By the Time Apple Finally Releases Its Smart TV, It Could Be too Late

Apple's management has promised new devices in 2014, and many investors may have presumed that a television set would be among them. Yet perhaps not: Apple's long-anticipated TV has reportedly been delayed yet again.

At this point, investors should be wondering if Apple's effort come too late. Microsoft's new Xbox seems to have all the features an Apple smart TV would offer, while cable providers themselves, notably Comcast , are slowly moving into the space themselves.

Apple's TV: delayed again?
Investors have been waiting for Apple to release a smart TV for at least four years. Since 2011, Piper Jaffray's Gene Munster has predicted an Apple TV set every single year, and every single year, he's been wrong. Still, he remains undeterred: Munster is now anticipating an Apple smart TV in 2014. Munster's credibility would be shot by now, except he predicted both the iPhone and the iPad before their debuts.

But Munster could be wrong at least one more time. KGI Securities' Ming-Chi Kuo thinks Apple is unlikely to release a TV before 2015, while NPD Display Search believes that, although Apple has the manufacturing lined up to produce the TV, it continues to struggle with securing the necessary content deals.

Microsoft's new video game console is really a smart TV
But 2015 is a long time from now, and if Apple waits until then, its window of opportunity may have closed. Microsoft, in particular, is about to deliver a product that seems to offer all the features a would-be Apple smart TV buyer could ever want.

Somewhat confusingly, Microsoft's Xbox One is actually the third console in the Xbox line, but its name is intended to embody its purpose -- serving as the central hub of a living room entertainment setup. In addition to playing video games, the Xbox One is chock-full of high-tech, entertainment features.

Using the second-generation Kinect, owners of Microsoft's device will be able to control their cable box with voice commands and hand gestures: saying, "watch HBO" will instantly change the channel. Beyond cable, Microsoft's console offers all the standard streaming apps, in addition to video chat Skype calls and integration with fantasy sports.

With a hefty $500 price tag, non-gamers may be unwilling to pay for the device. But as expensive as Microsoft's Xbox One is, Apple's all-in-one smart TV is likely to cost several times as much.

Comcast's cable box is getting much better
But for Comcast subscribers, having a smart TV or a smart TV add-on like the Xbox could soon be superfluous. Comcast has begun to aggressively move into the technology itself: Its new X2 platform offers many of the same features as Microsoft's Xbox, including access to apps, voice commands, and personalized recommendations. Netflix even wants to get in on Comcast's new platform.

Moreover, Comcast's platform is cloud-based, meaning that future technological improvements can be rolled out to its entire subscriber base with ease. In the past, Comcast's subscribers with old cable boxes may have had to suffer with a substandard interface; going forward, that shouldn't be a problem.

Of course, Comcast is just one provider, but it is the largest, with about one-fifth of the paid-TV subscribers in the U.S. Moreover, what it does is likely to become a trend -- with Comcast moving so heavily into tech, its competitors will be forced to follow. Indeed, DirecTV has already begun to push voice-based technology.

Does the TV really matter?
Without seeing Apple's TV set, it's impossible to say for certain whether or not it will be a revolutionary device. The alternatives offered by Microsoft and Comcast seem promising, but Apple could -- at least in theory -- still have something to blow the competition away.

Yet the more crucial question is: Does it even matter? TVs are a low-margin business, one that's burned high-end companies like Sony, Panasonic, and Sharp in recent years. Consumers generally wait five years or more to replace their TV, and when they do, they may only buy one or two per household.

Morgan Stanley's Katy Huberty estimated last year that an Apple TV could add $4.50 to Apple's earnings, but I think investors should remain far more skeptical. Assuming the device does get released, and beats back the growing list of competitors, it's not going to come close to the iPhone in terms of earnings power.

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