Since Apple released its disappointing fourth-quarter earnings report, the number of articles, blogs and analytics that sought to defend the buying and selling of Apple shares has been overwhelming. While the focus of the current debate remains on Apple\'s smartphone, tablet and computer business, some analysis has begun to measure Apple\'s potential in the living roome. How much value can Apple create if it succeeds in launching its smart TV product? With Apple gaining a foothold in the mobile, tablet and computer markets, and Apple\'s growth in these areas starting to slow, it seems natural for Apple to enter another considerable consumer electronics market, in this market, there is still a huge space for innovation to further grow. In theory, Apple can leverage their expertise in hardware design, supply chain management, and ecosystem advantages to create another iPhone or iPad story for the new TV business. In addition, the global flat-screen TV market is huge, with annual revenue of more than $110 billion. However, for Apple, the opportunity for the living room is too small, and if it continues to sell the business model of hardware products in the TV business, it will not provide significant upside potential for stocks. ( Apple has also made a lot of profits from software and content, but its hardware profits dwarf Apple\'s size. ) The profit margin on selling TV sets has been a notorious ugly business for the past few years, as its profit margin is low. Consumer demand for television in developed markets has intensified. Japanese TV makers are suffering from a slump in consumer demand and a meager profit in the TV business. Sharp is almost about to become another Kodak; Sony has lost money on every TV sold for many years; Panasonic\'s TV business has also suffered huge losses. Koreans do better, but even the king of the television industry --Samsung - Operating profit margin of only 5%- 7%, far less than twice it Profit margins for smartphone and tablet businesses are high. Assuming Apple\'s Smart TV will be a hit, most consumers will take it home, but how will Apple deal with this single Digital profit margin for TV business? Wall Street analysts have been frustrated by Apple\'s falling profit margins due to an increase in iPad mini sales, and a further decline in the TV business will only make the company\'s valuation less attractive. Take a look at the operating profit of 2010 and 2011 of major TV suppliers, even if we think Apple\'s profit will significantly exceed the current market-leading Samsung subsidiary Operating profit margin of 5%, the operating profit margin of Apple\'s TV business is likely to be far lower than the current 30%. While Apple may manage its supply chain more effectively than Samsung, which has been in the TV business for years and runs its own display business, Apple\'s new TV also has to charge a fairly high price premium in order to make a profit. According to the strategic analysis company\'s estimate, Samsung TV\'s ASP in 2012 was about $700, which was also diluted by large-scale sales of low-end models. Considering that Apple\'s new TV will obviously be a high Terminal mode, it\'s not surprising if the wholesale price of Apple TV is over $1000, resulting in a retail price of $1200 or more. If the basis for price elasticity still exists, a huge price tag is likely to dampen consumer demand. Apple\'s new TV could also add to customer service costs, as providing an excellent Genius Bar experience for a product that one can barely carry seems like a challenge. Apple is widely regarded as a growth company and a growth stock. The IPhone and iPad\'s astonishing revenue growth brought the share price to $700 last year. By contrast, with the growth of the global flat-screen TV market in 2012, the TV business is not a story of growth. While growth in emerging markets offset the decline, television markets in the US and Europe were particularly weak, with negative growth last year. There is no indication that the global TV market will see any significant growth in the coming years without any major growth drivers. OLED and Ultra HD TVs will have a positive impact, but there is no material in the short term until prices drop significantly. Granted, Apple\'s TV may be a strong driver of the TV market, but it is likely to grow at a much slower pace than the growth of smartphones and tablets, as consumers upgrade their TVs less often than mobile phones and computers. In addition, high prices and lack of portability clearly limit its potential to achieve substantial growth in a short period of time. The growth of Apple TV can be at best aligned with the company\'s current growth, and it is unlikely to bring Apple back to its high growth track for the past two years. Apple\'s new TV will dramatically change the existing TV industry, if not destroy it. Unlike smartphones and tablets that get everything from the open Internet, TV content is still tightly managed by media companies, broadcasters and paid TV operators. DRM and conditional reception are a major theme in the TV industry. No matter what strategy Apple will take on its TV products, it has to deal with incumbents in the TV value chain. If Apple decides to set up a better platform for Comcast and Verizon to distribute TV content, it is likely that Apple will ask for a cut in content distribution revenue, as it did in the iTunes business. Pay-TV operators, however, are reluctant to give Apple a consumer TV experience, not to mention cutting existing revenues. They may end up boycotting Apple TV by not offering content on the platform -- Similar things happened when Google TV was launched. If Apple decides to work directly with content producers to disrupt the existing pay-TV industry, it needs to crack down on the huge and long term The term content involves media companies and broadcasters, and if its goal is to sell in the international market, presumably in each country. Unlike the music industry 10 years ago, the television and film-making industries make money through pay-TV companies rather than desperately looking for life --saving straw. Apple is unlikely to receive a 30% discount from TV shows distributed through its platform, as it does with the music industry. Let\'s do MathNow, let\'s do some math and see how big Apple TV is (not the set-top box) Opportunities can be. According to a survey conducted by Strategy Analytics last year, 23% of US Internet users said they were interested in Apple TV, with 24% willing to pay $1200 or more (retail) For products. This leads to 5. 5% of US Internet users are interested in the product and are willing to buy it at a reasonable price. The broadband penetration rate is 90%, which indicates that 5% of American households have interest and willingness to pay (5. 5%X90%) Because families without broadband connections are unlikely to use Apple TV. Given that consumers often raise their level of interest in the survey, I estimate that about 3% of American households will buy this product in the first year. This led to an estimated 3 of our sales. There are 45 million units in the United States. Let\'s estimate that Apple\'s sales in Europe and Asia are 2 million and 1 million units respectively, provided they can solve all the content problems in each country. This makes our sales estimated at 6. 5 million units worldwide. According to the calculation in the table, under all optimistic assumptions, Apple\'s new TV can generate $650. Operating profit of 0. 975 billion in the first year after listing, resulting in medium-term Point estimates of $0. 813 billion. This is only 1. Apple made 5% of its operating profit of $55 billion in 2012. As I said, the growth of Apple TV will be moderate due to the long life cycle of TV, so, the potential advantage of Apple\'s TV business appears to be in stark contrast to the size and growth that the company will demand to drive a new round of gains in Apple\'s stock. Disclosure: I do not have a position in any of the stocks mentioned, nor do I have a plan to start any position in the next 72 hours.