Will Apple TV add to dominance?

Analysts are hit-and-miss on set-top device that launches in Feb.

Like the iPod, Apple TV could be a phenomenon. A disrupter of lesser technology. A product that finally converges the computer with the TV set.

Or not.

Apple Inc. executives, including CEO Steve Jobs, have been calling Apple TV a DVD player for the 21st century. They are aiming for mainstream adoption, not just the niche inhabited by technology geeks or lovers of all things Apple.

Apple TV, due next month, basically is a set-top device that allows media residing in one's iTunes library — including music, TV shows, feature films and podcasts — to be enjoyed on TV screens. Wirelessly.

It will come equipped with a hard drive with enough capacity for 50 hours of movies and TV shows or about 9,000 songs.

Apple TV also lets users store and display on TV screens their own photos and home movies and will show movie trailers via Apple.com.

Analysts and bloggers have been busy trying to figure out whether Apple TV will be a hit or miss — or something in between — since Jobs first spoke of a gadget called iTV last year. A few weeks ago, he revealed the box, exact functionality and the product's new name only further fueling the debate.

"Wouldn't it be nice to just scroll through a list of your movies and TV shows and just pick the one you want?" one blogger asks.

"Apple TV is a solution in search of a problem," counters another. "Everything this $300 thing can do for me I can do with a $20 cable and my iPod."

Plus, iTunes movies and TV shows are available for purchase on DVD or could easily have been recorded by a TiVo or other DVR. The true point of iTunes video is to make portable the stuff that you once needed a TV set for, Jupiter Research analyst Todd Chanko said.

"Is there really going to be a market for exporting that content back to the TV?" Chanko asks.

Absolutely, counters Tobin Smith of ChangeWave Research, pointing to polling data to support his assertion.

In December, Smith asked 228 members of his ChangeWave Alliance who are electronics industry professionals to name the company they thought was most likely to see success with "media centers," defined as high-power devices capable of managing digital content around the home.

Apple, at 43%, was tops, followed by Sony (14%), Microsoft (11%), TiVo (8%), Hewlett-Packard (7%), Samsung (4%), Cisco Systems (4%) and Dell (4%).

He also asked the panel about Apple TV specifically, and 65% predicted it is "very likely" or "somewhat likely" to be a huge success in the first year. Only 30% predicted it was somewhat or very unlikely to succeed.

"It's simple," Smith said. "Apple will soon deliver the 100% turnkey home computing, viewing, listening system."

Look for Apple to next start selling LCD monitors up to 65 inches with Apple TV and wireless broadband connectivity built into them, Smith said.

"One wireless touch-screen remote running on WiFi, one portable keyboard for e-mails and text messaging and one box to run it all wirelessly to any monitor or PC in your house," he said.

Not so fast, other analysts cautioned.

Citigroup's Tony Wible doesn't see Apple TV "gaining widespread adoption in the near term" because of its $299 price tag and limited storage. He also calls it a "more complicated solution" than offered by others.

Apple TV further increases the company's focus on consumer electronics and entertainment products. Its iPod business already brought in the majority of overall company revenue for its latest fiscal year.

Sean Badding, a senior analyst with the Carmel Group, said that if Apple can sell 500,000 Apple TV units in the first year, he will consider it a success.

"It's not a breakthrough product," he said. "Networking a computer to TV wirelessly has been done before. The question is: Can Apple do it better?"

A couple of years from now, Apple TV, in addition to what it will be when it launches next month, also might have morphed into a DVR and even a video game platform, Badding said. "Hey, it has got the Apple name and Steve Jobs at the helm, and that's what will be on people's minds when they go out there kicking the tires on Apple TV," he said.
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