Apple vs. the Living Room
Dana is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
If Apple (NASDAQ: AAPL) is going to make a comeback in 2013, most analysts agree it must find new worlds to conquer. It conquered music with the iPod. It conquered telephony with the iPhone. It conquered mobility with the iPad. Having conquered our feet, Apple needs to make another push for our butts.
Battle of the Butt
Butts are a big problem for Apple. PC sales of all kinds are peaking, even Macintosh sales, writes 9to5Mac. The tablet market is also slowing, which is a big reason why shares are trading at a discount to those of Microsoft, which makes no sense at all. No, everyone agrees that in order to grow Apple must get into the living room.
Of course, you can argue that Apple is already in that market, with the Apple TV, which operates like a cross between a home server and a set-top box. The next version is already on the drawing board and it currently supports a host of TV-like content, most recently that of HBO.
The problem is that in all these “content deals,” Apple is merely following the industry. With HBO, for instance, you must already subscribe to the service through your cable provider to get at it with the Apple device. It's a pass-through, not an up-sell.
Who Might Butt In?
The trends in the market are obvious to everyone. The convergence of games and Internet around the TV, and the delivery of content via the Internet, have been on rivals' radar for many years. Is Apple TV, in the end, just another console? If that's the case, then there are two companies that might be interested in competing, and quickly.
Sony (NYSE: SNE) is one company that might jump in ahead of Apple. They have a press conference planned for Feb. 20, and most speculation about it involves a successor for the company's PlayStation game machine. But Sony has both video assets and a history of adding features to the PlayStation. There is speculation they could jump in with an Apple TV-like product.
Microsoft (NASDAQ: MSFT) has been doing many of the same things Sony has with its XBox. It, too, is expected to relaunch its product later this year. Could Apple actually enter the console wars and find itself out gunned by rivals like this? That, too, is speculative. But stranger things have happened, and as many have noted before that both Sony and Microsoft are desperate for a hit.
The Big Screen
A better hint of what's coming may be found on the worried face of Gabe Newell. Newell runs Valve, which runs Steam, which is how most gamers get their games these days.
Newell says he isn't worried about Sony, or Nintendo, or even Microsoft with its XBox Live. Instead he's worried about Apple. As he said at the University of Texas recently "I think the biggest challenge is that Apple moves on the living room before the PC industry sort of gets its act together.”
So here is what is going to happen: at some point in the next six months, Apple is going to roll out its own TV. Nothing more than a Retina-style screen, in a variety of sizes, with something like the current Apple TV built-in. This will let it command a premium price point over other TV brands, a market just looking to be rolled-up by a software-driven play.
The new product will be fully iOS compatible, will come with a cool new wireless interface that supports gestures, and it will sell both games and TV shows through iTunes, for sale or rent. Figure a 30 inch screen with 128 GB of main storage selling for $2,000.
Shares will probably double in value, even before this thing hits the streets. Everyone will be talking about how Apple has its mojo back. Buy the rumor, sell the news, or just start accumulating shares at these dirt cheap prices. Your patience will be rewarded.
DanaFBlankenhorn owns shares of Apple and Microsoft. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!