Is Apple Going to Be a TV Star?

Sooner or later, Piper Jaffray analyst Gene Munster's going to get it right. He is once again stirring the rumor mill, pointing to the inevitability of Apple (Nasdaq: AAPL  ) entering the television business.

We're not talking about the $99 Apple TV set-top gadget that the class of Cupertino already has out on the market. Munster's talking about actual high-def televisions with LCD screens as large as 50 inches.

You've heard this before. Two years ago, Munster told Macworld he was expecting the tech giant to eventually begin cranking out high-tech televisions. He repeated the claims this past summer, targeting a rollout in time for the 2012 holiday season.

Munster's at it again, and this time there's a little more meat to his theory. "While Apple's commitment to the living room remains a hobby, we continue to believe the company will enter the TV market with a full focus, as an all-in-one Apple television could move the needle when connected TVs proliferate," Munster writes, as retold by Barron's Tiernan Ray.

Munster points to a hush-hush component deal that Apple recently secured from its suppliers. Apple mentioned this in its latest conference call, though it didn't elaborate. Even if this is a display component, it wouldn't mean that Apple was making the push into television hardware.

However, if Munster's right, you've got to like Apple's chances.

Don't bet against Apple 
It's only natural for a computer company to expand into television. They make monitors, so how hard can it be to blow them up into full-fledged home theater devices?

History hasn't been kind, though. Dell (Nasdaq: DELL  ) and Hewlett-Packard (NYSE: HPQ  ) have tried and largely failed. HP was even ahead of its time with the Web-tethered MediaSmart line it introduced in 2006.

Consumers weren't ready then, but they are up for it now. The popularity of streaming gadgetry has made connecting a living room's home theater system to a home's network a priority for couch potatoes.

There's also the allure of Apple's brand and its healthy success in hardware. No one was giving portable media players much of a chance when it introduced the iPod in 2001. The wireless handset market was growing at a reasonable pace before Apple's iPhone found the mainstream masses clamoring for a smartphone. It has since exploded.

If Apple puts out a TV, I know that I'm going to be interested, and I'm pecking this story out on a Windows-loving HP machine. In other words, I'm not a diehard buyer of all things Apple.

The challenges are real
There's a reason why Apple TV is in its third incarnation but still a fringe offering. There's a reason why Google (Nasdaq: GOOG  ) -- the company that had no problem disrupting the smartphone space with its open-source Android -- has initially stumbled with Google TV.

Consumers simply aren't making the connection between general tech success and the visual medium.

Diehard couch potatoes are sticking with the television brands they trust. Even when it comes to streaming, they warm up to a dedicated celluloid specialist -- Netflix (Nasdaq: NFLX  ) -- over attempts by Apple, Google, and Amazon.com (Nasdaq: AMZN  ) to market digital video.

The Apple name alone won't make it sell, but when has Apple relied solely on its name to sell a "me-too" product? Apple doesn't enter a market unless it feels it's raising the bar. Why should television be any different?

The Apple difference
Now that more and more televisions are coming with wired or Wi-Fi connectivity, it no longer has to be some margin-anchoring endeavor. An Apple television -- or iTV -- won't be a touchscreen. That stuff's only for the Poltergeist girl. However, Apple would still likely crank out a theater-centric App Store.

This isn't ground-breaking stuff. VIZIO rolled out its VIA apps on its XVT series two years ago. The Google TV-fueled Logitech (Nasdaq: LOGI  ) Revue turns any television into an app-running smart-television with access to Twitter, Netflix, and even customized stock quotes through CNBC.

The difference here is that Apple would transforms apps from a platform where a select few prolific service providers put out free applications into a floor-leveling marketplace where developers of all stripes can compete with free or premium downloads. Apple would be there to skim roughly a third of revenue.

The television itself will also have to be special. Apple can't just slap its name onto some run-of-the-mill flat screen. We'll have to trust Apple to be a differentiator with the eye candy. Obviously, the "retina display" and FaceTime video chat incorporated in its latest line of iPhone and iPod handhelds will make it into iTV. That will be just enough to get in the way of companies trying to offer costly routes to consumer videoconferencing.

Voice controls? Gaming possibilities? Premium streaming? Oh, we're just starting to scratch the surface of what's possible if Munster's right. And, sooner or later, he will be. 

What do you think about Apple entering the television space? Share your thoughts in the comment box below.

Google is a Motley Fool Inside Value selection. Google is a Motley Fool Rule Breakers recommendation. Apple, Amazon.com, and Netflix are Motley Fool Stock Advisor selections. Logitech International SA is a Motley Fool Hidden Gems selection. The Fool has written puts on Apple. Motley Fool Options has recommended a write covered call position on Logitech International SA. The Fool owns shares of Apple, Google, and Logitech International SA. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz always bets the over when it comes to Apple. He does not own shares in any of the stocks in this story, except for Netflix. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy, and it knows better than to talk down to Apple.


Read/Post Comments (8) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 07, 2011, at 8:09 PM, websterphreaky wrote:

    Only if CrApple can over charge for it and have it made in some Sweatshop in China employing minors for $10 a month net after charging for room and board.

    Atta boys CrApple, America's Gadget company and the FIRST to outsource ALL manufacturing in 1981. (Turn over ANY Mac you have, since 1981)

  • Report this Comment On February 07, 2011, at 8:11 PM, fchain911 wrote:

    It make

  • Report this Comment On February 07, 2011, at 8:15 PM, fchain911 wrote:

    It make a lot of sense...the Big TV screen on the living room is the center of the home, the family place and I think that Apple can't leave this strategic place open for competition...on the other hand no other company have yet simplified the matching of different equipments and that's one of Apple virtues...hope this happen soon...

  • Report this Comment On February 07, 2011, at 8:24 PM, IraLA wrote:

    What does make sense is a TV controlled by a touch-screen remote that would like something like an iPad or iPad2.

    Wanna get crazy? Imagine a nice Oprah Winfrey app for 24/7 content; watch your OWN or some such.

    http://wereport.com

  • Report this Comment On February 07, 2011, at 8:29 PM, ban222 wrote:
  • Report this Comment On February 07, 2011, at 11:09 PM, gslusher wrote:

    "There's a reason why Apple TV is in its third incarnation but still a fringe offering."

    First, Apple TV is in its SECOND incarnation, unless one counts a prototype that was never marketed. The software was updated in 2008 so that one didn't need a Mac to use the Apple TV, but the device remained the same.

    Second, Apple sold over 1 million Apple TV 2s between the end of September and Dec 27th--a little more than 2 months, when they announced that sales had topped 1 million. To put this into context, Apple sold 1.23 million desktop Macs in the entire quarter--3 months. Extrapolate Apple TV sales to 3 full months and you'll see that the Apple TV sold about as well as desktop Macs. Are desktop Macs a "fringe offering"?

  • Report this Comment On February 08, 2011, at 1:13 AM, FrankDip wrote:

    Most people view the TV as a commodity. It will be interesting to see how or if Apple will somehow be able to differentiate.

  • Report this Comment On February 08, 2011, at 11:06 AM, techy46 wrote:

    Think Home Technology, the TV has been reduced to only the monitor by DirectTV, Comcast and home theater systems. Large monitors don't require iOS (touch sensitivity). Much like enterprise technology, home technology could have a central controller (cloud or server) which interfaces all peripherals (appliances, gadgets, monitors, music, phones, security, speakers, etc.). Is it like XCloud or XBox or Xtbd? More of a hardware and media issue than a software issue.

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