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Analysis: Improved 4K TV demand could lift Best Buy

  • Best Buy (BBY) could get a lift from demand for 4K TVs, according to Bank of America.
  • Though the ultra-HD TVs with a resolution of 3840 x 2160 pixels are still a niche product, growth in 4K content is expected to help boost awareness with consumers this year.
  • BofA analysts have Best Buy lined up with a Buy rating.
Comments (4)
  • db313706
    , contributor
    Comments (213) | Send Message
     
    What growth in content? The only viable service I'm aware of is the RedRay streaming boxtop, which costs and arm and a leg, but is probably worth it as most early adopters of this kind of hardware don't mind shelling out for the services to properly outfit it.
    17 Jun, 09:25 AM Reply Like
  • chopchop0
    , contributor
    Comments (3434) | Send Message
     
    TV's are probably some of the worst low-margin deflationary products in recent memory. They make money for no one, least of all the manufactuers.

     

    BBY will only make money on the extended warranties they can sell to the chumps who buy them along with their TVs.

     

    (Hint: Don't buy them, use certain credit cards and get an extra warranty year for free)
    17 Jun, 09:26 AM Reply Like
  • someguyinfl
    , contributor
    Comments (6) | Send Message
     
    Any electronics company needs the following every year to be "successful":
    1. New Apple release (iPhone 6, iPad 5 this year)
    2. New console release (xbox1, ps4 last year)
    3. New product line release (Last year smart watches, this year google glass)
    Novelty is what keep the electronics industry afloat. It takes a ridiculous amount of money to develop these new technologies, often done in secret and in proprietary labs by the major corporations. The first six months to a year of any product release is critical to recoup as much cash as possible, before other companies start copying whatever it is that makes your product special and undercutting your prices.
    After a year, the average electronics device sells for 40% of its initial release price, if it is even available. Most devices only sell for 3-6 months, just to be replaced by the next best thing. The saturation of the market with older devices is a constant struggle, so companies limit long production runs unless a product is particularly successful. The smaller and more portable the device, the more often it gets "upgraded" and replaced.
    With that in mind, 4K has been available for about a year and the prices have come down dramatically, the $6000 Sony TV last year is now $2000, and available from dozens of different manufacturers. Now that the products are affordable, it is going to take another year and holiday season to get a significant amount of them into the market. Also, the production studios and production companies have only had a year or so to create content and purchase new equipment themselves. They need to train their people and get all of their new equipment working before they even start filming, who knows how long that may take.
    Cheer up, it should be coming, probably sports and/or animation (besides porn) are where you see the majority of the first content, so lets wait and see.
    17 Jun, 10:04 AM Reply Like
  • db313706
    , contributor
    Comments (213) | Send Message
     
    I agree with the majority of your comment regarding the exponential curve that evolves naturally as the MSRP slopes off at an increasing rate over time.

     

    However, just as an aside, I would exclude any reference to video game consoles in this debate. The product cycles are an eternity compared to most of the consumer electronics community. Also, consoles usually operate at a loss in a strictly hardware sense. Some of the money is recuperated via peripheral equipment, but mostly it is through exclusively licensed games and other media; it's the licensing fees owed to bigger-name, 3rd-party studios that erodes these margins further.
    17 Jun, 10:51 AM Reply Like
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