Market Overview

Apple TV with Retina Display Would Cost $25,000


After Apple (NASDAQ: AAPL) unveiled the next-gen MacBook Pro, which includes the world's first 15-inch Retina Display, techies began to fantasize about the beauty of an even larger screen.

The 17-inch MacBook Pro may be dead, but Apple still produces the iMac, whose screen comes in two sizes: 21.5 inches and 27 inches. A Retina Display of that size would be gorgeous.

Then there is the promise of tomorrow, which will (eventually) bring the release of Apple's first television set. Consumers can easily imagine the beauty of a 50-inch Retina Display hanging on their walls.

It could be a long time, however, before Apple is ready to bring that screen to market.

"I think if they put a Retina Display [in the TV] and the main screen size is [at least] 50 inches, I think the price point of that device will go for more than $25,000," Trip Chowdhry, the Managing Director of Equity Research at Global Equities Research, told Benzinga.

Chowdhry said that it is not economically feasible for Apple to produce a Retina Display that large. "I think the focus of the Apple television will be all about software and usability," he said. "You don't have to put 10 speakers in your home. The screen itself will have beautiful surround sound, and probably one wire that goes into the power [outlet]. From a design perspective, it will have a very intuitive UI."

We could, however, see a Retina Display TV in five or six years. "And over the next five to seven years the price point of those displays should come down," said Chowdhry. "But over the next three years, there's no way a Retina Display at 50 inches can be priced at $2,000."

Chowdhry said that his price point of $25,000 is "still being very generous assuming they can somehow squeeze the suppliers."

"The price point, if it were launched today, could be closer to $50,000," Chowdhry added.

While Apple has not revealed how much it spends on each Retina Display, recent reports suggest that it costs $100 more than a standard 15-inch screen. According to a Bill of Materials list from iSuppli, the Retina Display featured in the third-generation iPad is $30 more expensive than the display featured in the iPad 2.

While the added expense could have easily forced Apple to raise its prices by a significant margin, the company maintained the iPad 2 pricing structure when it launched the third-generation model. The MacBook Pro with Retina Display is $400 more expensive than the standard 15-inch model. But the Retina Display is not the sole reason for the price increase. In addition to the new (higher-resolution) display, the next-gen MacBook Pro comes with a pricey 256GB solid state drive.

With that in mind, how could a 50-inch Retina Display cost upwards of $25,000?

"Right now, we don't have the economies of scale and economies of scope with the displays," Chowdhry explained. "The cost of a large display is not linear. You cannot say, 'The 15-inch model costs [X amount] more, a 50-inch model would cost three or four times more.' It does not work like that. The cost of the Retina Display grows exponentially."

Indeed, high-def televisions have a history of extreme prices, particularly when new technology is introduced. The first 42-inch plasma TV retailed for $15,000 when it arrived in 1997, despite having a resolution of just 852 x 480. In 2008, Sony (NYSE: SNE) announced an MSRP of $2,500 for the world's first OLED TV. In 2011, the company released a professional OLED monitor (for TV and film producers) that retailed for $16,000. Sony has also released a couple of cheaper units: a 25-inch set for $7,400, and a 17-inch display for $4,900.

In January, iSuppli data showed that the average 55-inch AMOLED retails for $8,000. That price -- which is more than $4,000 higher than the cost of an LED display -- was only possible after companies like Samsung and LG Display began to mass-produce the units. Large AMOLEDs have been in production for a while now. The same cannot be said for Apple's shiny new Retina Displays, which are currently limited to a maximum size of just 15 inches.

Chowdhry estimates that if Apple were to produce a 17-inch Retina Display today, it could raise the price of the device (MacBook Pro or otherwise) by $700.

"The technology is there [for a 50-inch Retina Display]," Chowdhry said, but the "economies of scale and scope do not make it commercially viable."

"It might become commercially viable in the $3,000 to $4,000 range six years from now," he added. "That doesn't mean Apple isn't going to come out with a TV set. They're going to come out with a TV set."

But it will not have a Retina Display.

Follow me @LouisBedigianBZ

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