Will Apple Inc. Release an iTV in 2014? It's Looking Unlikely

Apple hasn't released a major new product in more than four years. Sure, there have been been plenty of revisions -- new features, faster processors, different screen sizes -- but nothing that fundamentally altered the tech landscape.

That was supposed to change this year. CEO Tim Cook has repeatedly promised new product categories in 2014. According to sell-side analysts, one of those products could be a revolutionary new Apple TV. If it takes the living room seriously in 2014, Apple could pressure existing players including Sony and even Comcast .

But investors may need to temper their expectations. Recent reports have called Apple's television plans into question, suggesting that 2014 might not be as big for TV as investors had hoped.

Analysts have big expectations
For years, analysts have called for an Apple-made TV -- not just a revision to its current miniature set-top box, but a full-fledged, integrated television set. As imagined, this device would serve up paid-TV content in an entirely new way, perhaps including a revolutionary new interface and deep integration with Apple's Web services. This speculation has been fueled by comments from Cook and the late Steve Jobs, who told biographer Walter Isaacson several years ago that he had "cracked" the TV interface problem.

While it seems obvious that Apple is interested in the TV space, nothing definitive has emerged. Still, that hasn't stopped bullish analysts from factoring an Apple TV into their projections. Morgan Stanley argued more than a year ago that a forthcoming, $1,000+ Apple-made TV could boost company earnings per share by $4.50. More recently, Wedge Partners' Brian Blair included the TV in a list of other rumored Apple products that could elevate the stock by as much as 20%.

Apple will have to deal with the cable companies
But a revolutionary TV product in 2014 is starting to look less likely. According to The Wall Street Journal, Apple has only now entered preliminary talks with Comcast, which is soon to become the nation's largest paid-TV provider. Apple is reportedly working on a Web-based TV service, which it wants Comcast to distribute to its subscribers on a preferential basis.

While Comcast, perhaps looking to gain an edge over its satellite rivals, could decide to play ball with Apple, there are many reasons to remain skeptical. As I've previously noted, Comcast has been working to make itself a de facto Apple competitor, adding apps to its set-top boxes and selling movies and TV shows through the Xfinity media store. Even if it agrees to Apple's demands, it could take some time to make the necessary network enhancements.

The TV business is terrible
Meanwhile, Yukari Kane, in her new book Haunted Empire, reported that Steve Jobs had no interest in entering the TV market. According to Kane, Jobs characterized the business as "terrible," noting that TVs are at best a low-margin business, with infrequent sales.

Jobs' observation is undeniably spot-on: just consider what has happened to the Japanese giants that once dominated the TV business. Last year, much to the chagrin of enthusiasts, Panasonic shuttered its plasma TV business. Although Panasonic's models offered unparalleled picture quality, most consumers just weren't keen on shelling out thousands of dollars for the company's high-end sets.

The same is largely true for Sony, whose TV business has basically been unprofitable for most of the last decade, though the company has been a bit more stubborn in its efforts. Earlier this year, Sony put its TV business in a separate subsidiary, making it easier to spin off, sell, or even shutter should the segment continue to struggle.

Growth in the TV industry has come largely at the low end, with companies such as Vizio besting larger rivals like Sony by offering cheap, mostly Chinese-manufactured panels. As a company, Apple isn't known for targeting the low end, calling into question the possible success of an Apple-made TV set.

Expanding the ecosystem
What seems much more likely, at least in 2014, is a vastly improved Apple TV set-top box. Cook has referenced the growth in that part of Apple's business, and though the numbers still pale in comparison to the company's other segments, there's growing demand for smart TV solutions.

9to5Mac reported that the company was testing a new version of the Apple TV operating system, one that would open the device to third-party apps. This software would ship in a new box, but would also be available to existing owners of older models. Paired with a bluetooth controller, the Apple TV could emerge as a low-cost alternative to traditional video game consoles and could help Apple continue expanding its iTunes revenue. That could help Apple lock customers deeper into its ecosystem, particularly as Google and other rivals set their own sights on the living room. But it wouldn't be the sort of revolutionary product many seem to expect

Certainly, an expensive iTV in 2014 is still possible, but based on recent reports, investors should be skeptical.