Is This Apple's Next Big Idea?

Apple (Nasdaq: AAPL  ) investors are notorious for having an appetite for The Next Big Thing. Can you blame them? The iEmpire has a history of delivering winners -- the Mac, the iPod, and the iPhone, to name three.

Could an iTV be next? No, not Apple TV but iTV, a full-screen digital television with iGoodness baked in. In a recent interview, Piper Jaffray analyst Gene Munster told Macworld UK to expect an Apple-branded TV soon.

I want my iTV
"Apple's fantastic ability to create exceptionally user-friendly products could revolutionize TVs just like the iPhone changed the mobile phone market," Munster said.

There's more than conjecture at work here. Munster points to a $500 million deal in which a unit of South Korea's LG Group will supply Apple with a substantial number of LCD panels at what appear to be very favorable terms.

"LG Display has made a long-term agreement to supply a massive amount of LCD to Apple in the face of uneasy condition of foreign capital inflow amid the global economic downturn," company executives said in a statement.

It's the second time -- that we know of, at least -- Apple has sent out for Korean. The last time, in 2005, the iEmpire prepped for demand for its newest iPods by signing a volume flash memory deal with Samsung. Smart move. By early 2006, Apple was moving more than 14 million music players per quarter. It has dominated the market ever since.

Why past might not be prologue this time
Would Apple fare similarly in the TV market? Honestly, I've some serious doubts. Dell sells them, but what you'll find at dell.com isn't all that different than what you can get from any electronics retailer.

But don't take my word for it. The top offer at dell.com's TV and TV accessories store is a 52-inch display from Sony (NYSE: SNE  ) . TV is a checklist item. "You need a big screen, sure we have that. A PC? Yep, we have that, too."

To be fair, Apple does this as well. Go into any of its retail stores and you'll see Apple TV playing on large-screen monitors supplied by third-party vendors. Munster obviously thinks Apple can do better. So do I.

It'll have to. Competition in digital TV is already fierce and getting fiercer by the day. Here's a look at four current and prospective combinations that would hinder adoption of an iTV.

MicroFlix. The obvious choice. Not only is the Xbox a popular platform for gaming, it has become a personal entertainment center. And now, it streams Watch Instantly videos from Netflix's (Nasdaq: NFLX  ) growing library.

The weakness of this pairing is that the Xbox is a game console, and most consoles are built for a two-to-three year upgrade cycle. Would consumers really want to swap out their entertainment center every couple of years? Probably not. A MicroFlix tube wouldn't have that issue.

GooVo. I've thought Google (Nasdaq: GOOG  ) should buy TiVo (Nasdaq: TIVO  ) since 2005. It hasn't happened, but that doesn't mean it shouldn't. TiVo has patents, technology, and access to millions of viewers. TiVo also supports YouTube videos, and we know from Google's blog posts that it's perfecting models for placing ads on YouTube. Figure out the form factor and you have a natural pairing.

And think about this: Were TiVo and Google to combine, what's to stop them from creating a portable store-and-view DVR for your Android smartphone? Not only would it be a great service, it'd be a slap in the face to patent rival EchoStar, which acquired SlingBox creator Sling Media in 2007.

AmVoFlix. This one's a little harder to imagine, but my Foolish friend, Rick Munarriz, makes a good case for why Netflix and Amazon (Nasdaq: AMZN  ) belong together.

"Amazon and Netflix seem to keep showing up whenever an appliance maker rolls out a new gizmo to give couch potatoes their streaming-video fix. Their latest conquest, announced at this week's CES expo in Las Vegas, is a new Web-connected Vizio television," Rick wrote. Now imagine that same Vizio with a built-in DVR. Peerless choice in streaming and control over live programming? Couch potatoes have never had it so good.

Alec Baldwin. During this year's Super Bowl ad fest, the 30 Rock star extolled the virtues (or lack thereof) of Hulu -- NBC's streaming platform for its own programming and related movies and TV shows. Or, if you believe Baldwin, an evil plot to destroy the world.

Baldwin's delivery and timing is wickedly funny. But a Hulu TV, built by NBC parent and electronics giant General Electric (NYSE: GE  ) , would be anything but. Imagine a subscription service where you mark as a "favorite" your top shows a la a Web browser and schedule them for delivery into a sort of programming inbox. You'd get better service and NBC would get a better ad platform.

How would Apple compete with these and other offerings? With iTunes movies on demand, certainly. But I'm also like Munster in hoping for something more -- a big idea that transforms the TV viewing experience.

I want my iTV, Apple. Are you tuned in?

Amazon, Apple, and Netflix are Stock Advisor selections. Dell is an Inside Value pick. Google is a Rule Breakers recommendation. Try any of these Foolish services free for 30 days. There's no obligation to subscribe.

Tim had stock and options positions in Apple and Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool and invites you to tune into its disclosure policy.


Read/Post Comments (9) | Recommend This Article (13)

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  • Report this Comment On February 10, 2009, at 3:40 PM, Wanyal wrote:

    Well, the problem is, there is a UK TV network named ITV, so i think Apple have gonna have to think of a new name.

  • Report this Comment On February 10, 2009, at 4:42 PM, JPDemers wrote:

    Apple competes on design and value -- what the heck can they add to a television set that's not already there? A white bezel?

    Apple needs tons of displays for their computer products. Unless the deal with LG calls for 40-inch screens, I'd bet on that.

    On the other hand ... where Apple really shines is in design and software. Anyone wrestling with the wiring and connections needed to hook up the dish to the box to the PC to the Tivo to the TV set and the DVD player, (and the cable modem and the router and the backup storage system and the game box) knows there's an opportunity for Apple to replace that horrific tangle with a nice clean piece of hardware and an intuitive interface.

  • Report this Comment On February 10, 2009, at 10:42 PM, Aeoran wrote:

    Ridiculous. Apple's core strength is not technology or innovation; it is the ability of their marketeers to create the perception of more technology and innovation than is actually there. The company does no fundamental R&D. Their ability to add value to and sell a premium-priced TV is as real as magic performed by the Wizard of Oz, and will only last as long as there are believers who trust the smoke and mirrors more than the fact that Apple hasn't done anything technologically difficult in a decade. If people think that adding IPTV functionality (with a fun Apple twist) to panels that are at least 5-10 years more advanced in picture quality than what IPTV can deliver - meaning that people will actually wait 5-10 years for their new TV to yield results - then they've got some deeper thinking to do.

  • Report this Comment On February 11, 2009, at 2:11 AM, BoulderBum wrote:

    While I'm not opposed to the idea of a TV with an Apple TV already baked in, I think you underestimate the Apple TV set top box itself.

    The problem with an Apple-branded television is that you're locked into a single display while the Apple TV box can be connected to any TV or even projector with the appropriate inputs.

    In my view, Apple needs to focus on improving the Apple TV experience, then committing to marketing the device so people understand what it does.

    If Apple can improve deals to get more content with less restrictive rental rules, then add a feature like an App Store, then they have a shot of owning video like they do music.

  • Report this Comment On February 11, 2009, at 9:38 PM, rlcato wrote:

    The market is too big. It would be pointless for Apple to produce a 'common' commercial product as a telly. At this time, they have only 'one' newly produced monitor for their computers and it's only for the laptops. Chances are that deal is for computer desktop monitors. The deal may be for LG to produce LED monitors that will fit into a solid aluminium frame. Just recently Apple sent out questionnaires to owners asking them how they use their Apple TV. So Apple has some plans for that product but overall, I believe, it's not going to change shape.

  • Report this Comment On February 18, 2009, at 4:17 PM, sweet16fan wrote:

    I can't wait to see Vizio's take on this first. Any one know a release date? I feel like apple will wait to see what everyone else does then try and blow everyone out of the water, no time to wait.

  • Report this Comment On February 24, 2009, at 7:21 PM, JPDemers wrote:

    "Apple's core strength is not technology or innovation; it is the ability of their marketeers to create the perception of more technology and innovation than is actually there. The company does no fundamental R&D."

    The marketing guys built the iPhone, eh?

    Your grandmother could set up a wireless home network with Apple components out of the box. Stick her with the Windows equivalent, and she'll cut you out of her will -- just as soon as the guys from Geek Squad leave the house.

  • Report this Comment On September 16, 2009, at 11:26 AM, indianfools wrote:

    that's gonna happen guys. don't doubt their guts.

    they will surprise you as they did with everything 'i'. Let's just wait to watch...

  • Report this Comment On July 22, 2010, at 9:17 PM, rlcato wrote:

    We've been down this road before. Apple may bring out a new computer monitor but not a telly. I think JPD's 1st comment is far more likely than the authors telly dream. Get off that idea about an Apple telly will ya!

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