Apple’s Supply Chain Testing out TV Designs

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The Apple Crystal Ball

Component makers in Apple's supply chain have been spilling the beans again, this time claiming that they are working with Apple to test out different designs for a high definition television set. Citing unnamed sources, The Wall Street Journal reported that Hon Hai Precision Industry has been collaborating with display maker Sharp on testing Apple TV designs.

We've had rumors like this before. In June, for instance, Hon Hai Precision was going to take delivery of TV displays for anApple TV that would be delivered in time for Christmas. Some quick back-of-the-napkin math will find that this didn't come true.

That report came from Topeka Capital analyst Brian White, one of many Wall Street analysts with connections inside Apple's supply chain. Canaccord Genuity analyst Michael Walkley wrote a similar research note in April. Also in April was a report from Peter Misek of Jeffries & Co. who said Apple would release a device called iPanel in this, the fourth quarter.

Let's see...Nothing into nothin'. Carry the nothin'...Yep, still no Apple TV.

Newspapers also have sources, of course. In August, The Wall Street Journal also reported details about an Apple TV, saying that it will have a built-in DVR, on demand TV shows, and more. DigiTimes has had a few reports, as well.

Of course, Apple CEO Tim Cook said just last week that the TV industry was an area of "intense interest" for his company, fueling equally intense speculation all over again.

Wednesday's report from The Wall Street Journal didn't offer many details on the device that Hon Hai Precision is testing. It did quote one of its sources, however, an executive at an unnamed company who said, "It isn't a formal project yet. It is still in the early stage of testing."

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Spin: We've noted this before, but it bears repeating: Apple tests all kinds of things all the time in all manner of product categories. Most of those tests are in black labs on Apple's campus, but some testing also takes place in the supply chain.

A big part of Apple's whole widget magic is the tight control it maintains over the manufacturing and assembly of its products, even though it outsources its manufacturing. The company's unibody manufacturing process for the MacBook Air, and later MacBook Pro, was developed in part by Apple in conjunction with the actual maker of the cases. Apple often owns the equipment used to make some of its components, too.

Our point is that these leaks are almost always accurate—if you read that a component maker is testing out this iPad or that MacBook or some iPhone, it's probably true. When DigiTimes reports that a new iPad model is going to be this size or have that bezel, it was probably based on a legit source who had some piece or another of a prototype that was made for Apple.

The flip side of that coin, however, is that many of these tests are on different designs that Apple will choose from or for products that the company is just trying. Remember how often Tim Cook or Steve Jobs talked about being proud of the products they say no to. Many of those decisions are based on having actually tested them, and in some cases, those test units were made by the supply chain.

So, yeah. Apple's supply chain is testing TV designs. Of course it is. That doesn't necessarily mean that Apple is getting ready to release a TV, however.

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Lee Dronick

I am still mixed on this rumor. I am thinking that if it did happen there would only be 3 sizes, maybe only two, a small large one, a medium one, and a modest size suitable for a small room. Of course there are people who consider a 48” TV to be a modest size. Anyway, the TVs would also be monitors and if you didn’t want it as a TV you could plug into a Mac. The remote control would be designed for ease of use and simple to understand, with BlueTooth connection. One could also control it via Bluetooth from a Mountain Lion or iOS 6 device. Hopefully it would connect directly to cable or U-Verse without those Godawful set-top boxes and their clunky remotes.

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