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Is Apple TV About to Go Big?

Is Apple TV About to Go Big?

Apple's little black box could turn into a big shiny rectangle if the latest rumor holds true. The company's reportedly planning to make its next-generation Apple TV an actual television, rather than a peripheral device. The stakes could be high -- the television market is already saturated, but Apple may be able to offer TV producers something others can't.

By Richard Adhikari MacNewsWorld ECT News Network
10/25/11 12:05 PM PT

Apple plans to offer a TV set by 2013 to replace its current Apple TV peripheral device, according to BusinessWeek, which cited unnamed sources.

The project is said to be headed by Jeff Robbin, who helped create the iPod and the iTunes media store.

The rumor has been lent strength by a statement in the biography of the late Steve Jobs, Apple's cofounder.

Jobs apparently said that he had finally figured out how to build an integrated TV with a simple user interface that would wirelessly synchronize content with other Apple devices.

"I think the signs are pointing to this happening, and obviously the release of the Steve Jobs bio and his comments in there make it seem even more likely that this is going to happen," Kurt Scherf, principal analyst at Parks Associates, told MacNewsWorld.

Should the rumor about the Apple TV set be true, Cupertino could find the device quite profitable, according to a note from Barclays Capital to investors.

Apple did not respond to requests for comment by press time.

TV Dreams

Apple is working on a prototype TV set and may put the device on the market by late 2012 or in 2013, Piper Jaffray analyst Gene Munster told investors.

He cited various contacts and Apple's patent portfolio as evidence.

If Apple were to offer a TV set, Barclays predicts its margins and pricing could be industry-leading, given Cupertino's dominance in the supply chain and its potential to drive premium pricing.

With 5 percent of the TV market and an average selling price of US$1,500, Apple could make more than $19 billion in revenue, Barclays forecast.

However, Samsung, LG and Google TV all offer apps, devices and a connected TV experience that is as good as Apple, and "it may be more difficult to differentiate them now," Russ Crupnick, senior vice president of industry analysis at the NPD Group, told TechNewsWorld.

It Takes a Village to Make a TV

Instead of making the TV itself, Apple might decide to team up with an existing TV manufacturer for the hardware.

"It seems more likely that Apple would partner with a limited number of vendors just as it did with the iPhone and iPad," Charles King, principal analyst at Pund-IT, told TechNewsWorld.

Apple wouldn't be the first computer company to turn its attention to making TV sets, but perhaps it should look at what happened to its predecessors.

"HP, Dell, Gateway and Pioneer all tried to make TVs and failed because this market's massively saturated," Rob Enderle, principal analyst at the Enderle Group, told TechNewsWorld.

"This makes the TV set a far greater risk than anything Apple's tried before, and failing at a new product so soon after Steve Jobs' death could crater Apple," Enderle elaborated.

Content Is King

The original Apple TV -- a white box that brought the user's iTunes content to a television -- did not prove to be one of Apple's hottest products. A later version added features like Netflix streaming and a lower price point. That version sold better, but Apple later stopped offering TV shows on a rental basis for $1.

"The market's likely unwilling to take $1 per show even though it could be a good deal despite the lack of commercials," Enderle remarked.

"This is because it's used to subscriptions in this segment, and change is very difficult once a market has locked into a model," Enderle continued. "But, if any company could do this, it would be Apple," he added.

Apple could offer something other vendors may not be able to: finely honed data on what consumers are watching on their multiple screens -- smartphones, tablets and TV sets, Parks Associates' Scherf suggested.

"One of the greatest challenges to TV everywhere is measuring how many times content is viewed on multiple screens," Scherf said. "Nielsen and others have tried to crack that, and I wonder if Apple can provide things like measurement and report back to the media industry about how content's being moved from one device to another and let the industry serve up complimentary content on a second screen."

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