Analyst Expects Apple to Offer Television Set by 2011

Apple Television?Apple will be adding an Apple-branded television set to its lineup by 2011, according to Piper Jaffray analyst Gene Munster. Such a device would have media-management features -- features currently found in the Apple TV settop box -- built into it, as well as a DVR and subscription-based content viewing, according to a research note to clients covered by AppleInsider.

The television market has been a low-margin business for decades, but Mr. Munster told clients that Apple could compete in the segment profitably by changing the rules, the strategy Apple used with its iPod, iTunes, and iPhone platforms.

"We see potential for Apple to offer best-in-class software and hardware and charge a premium," Mr. Munster wrote.

Mr. Munster wrote that he believed Apple's iTunes Store was losing online video market share to ad-based subscription services like Hulu and on-demand services like Netflix's Watch Instantly service. To combat that, Apple could launch a subscription-based service of its own in conjunction with a TV set.

In the past, Apple has insisted that customers wanted to own their content, and the company has repeatedly rejected the need for a subscription-based service for its music offerings. The company has been less vocal when it comes to the future of its video-business at iTunes, however.

Mr. Munster compared the state of the TV set market, which has seen significantly declining price points during the last several years, to that of the cell phone market, which also saw prices plummeting in advance of the iPhone's release as a premium-priced product.

Apple could take advantage of its ability to offer a better user experience to tackle this industry the way the iPhone did.

"[An Apple-branded TV] would command a premium among a competitive field of budget TVs," he wrote. "We believe Apple could differentiate itself with software that makes home entertainment simple and solves a pain point for consumers (complicated TV and component systems)."

As for Apple's existing Apple TV settop box, Mr. Munster told clients that Apple will sell some 6.6 million of the devices in calendar 2009.

Shares in Apple traded higher on Thursday, with the stock closing at $166.33 per share, a gain of $1.73 (+1.05%), on moderately light volume of 12.2 million shares trading hands.

*In the interest of full disclosure, the author holds a small share in AAPL stock that was not an influence in the creation of this article.