Does This Apple Rumor Check Out?

A long-standing rumor suggests that Apple (Nasdaq: AAPL  ) will build some sort of steroid-boosted TV set in the near future. You know what I'm talking about: the equivalent of a Retina Display with a built-in Apple TV box, all powered by some amazing new control system. Steve Jobs famously told biographer Walter Isaacson that he had "finally cracked" the problem of an elegant TV control method. Analysts like Piper Jaffray's Gene Munster have been pushing this idea for years.

The idea seems real enough, judging by patent filings and job postings alone. Cupertino is certainly doing some kind of research into the TV market, though it remains to be seen whether the company really wants to make a better TV set or just a better Apple TV box.

This week, the rumor mill poured fresh gasoline on the fire, as Apple fan site Cult of Mac reported two new things:

  • Apple CEO Tim Cook has been seen at the headquarters of PC game developer Valve Software.
  • That long-awaited TV set will include not only voice controls similar to the Siri assistant in the iPhone 4S, but also a touchscreen remote that could look a lot like today's iPod Touch and -- here's the kicker -- motion control akin to Microsoft's (Nasdaq: MSFT  ) Xbox 360 Kinect system.

Software specialist Valve is also hiring hardware engineers to "conceive, design, evaluate, and produce new types of input, output, and platform hardware," and company founder Gabe Newell won't exactly deny that there's a console in the works. Throw in Apple's hardware expertise, and maybe Valve's software could power a previously unheard-of hardcore gaming aspect to Apple's high-def TV.

That's one way of interpreting these rumors and reports, assuming that all of them are absolutely true. But even so, it's not an inescapable conclusion. Here's why:

  • Valve already works with Apple as its Steam distribution system, and many games run on Mac OS X. So Cook might show up at Valve's digs to discuss that existing relationship rather than some new hardware project.
  • A Kinect-like controller could be used to emulate a smartphone or tablet touchscreen at a comfortable couch-to-TV distance. Gaming is not required, and a simple touch emulator should cost a lot less to build than the powerful components that are required for fine-grained control of action-packed games.
  • Apple already has a gaming platform in the iOS platform. In fact, you could say the iPhone and iPad are killing the traditional gaming industry as we speak. (Not all alone, of course -- Android gets an assist and Facebook-style casual Web gaming is another console killer.) Why dilute the power of that weapon by starting over with another new platform and no apps to speak of?

So in short, parts of this dreamed-up Apple product look reasonable, but others do not.

I'll buy the idea of building a scaled-down Kinect into the iTV, but only to complement the flexible touch remote and voice controls. The thing should still play Angry Birds and Draw Something, probably running exactly the same code as the iPad versions. You could call this a gaming console, but then you'd have to put the iPad in the same category.

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Fool contributor Anders Bylund holds no position in any of the companies mentioned. Check out Anders' holdings and bio, or follow him on Twitter and Google+. The Motley Fool owns shares of Apple and Microsoft. Motley Fool newsletter services have recommended buying shares of Microsoft and Apple and creating bull call spread positions in Apple and Microsoft. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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