6 Reasons Apple Will Make a TV

There shouldn't be any naysayers left out there on the prospects that Apple (Nasdaq: AAPL  ) will make a full-fledged TV set.

Even though it's been less than two years since Apple began defining its latest market, namely the tablet market with the iPad, that doesn't mean it's too soon to lay siege to the next frontier: the living room.

Apple watchers have long speculated on Apple's entry into the full-size TV-set market, but the recent release of the late Steve Jobs' official biography has sparked renewed hope because of some choice words that the visionary expressed during the book's numerous interviews with author Walter Isaacson.

Graphic by Dari FitzGerald.

Here are six reasons Apple will inevitably enter the TV market with a smart HDTV.

1. It's all about the experience
How many times have you bungled with your existing collection of DVD players, gaming consoles, and TVs and their corresponding remotes, only to find that the you were using the wrong input to begin with? Or misplaced your favorite DVD or had to untangle a dozen different cables trying to find the right one?

Apple has long been the master of creating an integrated and simplified user experience, and an iTV would be no different. A TV would simply be another device for iCloud to seamlessly sync your content to, not to mention being another portal into your digital wallet as you peruse through iTunes video offerings from the device. Bloomberg has even named iTunes creator Jeff Robbin as spearheading the project.

iTunes facilitated the decline of physical CDs, and it promises to do the same with physical DVDs as digital distribution is quickly becoming the norm.

2. Game changer
Apple has inadvertently become an important player in the gaming world, after it opened up iOS to third-party developers in 2008. iOS game sales are killing dedicated handheld gaming-device sales like Nintendo's dejected 3DS and Sony's (NYSE: SNE  ) upcoming PlayStation Vita.

Apple's Game Center network has already garnered 67 million registered users since its launch a year ago, while mobile graphics performance is evolving exponentially. iOS 5 with AirPlay mirroring is already prompting some developers to create games to beam to a TV while you use your iDevice as the controller, which represents a clear threat to console-gaming platforms like Microsoft's (Nasdaq: MSFT  ) Xbox 360, Sony's Playstation 3, and Nintendo's Wii.

While dedicated gamers will always stick to dedicated consoles, Apple would be able to derail a healthy number of average gamers into just using an iDevice they may already own to get their gaming fix. iOS games are available for a fraction of the cost of console games, which typically run around $60 new.

3. "What are you in the mood to watch?"
I have an inkling that Siri will find its way into just about everything Apple makes. Forget the handful of remotes you use now. Just imagine having your TV ask you what you'd like to watch or telling it what shows you'd like to record. People have long been using their iDevices as universal remotes, and controlling an iTV isn't a far leap of the imagination.

Apple's approach should even combine the two ideas -- you'll tell your iPhone what you're in the mood for and Siri will beam it to your iTV, which would alleviate difficulties with distance and ambient sound interference. Now that would be compelling.

4. Content is king
When it comes to content, there are a few routes. Apple's current a la carte iTunes model doesn't seem like a good fit, since most people are used to subscriptions for television content. Netflix (Nasdaq: NFLX  ) is a requisite for streaming, since it's already built in to the current generation and leads the streaming pack. An independent Hulu would also be a good addition.

A few years ago, there was talk that Apple was pitching a subscription iTunes TV service to networks. Although nothing panned out then, the idea could still be on the table and would threaten to disrupt traditional cable operators like Time Warner Cable (NYSE: TWC  ) if the price was right.

For all we know, chances are that Apple is at the negotiating table as we speak with News Corp.'s (Nasdaq: NWS  ) Fox Broadcasting, Disney's (NYSE: DIS  ) ABC network, and Comcast's (Nasdaq: CMCSA  ) NBC Universal hammering out the details of a content deal.

5. All angles
All of Apple's premium displays, including the iPhone, iPad, iMac, and Thunderbolt/Cinema Displays, use a technology called in-plane switching, or IPS. IPS is the preferred technology within the display industry for its color reproduction and wide viewing angles.

Displays that incorporate IPS for its benefits carry heftier price tags compared with other display technologies, like twisted nematic, or TN. Creative professionals like graphic artists and Web designers generally opt for premium display technologies for their livelihood.

Apple would undoubtedly use this technology for a screen as large as a TV with 1080p HD resolution, and certainly with said hefty price tag.

6. Why not?
The LCD TV market next year is estimated at around $100 billion. That's a pretty big market with plenty of opportunity, and capturing just a fraction of it would be dollars in the iBank. Apple's offering would be on the high end of the market, but it would certainly offer a compelling value proposition that justifies the higher entry-level cost.

Google (Nasdaq: GOOG  ) largely failed with its first smart-TV attempt, and odds are that it has pulled back to regroup and flank the living room with another strategy that will incorporate soon-to-be subsidiary Motorola Mobility's (NYSE: MMI  ) set-top box division. If Google wants to throw a TV party, Apple will kindly invite itself to crash the festivities.

Moving into the living room is simply a natural progression for Apple. It's just about the only other place in your house with a screen that remains yet untouched by Cupertino. There are plenty of reasons for Apple to disrupt the TV industry, yet decidedly no convincing reasons not to.

Fool contributor Evan Niu is in the market for a new HDTV and is eagerly awaiting Apple's foray. He owns shares of Apple, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services have recommended buying shares of Netflix, Apple, Google, and Microsoft, as well as creating bull call spread positions in Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (6) | Recommend This Article (12)

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 October 29, 2011, at 6:32 PM, KTWalrus wrote:

    How about this idea?

    Beef up Airplay feature so it is the only interface to the actual Apple TV. Then, include an iPod Touch as the remote control (complete with Siri interface and the ability to take any internet content or iOS app and display on the Apple TV).

    This would be killer!

    Only problem is that Apple TV would essentially just be Airplay and Apple could just license it to all HDTV manufacturers and not get into selling overpriced HDTVs. Of course, HDTVs are a low-margin business and it would be best for Apple to stick with higher margin portable iOS devices.

    I'd also like to see Airplay enhanced so it could be used to run a car's navigation/audio system (where the car would have a separate touch display that could be controlled by an iPod Touch/iPhone including touch input on the car's display controlling the app running on the iOS mobile device).

    Basically, the interface between the iCloud/iOS app should be through an iOS device using Airplay to an external display.

  • Report this Comment On October 29, 2011, at 9:48 PM, dpetrosky wrote:

    You make some good points as to why Apple may dominate in the living room, but not why they need or even should make a TV. The only real TV feature you mention is that Apple uses expensive LPS displays which are better than what many TV makers use today, but that's a double edged sword.

    Bottom line is that connecting an AppleTV to a TV takes a single cable and virtually no space. So the difference between an AppleTV box connected to a TV and a TV made by Apple with an AppleTV box built in is trivial!

    But the down side is major. TV's are 10-15 year upgrade cycle purchases and AppleTV set top boxes are 3-5 year life cycle devices. It just can't work.

  • Report this Comment On October 29, 2011, at 11:53 PM, phoebe44 wrote:

    Do we think Apple might be looking at buying Dolby for sound quality in these new TVs?

    And, for sound quality with Siri?

    Hope so!

    Sherry

  • Report this Comment On October 30, 2011, at 12:52 AM, prginww wrote:

    good analysis

  • Report this Comment On October 30, 2011, at 10:43 AM, Chemsoldier88 wrote:

    Game apps for iPhone and Android poise zero threat to consoles such as Xbox or PS3. I play the hell outta apps, but in no way, shape or form will they ever compare or take the place of my Xbox or anyones for that matter - I promise you. Apps are for on the go, or while at work of course, and nothing else. I don't know anyone that plays a game on their iPhone sitting next to their unloved or unused Xbox. Doesn't exist.

  • Report this Comment On December 28, 2011, at 9:46 AM, Brent2223 wrote:

    AppleTV is already plug and play, don't see what additional value would be unlocked by offering an actual television. Although it would be in line with Apple's obsession with controlling all software and hardware that can be used with its devices.

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