prevent the inevitable; addition of Wifi and some type of content distribution platform won’t arrive until a likely upgraded ipod touch shows up on the shelf with vastly superior capabilities across the board. I hope this is CSCO last foray into the living room, and they sharpen their focus back on the Enterprise and Service Provider segments.

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Tags: 3G, AAPL, Apple, Cisco, CSCO, HD, video editing