The media is abuzz with reports that Apple is working on a tablet device (the latest is from the Financial Times) that could be like the iPhone or iPod Touch on steroids. While the thought is that an "iTablet" would be a netbook-killing (and Kindle-killing) device, it could eliminate another product: Apple TV.
Unlike its ventures into MP3 players and smart phones, Apple's home theater device hasn't been a big hit and has even been labeled as a "hobby" product by the company. The Mac Observer argues that an Apple tablet, which is rumored to have a 10-inch color screen, could replace Apple TV by letting a younger generation used to looking at small screens on mobile devices watch video on the tablet.
But there's another way that an Apple tablet could replace Apple TV. Presumably, the tablet would come with built-in 802.11n Wi-Fi support. While that could allow the device to download or stream videos to watch on its screen, couldn't it also allow you to stream those videos to an HDTV (via an adapter that, knowing Apple, would be optional)? This could head Netflix off at the pass in another market: on-demand Internet video delivered to a set-top box or widgetized TV. Instead, you could rent a movie on iTunes, start watching it on a bus ride home, then finish viewing it on your TV once you're in the your living room. Unlike Netflix (though like Amazon Video On Demand), iTunes doesn't require a monthly subscription plan in order to access online rentals. Of course, the Apple TV interface could be ported over to your tablet, which could also function as a (large) remote for your cable box, too, if an app is created for it.
I'm sure this scenario isn't a foremost one in Apple's collective mind, but it would be an intriguing way to try again to bring Apple into the living room. Of course, Apple has to announce a tablet first. Then again, sometimes it's more fun to think of things that Apple could do with a new device than what ultimately gets implemented.