Apple Inc. (AAPL) iTV: The Absurdity Continues

These days, there are three rumored devices that keep making the rounds in Apple Inc. (NASDAQ:AAPL) headlines: the smart watch, the transparent two-sided iPhone, and the iTV. All of this news is based on second-hand information – patent applications, supply chain observations, analyst predictions, and unnamed sources. Apple Inc. (NASDAQ:AAPL) CEO Tim Cook obviously hasn’t confirmed any of these rumors.

Apple Inc. (NASDAQ:AAPL)

But it’s understandable why Apple investors are so eager for a new product release – Apple Inc. (NASDAQ:AAPL)’s shares have slumped nearly 30% over the past twelve months after being pounded against the ropes by South Korean nemesis Samsung Electronics Co., Ltd. (KRX:005930). Recent disputes in China, lower iPhone parts shipments and a decline in iPad Mini shipments have also weighed down the stock.

Yet there’s a point when hopeful claims just reach a feverish absurdity that has to be addressed.

My case study of the day is Apple Inc. (NASDAQ:AAPL)’s iTV and the recent rumors regarding its design. Let’s separate fact from fiction, and take time to address the benefits and drawbacks of a possible iTV release.

Rumors galore

Topeka Capital Markets analyst Brian White recently claimed that unnamed sources from Apple supply chain companies in China and Taiwan have divulged that an iTV could be released within the second half of the year. While that claim is nothing new, White went on to describe the device in deeper detail.

White claims that the iTV will be between 50 to 60 inches wide, equipped with a mini 9.7-inch television screen that allows users to watch shows on a second screen. The smaller screen, which is the same size as the larger iPad, could also be integrated with Siri and FaceTime. White went on to speculate that Apple would offer a single mini iTV screen with each iTV set, but users could purchase four mini screens together as a package deal.

Although White’s vision of the iTV is more detailed than prior accounts, most of his story sounds absurd.

That “second screen” idea is lifted straight from Nintendo Co., Ltd (ADR) (PINK:NTDOY)’s Wii U, which allows the player to continue playing the game even after the television is turned off. However, the Wii U has a much shorter second screen range of 7.3 meters. Meanwhile, the iTV’s alleged range of 200 meters means that the mini iTVs could be carried into other rooms, sharing the content across a whole house.

Why would Apple Inc. (NASDAQ:AAPL) manufacture yet another tablet device with iOS features simply to be used as a remote control and second screen? The company has already been accused of cannibalizing its own product line with the release of the iPad Mini. It would make more sense for Apple to simply launch an iOS app that synchronizes the iPad or iPad Mini directly to the iTV. That way, sales of an iTV would have a halo effect and boost tablet sales, which account for 20% of the company’s revenue. Couldn’t the same app be installed on iPhones, which account for 56% of Apple’s top line?

White also claimed that an “iRing” worn on the user’s finger could be used as a remote control or enhance the television’s gesture detecting functions. This is a bizarre claim, since recent sensor-based technology has demonstrated that motion gestures can be accurately read in front of a screen without the aid of extra peripherals. More importantly, who would want to put on a ring every time they wanted to change the channel?

Reality check

Instead of daydreaming about big iTVs with tablet remotes and magic rings, Apple investors should crunch the numbers to understand what Apple really needs – product diversity.