The long-standing rumors of a forthcoming Apple (NASDAQ:AAPL) smart TV were given weight this week after Apple confirmed that it had acquired PrimeSense, the company best known for developing Microsoft's (NASDAQ:MSFT) Kinect technology.
Apple's TV has reportedly been in the pipeline since at least 2009, and since that time a host of competitors have emerged, including Microsoft and Samsung (NASDAQOTH:SSNLF). Yet despite Apple's delays, the opportunity remains.
Microsoft's Xbox One is loaded with advanced TV features
Microsoft's new video game console, the Xbox One, is packed to the gills with smart TV capabilities. In addition to offering access to online services like Hulu, the Xbox One interacts directly with owners' cable boxes, giving users the ability to control their TVs with voice and hand gestures. It also offers facial recognition and Skype video calling.
In short, it's just about everything you'd expect from a full-fledge Apple television; indeed, Apple's decision to acquire one of Microsoft's suppliers suggests that Apple is moving in a similar direction. Before it was acquired by Apple, Authentec supplied fingerprint scanning technology to Motorola for the Atrix smartphone.
But although Microsoft apparently had the right idea, early reviews of the Xbox One have found fault with the interface. The Verge noted that Kinect "doesn't always work," and that voice commands were "hit or miss." It found similar issues with the Xbox One's hand gesture-controls, characterizing them as "even more finicky."
CNet's review was largely the same. In addition to faulting the voice controls for their unreliability, it complained about the Xbox One's confusing dashboard and lack of full DVR integration.
Samsung sees its TV advantage as a way to stand out
Samsung, not Microsoft, might ultimately become the more fearsome competitor. Samsung already has a massive, established TV business -- with about a quarter of the market, there's a good chance that many Apple iPhone owners have a Samsung TV in their house -- and now Samsung wants to use its TV business to support its mobile devices.
Samsung held its first annual developer conference in October, unveiling several software development kits, or SDKs, that make it easy for programmers to give their mobile apps TV functionality. For example, one allows games played on Samsung handsets to be beamed to TV screens, while another offers easier multi-screen content sharing.
All of Samsung's high-end TVs currently come with its smart TV software, but that's really nothing more than a built-in Roku player. Techradar said Samsung had only the third-best platform, behind both LG and Panasonic. Some of Samsung's TVs include voice and gesture controls, but these were for faulted for being unreliable.
The threat comes from Samsung's large install base. Since 2012, all of Samsung's smart TVs have come with a slot in the back, which allows owners to install "evolution kits" at some distant future date. If Samsung ever gets it right on smart TV software, consumers may find it easier to upgrade their existing Samsung TV rather than buy one Apple's new one.
Apple's TV potential
I suppose Apple may opt to employ PrimeSense's technology for something else, but given how Microsoft has used it in the living room, it seems to more or less confirm what so many have expected -- Apple is planning to release a full-fledged TV.
In the past, I had speculated that Apple had waited too long. That the market for the device was rapidly being filled by Apple's competitors, particularly Microsoft, which have beaten it to the market with gadgets that offered similar functionality.
But with Microsoft whiffing on the Xbox One's TV features, the opportunity for Apple to introduce a breakthrough smart TV remains. As the iPhone unified a market of confusing, faulty smartphone solutions, so too, could Apple's TV bring Internet-connected TV to the masses. And like the iPhone, Apple's major competitor could prove to be Samsung -- not Microsoft.
Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Microsoft. 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. The Motley Fool has a disclosure policy.