Apple TV Service Could Rival Google TV in Cloud

By Clint Boulton  |  Posted 2011-04-16

Apple TV Service Could Rival Google TV in Cloud

New life was breathed into the old rumor that Apple could release an Web-fueled TV set by an analyst who believes such as launch could produce a halo effect for the iPad and iPhone and add billions of dollars to Apple's 2012 revenues.

Jefferies and Co. analyst Peter Misek said channel checks with content providers and developers suggest Apple is about to launch a subscription-based video service, possibly in the form of a full TV set or set-top box.

"We believe Apple will launch a new far reaching cloud-based service that is more than just a music or content locker and focused on video," Misek wrote in a research note April 12.

This is not to be confused with the existing Apple TV product, a small, hockey puck-style device the company sells for $99 to let users stream Netflix and other content via their existing TV sets.

The Apple TV Misek believes is coming is more akin to Google TV, the Android-based Web TV product that blends a Chrome Web browser and search capabilities with consumers' existing TV services.

Google TV, which comes via the Logitech Revue companion box, Sony Internet TVs and Blu-ray players, has endured relatively weak reception since its launch last fall. Google is expected to make its Android Market applications available for Google TV this year.

The Apple TV service Misek envisions could include a Safari Web browser and sync content and services across users' iPhones, iPads and Macs, and provide a gateway to the 350,000-plus applications in Apple's App Store. This offering would compete with not only Google TV, but services such as Netflix and Amazon's Instant Video service.

Such a service could be fueled by Apple's new data center in Maiden, N.C., which Apple COO Tim Cook has said will support Apple's existing iTunes and cloud-based MobileMe service. Others speculate the data center will be ground zero for a Web-based iTunes and other cloud services.

An Apple TV Has Its Doubters

A new Apple TV service would seem to fit in well there and boost sales for the iPad, iPhone iPod Touches and Mac computers.

"In addition to subscription revenues, we think Apple could potentially benefit from a halo effect that increases units and ASPs for its existing products and provides a foundation for the launch of an iTV-like device," Misek wrote April 12.

This halo effect spurred Misek to raise his 2012 fiscal year revenues to between $150 billion and $171 billion versus Jefferies' current $134 billion sales cushion, and the consensus of $118 billion.

Other analysts are skeptical, noting that connected TVs have simply not taken off for the last decade or so that companies have launched them.

"An Apple TV has been one of the biggest digital unicorns of all time," Gartner analyst Michael Gartenberg told eWEEK April 15, adding that there is no reason to think Apple is building this. "Saying that Apple is going to build a television set two years in the future and saying that for five years doesn't make you right."

Misek is hardly the first financial industry analyst to predict an Apple TV set. Piper Jaffray analyst Gene Munster has been calling for an Apple Web TV service since 2007.

Most recently, Munster said in January that Apple is investing in LCD displays used for Apple's iPad and iPhone lines, Macs with 27-inch screens, and possibly up to 50-inch-screen Apple televisions in the future.

Gartenberg said there are a lot of challenges and risks in the market for such a product, starting with the obvious cost and margin perspective, and moving right on down to the consumer churn issues and channel challenge. For example, Apple received a lot of resistance from TV networks when it tried to offer TV rentals.

"Apple would have to find a way to do this in a way that would be so transformative and so disruptive much as the iPhone was," Gartenberg.


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