Could a Set-Top Box Pop Amazon Stock?

Alright, so Amazon.com's (AMZN 0.01%) stock valuation is already high. But it seems the online retail giant and all-around innovator may have one more thing to push that even a bit higher – and, hopefully, its stock price along with it.

Just a few days ago Bloomberg reported that the company is rumored to be making its own TV set-top box, due for release this fall. Although no pricing, or official word, has come from Amazon, the move would be a natural step for a company knee-deep in online content.

Amazon's online streaming service, Prime, just released 14 pilot shows to test the original content waters. The company opened up the episodes to both members and non-members, and will order full seasons of the top-rated shows based on voting from online users. The company is already gearing up for original programming, and having its own set-top box would give them yet another way to deliver content to its users.

Amazon's obviously not the only online streaming game in town, with Netflix (NFLX 0.02%) just releasing two of its own original content series' and much more on the way. Netflix recently reported that its U.S. subscribers jumped by 2 million in the past quarter, bringing the total to 29 million. Content-hungry users don't have to choose between Netflix or Amazon; they can simply sign up for both. Amazon, however, knows how to build hardware that gets people to buy content (ahem, Kindle), and it's likely they can do the same on TVs.

Amazon may be in a postion to push out current video streaming competitors, as well. Coinstar's (CSTR +0.00%) Redbox Instant, a joint program between the company and Verizon, has yet to gain the traction Netflix has. Unlike Amazon and Netflix, Redbox doesn't have any TV-show content, which puts the service at a disadvantage. An Amazon set-top box could be very bad news for Coinstar's project, just as its getting under way. 

Amazon's move into set-top boxes won't come without some serious hurdles though. Apple (AAPL +0.00%) is already firmly in the space, and is arguably one of the best companies at fusing hardware, software and content all into one perfect little package. iTunes currently takes 67% of the online TV show sales market and 65% of the movie sales market, which either means they should be concerned about an Amazon set-top box. or Amazon shouldn't expect to gain too much ground right away. Either way, investors can expect more intense competition between the two if Amazon releases the TV box.

We can't forget about another player throwing its hat into the set-top box ring, either. Intel has said it has official plans to launch its own box. The advantage for Amazon is that it already has deals with content providers, is currently selling video content on its tablets and website, and can bring all of that experience, plus brand power, to a set top box. Intel really doesn't have any of that right now and could quickly get pushed out of the space just as it's getting started.

At this point, it seems like a no-brainer for Amazon to try its hand at a set-top box and tap into the burgeoning trend of ditching cable and satellite for a more on-demand content experience. Amazon's stock may not need the new set-top box, but investors may have more to look forward to if it does launch such a product.