Is Apple Developing an Internet-Connected HDTV?

The business world is a little bit like high school: there are always rumors flying around, and nothing stays secret for long. And as in high school, many of those rumors turn out to be at least partially true, though often built up so much as to make the truth less interesting in comparison. So when I hear a rumor that Apple (NASDAQ:AAPL) is developing an Internet-connected HDTV, I’m quick to believe it, but I remain skeptical about just how successful it will be until it’s been tested on the market.

UBS (NYSE:UBS) analyst Maynard Um believes that Apple could gain an incremental $50 to $100 billion in market capitalization if the television is successful, the most important word being if. While there’s no doubt that Apple is a powerhouse, sometimes expectations for its success are so high that not even a company like Apple can fulfill them. While the iPad revolutionized the tablet industry, its sales figures still came in below expectations. And depending on the price tag for an Apple HDTV, consumers might be wary about buying the first version, especially when Apple so often significantly improves upon original technologies so quickly that they are often outdated within a year. It’s one thing to buy a new and improved iPhone every year for $200 or $300, but it’s quite another to buy a new TV every year that could possibly cost upwards of $1000.

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Just taking into consideration the amount of brand loyalty, it’s hard to believe that any Apple offering could be unsuccessful. And the digital TV market is growing, expected to hit 144 million units in 2011, bringing in $76.7 billion in revenue. But just as Android (NASDAQ:GOOG) stole the top spot from Apple’s iOS in terms of market share, Apple will face competition in this new market as well — competition that has had a head-start. Apple will have to add all the bells and whistles if it’s going to steal a significant portion of the digital TV market share. And it might have to try something it’s never done before: competitive pricing. While MacBooks have managed to be successful despite a significantly higher price tag than a lot of PC notebooks, Apple might not be so lucky with their TV offering, especially when considering that many people already do a significant amount of their television-viewing on their computers, making an Internet-connected TV somewhat redundant.

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