Apple's next big bet: A TV box that monetizes the living room?

Apple TV may hold a tiny fraction of overall quarterly sales, but adding an app store directly in a user's living room could mean a significant profit boost for the iPhone and iPad maker.
Written by Zack Whittaker, Contributor
Image: CNET

In the latest round of rumors, reports emerged on Thursday that Apple will revamp its television set-top box in the first half of 2014.

But there's a twist: The Apple TV device may soon include an app and game store, akin to that of its sibling products in the iOS-powered device range.

As first reported by 9to5Mac's Mark Gurman, citing sources familiar with the matter, the device will include a revamped operating system — currently, it's based on the same software used on the iPhone and iPad — that will fling open the doors to the amount of overall available content.

The news, if true, may represent a turnaround on what senior Apple executives had felt about the living room-based platform. It would be a continued logical evolution over many iterations of the device.

Apple (as you might expect) declined to comment to sister-site CNET on the news.

By simply opening up the door to another point of purchase directly in the living room, Apple's revenues could see a significant spike in the following fiscal quarters.

During Apple's fiscal fourth-quarter earnings, the company generated $4.3 billion in iTunes Store and App Store revenue, up 22 percent on the same quarter a year earlier. The number isn't broken down more granularly, but most of this figure comes from music, video, and app downloads. While Apple TV can be used to purchase music and video content outside a desktop version of iTunes, the technology giant could be aiming to expand its revenue reach by giving another device the ability to buy apps.

"Our Apple TV product is doing quite well, but in the scheme of things, we still classify Apple TV as a hobby. We continue to add things to it. I don't know about you, but I can't live without it." — Tim Cook, 2012

Chief executive Tim Cook dubbed Apple TV as a "hobby" for the company. Raking in about 2 million sales during the fiscal first quarter of 2013, with an expected year-later figure of about the same, the set-top box has one thing that most other devices Apple sells don't have: Potential.

It has been and remains, at least in Cook's eyes, an "area of intense interest" for the company.

Any developments in Apple TV could be a stepping stone for bigger and better things for the set-top box — which many still consider a test-bed project ahead of a fully-fledged television set. 

The battle for the living room is beginning to take shape. Apple, however, has not made any plans clear for a highly anticipated television set, if ever. Nor has the company given any clear indication of which direction it will take its set-top box business in.

The technology giant started out with its own set-top box, gauged the market, and held back where appropriate and necessary. Not wanting to rush a decision on building a low-volume yet high-margin television, the company has over time dedicated a small amount of overall resources to a cause it believes in — yet doesn't know where the industry is taking it.

If this latest leak is to be believed — make no mistake, Gurman's sources have near-impeccable accuracy — there are no plans to dish out a fully fledged television set for some time yet.

But as Apple TV remains a side project, despite significant resources being plowed into the set-top box, it's indicative of a wider problem for Apple: It hasn't yet fully conquered the living room space.

Apple still has yet to receive any incentive to jump into the television-building business. Televisions cost a lot to build and develop, and owners replace them every five years or more; unlike smaller devices like smartphones and tablets that are replaced almost every year.

But if the time is ever right, that may be when we see an Apple television.

Until then, it's no skin off its nose. It was fun while it lasted, and there's no love lost if it doesn't ever make it to the "big screen."

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