Reasons to believe
IDC senior research analyst Linn Huang shares the conventional wisdom that Apple is already working on a fully self-contained TV, that it's a real product, and that it will eventually go on sale. "They have done some sourcing of components from the TV components supply chain," says IDC senior research analyst Linn Huang. "They have made engineering explorations into the TV space."
But what Apple is building isn't like anything you'll currently find in Best Buy. It will be much more akin to a giant iPad, with a beautiful screen that can be controlled with an iPad or iPhone from your couch. And its user interface will feel like the iPad's (though on a much larger scale), and Siri will be on call to help you find the TV content you're looking for.
Huang says the living room TV represents Apple's final frontier. We have five really important screens in our lives--the desktop, the laptop, the phone, the tablet, and the TV. Apple has product answers for the first four, and now it needs to find a home on the fifth screen.
"They want to extend their OS reach beyond the devices they're already in," says Huang. The endgame is to sell both more content and apps. The iTV itself is just a gateway to enable that, he says.
Even if Apple only breaks even on sales of the TV itself, Huang says the company will profit directly from couch-based purchases of video and music from the iTunes store, and indirectly from in-app purchases and in-app ads.
What it will look like
The existing Apple TV product already extends an Apple OS to the TV, but Apple likely won't be satisfied with a set-top device that relies on a TV made by some other company. Apple has shown an insistence on controlling the whole consumer experience--from the interface to the look of the video to the size and shape of the apps. And Apple can only get that kind of control by going all-in with a full-fledged, big-screen TV.
Analysts say, and history suggests, that Apple's iTV will sell at the high end of the market. It will use the best components--the best screen, the best materials, and the best microphones (for voice recognition).
Huang believes that the iTV, in line with Apple's broader product strategy, will use premium components that fit with the product's user experience. "The new 4K resolution would be a logical build choice, whereas 3D would probably not be," Huang says. "They are not trying to absorb all the features in the market today. They choose only the ones that are important for the experience they are trying to create."
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