CUPERTINO — With the launch of its iPad Mini, Apple (AAPL) now has a device for nearly all purposes. But the company still hasn’t offered its version of the biggest home device of all — the TV.
Analysts argue that many consumers want a gadget that is as easy and sleek as an iPad to manage and operate their home entertainment systems. Apple, it is hoped, will reinvent that living-room box into a sophisticated system that allows people to effortlessly access limitless entertainment and information on one device — everything from HBO shows to Internet videos to games to email.
Walter Isaacson’s 2011 biography of the late Apple co-founder Steve Jobs heightened interest further. “I’d like to create an integrated television set that is completely easy to use. It would be seamlessly synced with all of your devices and with iCloud. … It will have the simplest user interface you could imagine,” Isaacson quotes Jobs as saying. “I finally cracked it.”
A year has passed and Apple has not moved beyond Apple TV, a digital media receiver that allows users to stream photos, music and videos originating from limited Internet services or a local network.
Some analysts believe Apple is preparing to release its next new thing — an ambitious iTV that becomes the center of people’s digital lives — in 2013. Others, though, believe Apple’s contributions will be greatly constrained because content providers, from studios to cable companies, are wedded to the lucrative pay-TV subscription models they have now and won’t welcome Apple’s role as an intermediary with consumers.
“The TV is a complicated story because Apple has to secure content from content creators and that’s a big issue,” said Needham & Co. analyst Charles Wolf. “It was much easier with music.”
The Cupertino company is not alone in its pursuit of dominance in the living room. Giants like Intel (INTC), Google (GOOG) and Microsoft — as well as a host of smaller companies, including TiVo and Roku — see business opportunities in front of the couch.
But Apple’s design aesthetic — in both hardware and software — and past deals with Hollywood and TV studios that allow their content to be sold through iTunes is believed to give it an advantage.
Piper Jaffray analyst Gene Munster has for years maintained Apple is hard at work on an ambitious iTV device. In a note to investors at the end of May, he said such a product was not an “if” but “when.” He envisions an Apple TV selling for $1,500 to $2,000 that would include Siri, Apple’s voice-command technology, be tied to the App Store and controlled through an app on an iPhone or iPad. Apple’s TV interface would “revolutionize how consumers interact with their living room,” Munster predicted.
Richard Doherty with the Envisioneering Group thinks Apple will launch a new TV as early as the first half of next year and it will be a device with many of the same features found on the iPad, such as a camera and microphone. He also believes Apple would develop some sort of intuitive software that would let users know when a favorite TV show will be repeated and suggest songs to buy through iTunes based on viewing habits.
“It will be smart and anticipatory, just like so many Apple interfaces have been,” Doherty said. “We know from interviews on both coasts that consumers want them to do this.”
Apple could eventually partner with a cable company and create a new stream of revenue with fees added onto cable bills, he said.
“Apple is in talks with cable operators,” Doherty said.
Wolf said it does not make business sense for Apple to simply make an actual TV.
“It’s a low-margin product,” Wolf said. “It’s not clear what advantage it would convey to Apple.”
Riddhi Patel, research director for consumer insights at NPD DisplaySearch, added that beyond the Apple faithful, relatively few consumers would be willing to pay the premium price an iTV would command. “The consumer base is very, very price sensitive,” she said.
Wolf and others believe Apple’s strategy for the living room will be providing software to create a digital hub.
“Their biggest opportunity is a box accessory (that connects) to the Apple ecosystem,” said Creative Strategies analyst Ben Bajarin. “It fits their model of product refresh cycles. Consumers could refresh that every couple of years. You are not going to refresh a TV every couple of years.”
Sterne Agee analyst Shaw Wu, though, believes the long-awaited Apple TV is already here — it’s called the iPad. Movies and TV shows are available through apps such as those from Netflix (NFLX), Hulu and ESPN.
“If you look at TV sales, they are flat to down,” he said. “But you are seeing sales of mobile devices going up. People are doing TV-type activities on iPads. For some people, their iMac is their TV. So Apple TV is already here.”
Contact John Boudreau at 408-278-3496; follow him at Twitter.com/svwriter.
