Apple needs to jump on TV opportunity, analysts say

The time is ripe, as the company has brand equity as a device maker and content provider

Apple's success in mobile devices like the iPhone and iPad could spill over into the TV segment if the company decides to make a push for devices with larger screens, analysts said on Friday.

Engadget on Friday reported that a new version of the Apple TV platform was due for launch soon. It would succeed the current Apple TV service, which allows users to watch movies and experience other multimedia content on TVs. Apple declined to comment about the Engadget report.

The new platform would include new hardware, including a box with an Apple A4 chip that would allow for 1080p video playback, according to the report. The device will be priced at US$99, substantially lower than its current $229 price, and will come with the iPhone OS. The new device will provide content storage in the cloud, compared to hard-drive storage in the current device, Engadget reported.

The initial Apple TV service was not considered a success, but with Internet and broadcast content beginning to merge, the company could be poised for success in the TV market, analysts said. The sales of wireless and Internet-capable TV sets are taking off, and Apple has more brand equity as a device maker and content provider than ever in the past. However, the company will need to fend off TV makers, service providers and software makers who have their sights set on the burgeoning TV segment.

There is a lot of fragmentation in the TV space, and Apple has a content distribution advantage compared to its rivals, said Roger Kay, president of Endpoint Technologies Associates. Elements of broadcast and Internet content are starting to merge, but companies are still trying to figure out the best way to bring them to big screens, he said.

"Apple has made a recent try at TV and it wasn't so great," Kay said. "This is an important market that Apple shouldn't leave uncovered."

Though unsuccessful, Apple can boast of experience in the TV market, which gives it an early mover advantage, Kay said. The company also has the reputation of providing a good user experience for customers on devices like the iPhone and iPad, and the brand equity could carry over to the TV.

One of Apple's rivals could be Google, which along with partners Intel, Sony and Logitech last week announced the Google TV platform, which will blend broadcast TV and Internet into one interface. Google will supply the software, and the service will be available later this year in some Sony high-definition TVs and Blu-ray DVD players, for which Intel will supply the Atom CE4100 chip.

It would not be a surprise if Apple announces something around Apple TV as early as the developer's conference, said Tim Bajarin, president of Creative Strategies. Apple's Worldwide Developers Conference will be held in San Francisco from June 7 to 11.

"People think that Apple may be responding to Google, but it may be the other way around," Bajarin said. Google CEO Eric Schmidt was part of Apple's board in the past and understands Apple's direction, he said.

Apple's mobile product strategy -- like with the iPhone and iPad -- revolves around bundling hardware, software and services. But the strategy may need to change in the TV market, analysts said.

Apple was an early player in the mobile market, which allowed it to blend things, but there are too many players offering Internet-connected TV sets and services, analysts said.

In addition to providing hardware and content, Apple will also need to make it easier for customers to understand what the service does, said Stephen Baker, vice president of industry analysis at the NPD Group. There are too many moving parts a customer needs to understand in order to use the current Apple TV device and surrounding services.

It will depend on Apple if it wants to bring simplicity with an all-in-one purchase, Baker said. Nevertheless, the segment is growing and the time is ripe for Apple to exploit it.

"Given the fact they've been unsuccessful, it's a product segment that it is poised to explode," Baker said.

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