Apple TV Would Enter Competitive Web-Connected Market

Gartner analysts estimate worldwide unit production of flat-panel smart TVs will grow from 69 million in 2012 to 198 million in 2016.

Amid increasing speculation that Apple is working on a Internet-connected television set, a report from IT research firm Gartner projects other television manufacturers are making the move to the Web, too.

Gartner forecasts that 85 percent of all flat-panel TVs produced in 2016 will be "smart" TVs—sets that are able to access a wide variety of content from the Internet over a broadband connection, and can receive traditional TV broadcasts through terrestrial transmissions or via satellite, cable or an Internet Protocol TV (IPTV) set-top box.

The report notes that a Web-connected TV is not essentially a game-changing competitive feature on its own, though Gartner analysts estimate worldwide unit production of flat-panel smart TVs will grow from 69 million in 2012 to 198 million in 2016. Instead, compelling features unique to the brand user interface will help rival manufacturers gain an edge and drive overall market demand.

"In the end, the choice may be all about the extra content that one TV brand offers over another. Consumers will be asking questions such as which Internet TV services can the TV access? Are these the sites I think are valuable? Can I use my smartphone or tablet with this TV?" Paul O'Donovan, Gartner principal research analyst, said in a statement.

"It is critical for the TV industry during this global economic downturn and decline in consumer confidence levels to sustain sales and maintain or grow market share—especially in emerging markets. This is difficult when demand has slowed, so the extra functionality offered by smart TVs becomes the product differentiator —if prices are already competitive and all other variables are equal between brands," he continued in the statement.

Gartner further noted existing smart TVs can already access video content on the Web in many ways—such as through popular streaming sites like YouTube, Netflix, Hulu and other sites, as well as social networks like Facebook or Instagram—and can run some applications commonly found on devices such as smartphones or tablets. Mobile devices are also increasingly able to connect to televisions, allowing users to control their sets using the device as a remote control or to stream content to the TV.

"With connectivity to smartphones and tablets comes the ability to pull content from the Internet on one device and push that content to the TV," O'Donovan's statement concluded. "For those TV manufacturers that also make smartphones and tablets, the marketing advantage of the smart TV makes educating the consumer a lot easier."

The report comes as rumors and speculation mount that consumer technology titan Apple is hard at work developing its own smart television. The company already offers Apple TV, a small white set-top box that allows users to stream content from iTunes, Netflix, Hulu Plus, YouTube and other sites.

A recent survey by Morgan Stanley Research suggests consumers would be willing to pay a 20 percent price premium over competitors' offerings to get their hands on a physical TV set made by Apple. Indeed, 11 percent of respondents said they were "extremely interested" in an Apple TV. The study, conducted by AlphaWise and Morgan Stanley, is based on a poll of 1,568 American consumers on the smart TV market, and the results suggested those who do own a smart TV find the experience underwhelming. While 18 percent of homes have a smart TV, 13 percent didn't know whether the device was a smart TV, and those who own smart TVs connected to the Internet actually spend less time accessing Internet content through their TV than those who do not own a smart TV.