Sony (NYSE: SNE ) and Samsung have had enough.
In a move to fortify their money-squandering television businesses, the two Asian powerhouses are initiating new policies that will keep retailers from selling their flat screens at anything less than the prices that they set.
Yes, it's legal.
Good luck with that
On the surface, this may seem to be a terrible move for Amazon.com (Nasdaq: AMZN ) , which would be prevented from underselling its pricier offline rivals. However, it's actually better for Amazon than you probably think.
- In a perfect world where Sony and Samsung could dictate high selling prices, Amazon would make a killing on every sale.
- Even if the prices were identical, the ability to sidestep the collection of sales tax in most states would still make Amazon cheaper more often than not. The popularity of its Prime frequent shopper program would also give Amazon a pricing advantage in the form of free two-day shipping.
- Believe it or not, there are deep discounters that undercut even Amazon, so the leading online retailer would be protected on that front.
The biggest question would be what would happen to the rest of the industry's TV makers. Would they risk collusion by moving to higher ground alongside Sony and Samsung, or would they make a killing by taking advantage of two giants that are pricing themselves out of the market?
The average selling prices for flat-screen TVs have been falling for years. Why should that change? Under the dream scenario where Sony and Samsung can get consumers to pay more for LCD and plasma sets, can we be sure that they will truly win?
The only thing for sure is that if Apple (Nasdaq: AAPL ) should decide to throw its hat into the TV ring that it will make a killing in this climate.
Apple's TV dinner
Steve Jobs told his biographer that he had "finally cracked" the code when it came to improving on the traditional television, so we know that Apple was at least pondering an entry into this fierce market shortly before his passing.
The allure of an iOS television with iCloud support and a touch-based controller is fairly obvious. The one thing that may hold Apple back is if it prices itself out of the market. Well, if Sony and Samsung are trying to raise the bar in terms of what consumers will consistently pay for high-end flat screens, Apple's going to be sitting pretty in terms of pricing.
It only helps that other potential entrants into the smart television market are also gunning for high prices. Google (Nasdaq: GOOG ) is using next month's CES exposition as a springboard for its revamped Google TV initiative. South Korea's LG -- the world's second largest manufacturer of televisions -- is rolling out Google TV-enabled flat screens this week. LG's pricing between $1,699 and $2,299 seems ambitious, especially since Sony's original Google TV sets flopped at lower price points.
However, this is all part of the unjustifiably cocky marketplace where Sony and Samsung feel as if they can dictate market pricing and LG feels that it can succeed where a rival faltered for a platform that should be discounted because it's already burned buyers once.
A feast in Cupertino
Sure, Apple's flat screen isn't likely to come in the 47-inch and 55-inch beastly dimensions as LG's Google TV sets. Apple is going to want to aim for sizes that are large enough to satisfy a living room, but small enough to be carried out of your local Apple store. Those will naturally also be cheaper to make, giving Apple plenty of room to mark up its sets accordingly.
However, we can't forget the monster advantage that Apple will have -- and Sony, Samsung, and LG sorely lack.
The sale of Apple HDTV is not a one-time purchase. It's an invitation to wade around in Apple's flat-screen App Store. It's a ticket to the iTunes playground with movies and shows galore. Of course, Apple will make a mint off the sets, but the point is that the party doesn't end there.
And as for the party, now that Sony, Samsung, and LG are making it seem as if this is a black-tie affair, Apple won't have to worry about seemingly outlandishly overdressed when it finally reveals its pricing.
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