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Apple Rumor Mill: The Plot Thickens For A New Apple TV In 2014 - IWatch Coming Later?

|Includes: Apple Inc. (AAPL)

Three historically good AAPL sources (Mac blog 9to5Mac, Bloomberg and the WSJ) are reporting that a new Apple TV is indeed coming soon:

The Wall Street Journal has published a report that largely corroborates what Bloomberg said earlier; a new Apple TV is under development with Apple currently in negotiation stages for content deals, with at least Time Warner Cable. However, the Wall Street Journal adds some new information about what these talks entail.
Initially, it appears that Apple wanted an independent Apple TV product to offer TV shows and films exclusively over the Internet. However, not it appears that Apple is scaling back some of its ambition due to resistance from content companies.
This reports line up well with 9to5Mac's reporting about new Apple TV hardware from a couple of weeks ago. We said that Apple has been testing hardware that includes a tuner, as well as a revamped App Store and Game Store model. Most recently, we found references to Apple TV 4,1 in iOS 7 files which (in accordance with Apple's typical identifier scheme for products) indicates a major revamp over the current generation.


As for the long wait (quite unusual for AAPL product launches) between an announcement in spring and a release later in 2014?

One rumored key element could help explain that: The new Apple TV will likely offer a SDK for third parties. Therefore, a timed reveal could allow developers to create apps (I think audio/video media apps and casual games could be especially popular) in time for the device launch date.

In addition, the WWDC in summer (the annual Apple Developer Conference) is conveniently timed in between the two rumored dates.

Other points of interest I noted (assuming the rumors turn out to be true):

1. There is no "real" Apple TV (aka iTV) coming, at least not as of yet. It appears that Apple won't produce a giant flat-screen TV of their own - "just" a box. If so, my predictions made back in 2013 (see my earlier Instablogs on AAPL and an Apple TV set) would prevail. It also appears that the company will acquire less live/exclusive content and instead work with current rights owners (otherwise, this would have taken years of negotiation in many countries since Apple is a global company. The Apple TV would remain a "North America only" product launch initially, similar to the licensing work ahead for a launch of iRadio in more countries...)

2. At $99 (current Apple TV price point) Apple will need to move a lot of devices to really influence the stock price. I therefore doubt Wall Street will be satisfied with the upgraded former "hobby" category as a new category. The new Apple TV could sell for higher prices, say $149 or $199, thanks to its new capabilities - even so, Apple would need tens of millions of units per year to really impact their total revenue numbers. That's hard to achieve even for a company like Apple. For comparison's sake, the most successful game consoles like the Playstation 2 "only" moved about 150 million units in lifetime sales.

3. Wall Street and many retail investors will probably wait for an iWatch or similar wearable products to really move the stock higher, there appear to be more stock impulses and revenue fantasies attached to that new product category - on the other hand, the new Apple TV could help make the ecosystem "stickier" and also increase iTunes revenue over time (TV apps, TV games and media content).

Disclosure: I am long AAPL.

Additional disclosure: Long AAPL at $501 since Jan 2014