Apple Television: The Rumor Is Probably Right

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Apple TVSome rumors just won't die.

Tech watcher VentureBeatis the latest to throw some weight behind the chatter that Apple (AAPL) wants to introduce an Apple television as early as next year.

We're not talking about Apple TV -- the small set-top video box that has been a rare dud in the Cupertino giant's arsenal in recent years. What some are calling the iTelevision would be an actual high-def LCD television set.

VentureBeat's Dylan Tweney is not the first to proclaim the inevitability of a high-tech Apple HDTV. Ticonderoga Securities analyst Brian White and Piper Jaffray's Gene Munster have been making these same predictions for a long time. This is more than just a case of wishful bloggers dreaming out loud.

Everyone's Going to Want One -- Here's Why

But some skeptics still don't feel it will happen. The margins are too thin, the replacement cycles too long, they say. It's hard to fathom shoppers dragging out gargantuan iTelevisions through an Apple Store in a suburban shopping mall.

Who cares what the skeptics are saying? The margins won't be so bad if Apple can -- and will -- command a healthy premium. And while consumers may not be replacing their televisions every two years like they do with wireless handsets as they come off their carrier contracts, many homes also have multiple televisions to update.

Apple-branded televisions are the next logical step in Apple's transformation into a full-blown entertainment company. And when it happens, you're going to want to own one. Here's why:

1. It's Apple
Nobody wanted a tablet until Apple rolled out the iPad last year. Judging by rival price cuts and discontinued models, the iPad remains the only tablet that mainstream audiences are craving.

Similar arguments can be made for the iPod in portable media players and the iPhone with consumer smartphones outside of Android gadgetry (which followed the original iPhone's success).

Apple isn't perfect. It has come up short with the Newton personal desktop assistant and some of its more daring Mac designs. But the tech behemoth's impressive track record makes it easier to bet on the side of it succeeding with every new rollout.

2. Three letters: iOS
The iTelevision would be powered by iOS, the same mobile operating system that has helped Apple move more than 200 million iPhones, iPads, and iPod touch devices -- with half of those gadgets selling over the past year alone.

The key to the platform's success is Apple's vibrant App Store, which feeds devices with hundreds of thousands of free -- or nearly free -- applications that can be easily downloaded.

There will obviously be limitations here. No one expects the iTelevision to be a touch screen like existing iOS products. You won't be smudging up your costly set with greasy fingerprints to play Angry Birds. However, the power of the App Store ecosystem is undeniable -- and a touch screen remote control may be enough to do the trick.

3. Paying a premium for Apple is a rite of passage
Few consumers bought Dell's(DELL) branded televisions in its failed experiment a few years ago. There is no reason to buy a Best Buy (BBY) branded Insignia television, unless it's the cheapest option.

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Apple is different. Just as computer users know that they will pay a premium for Macs and Macbooks over Windows-based machines, folks will pay extra for an Apple television. It won't just be the snacked-on Apple logo that attracts consumers -- though they seem to have to no problem paying up for a Nike (NKE) Swoosh on an otherwise indistinguishable cotton shirt.

Apple -- even without Steve Jobs -- will do a masterful job of setting its TV apart in its initial presentation. The apps and promised software updates will make this a product that consumers will want to own and show off to their guests.

4. Apple is already a master of media distribution
I am the proud owner of a Google TV box, but I'll be the first to admit that Google (GOOG) dropped the ball: It chose to launch the technology first, and then warm up to studio partners.

This was a big mistake, and we see it in the existing streaming limitations of Google TV.

This won't be a problem for Apple, which has been rubbing elbows with Hollywood for years through its lucrative iTunes platform. Apple is also the world's largest music retailer, something that will come in handy when the iTelevision is promoted as the heart of your home theater.

Admit it: Even if you never actually do buy an iTelevision, you know you're going to want one when it comes out -- when, not if.

Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Best Buy, Google, and Apple. Motley Fool newsletter services have recommended buying shares of Apple, Dell, Best Buy, and Google, as well as creating a bull call spread position on Apple.

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