Apple to Enter TV Market?

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An Apple-branded TV?

It might seem laughable, if it weren’t for the fact that the iconic Silicon Valley company has already entered more than one consumer market with big, established players and rewritten the rules of the game — think portable music players and smartphones.

Piper Jaffray analyst Gene Munster wrote in a note to clients that Apple (NASDAQ: AAPL) is now primed to develop a “connected TV” over the next two years that would be available in 2011.

The system would include built-in digital video recorder (DVR) and home media functionality. Munster said such integration would let users sync recorded shows to Macs, iPhones and iPods over a wireless network.

Apple has made no secret of its ambition to play a greater role in the so-called “digital living room.” The company already has a product called Apple TV, designed, in part, to watch iTunes and other downloaded digital content on the TV.

CEO Steve Jobs labeled that product a “hobby” when it first came out in 2007. But after a slow start, Apple TV has picked up steam more recently and Apple predicted sales will triple this year to 6 million units.

The success of the Apple TV could also be a stepping stone to a broader television package — with a full-fledged Apple television down the road, Munster said.

He suggested that Apple in the next year might launch an iTunes-like service for Apple TV owners, offering a broad library of content for a monthly subscription fee of $30 to $40. The package could include Apple’s library of iTunes content and network and cable shows — assuming Apple could negotiate a deal to make that happen.

The Web-based service would “effectively replace a consumer’s monthly cable bill and offer access to current and older episodes of select shows on select channels,” Munster said.

Analyst Phil Leigh, founder of Inside Digital Media, thinks the idea has merit.

“Do I want to subscribe to cable TV or iTunes? I might just pick iTunes because so much will be available on demand when I want it,” he told InternetNews.com.

As for an Apple-branded television as the culmination of the company’s current and possible television moves, Leigh thinks there’s an opportunity for Apple — or another company — to bring new systems to market.

“Television is not only a huge market, it’s a market that’s almost certain to evolve in this [Internet-connected] direction,” he said. “Whether it’s Apple or someone else, this is the way products are going to work.

Leigh said that current Internet-connected TVs, like Sony’s Bravia and Samsung’s models that include Yahoo’s widgets for grabbing Internet content, are more of an interim step.

“Those are essentially traditional televisions that also connect to the Internet,” he said. “I think with Apple, we’re likely to see a new generation of device.”

Apple could not be reached for comment by press time. The company has a standard policy of not commenting on new product speculation.

But can Apple really pull it off?

Still, NPD Group retail analyst and vice-president Stephen Baker is highly skeptical of the idea that Apple plans to bring out a TV. At the very least, it will have plenty of hurdles to clear if it does, he said.

“If they had a game-changing technology, maybe,” Baker told InternetNews.com. “But I don’t know they have enough to add that will resonate that strongly with enough consumers.”

“Also, 2011 is a ways off, and a lot of the established players are already pursuing these kind of advances,” he added.

It’s also a highly price-competitive market. Even though TV prices are falling, Piper Jaffray’s Munster believes Apple could differentiate itself with software that makes home entertainment simpler for consumers and the various components they have to deal with today.

But NPD’s Baker thinks it would still be tough for Apple to get traction in the retail channel.

“No one selling a premium product is happy with the state of a market that’s lost something like 30 percent of its value in the past six months,” he said.

Baker also said he thinks current Apple partners like Best Buy have their hands (and shelves) full already. And Apple doesn’t have enough of its own stores — just a few hundred — for a serious national rollout.

Article courtesy of InternetNews.com.