Apple TV expected in the market soon

Apple TV is soon expected to graduate from being a hobby of Apple to being the center of attraction. Apple is known to change the whole market every time it ventures into a new one. Whether a similar fate is awaited by the television market too is yet to be seen.

The oddity is what catches our attention - a red balloon in a sea of white; or a lone horseman atop a barren ridge. At Apple, the success of the iPhone and iPad are far from unexpected - both devices were blockbusters. Instead, the oddity is Apple TV, the self-described Apple hobby.

Apple sold its fair share of the palm sized devices. If it was any company other than Apple, investor's would be happy with nearly $150 million in product sales last quarter. But, 1.4 million devices sold in a market of hundreds of millions of televisions is far from what we have come to expect from the consumer electronics giant. It's enough to make investors ask 'what gives'?

CEO Tim Cook downplayed Apple TV on Apple's conference call. The device, which sold 2.8 million units last year, achieved record sales in the quarter. Yet, Mr. Cook quickly curbed enthusiasm, insisting the device remained a hobby. Perhaps, in homage to Steve Jobs, Mr. Cook has little interest in showing his hand when it comes to Apple's television plans.

For good reason. Apple doesn't like to fail. And, Mr. Cook doesn't want Apple TV's stutter-steps taking the media focus off Apple 4S and tablet results. Instead, Apple is content to watch the nascent market and learn what works - and what doesn't. Apple TV is a work in progress, not quite ready for prime time, but getting closer by the day.

The television market dwarfs smart phones and tablets, which is why Apple's biggest competitor's Google and Microsoft are among those developing products.

Google's first attempt at TV was lackluster. But, the company is back in 2012 and is leveraging the same strategy it successfully used in both smart phones, thanks in part to Samsung, and tablets, thanks in part to Amazon's Kindle Fire. In December, Google's Executive Chairman Eric Schmidt boldly claimed the majority of TV's made would be built with Google TV inside by mid 2012. Google knows consumers want integration, not another box to stuff in the media cabinet. Likely, Apple is paying attention.

At Microsoft, the company has long believed gaming provides the best launching point for inter-connected media. Xbox as a TV device took a huge leap forward with Kinect, which allows consumers motion controlled gaming. It's Xbox Live integrates social media with entertainment. And, its live tiles user interface would seem to offer the perfect user experience for a future motion controlled television - simply point at live content tiles to control your television.

And, yet while motion controlled television is exciting, Apple may hold the trump card in Siri, its hugely popular voice program, which was born in a DARPA lab and acquired by Apple in May 2010.

Siri on Apple TV could be a game changer. Users could toss away remotes, using voice to turn televisions on and off, or change channels. Viewers could ask Apple TV what the weather is like and have Siri automatically open a weather widget or switch to the Weather Channel. Finding content would be more robust. You could ask Siri to find an episode of Friends. And, Siri could respond, asking if you'd rather watch the episode where Ross and Rachel take a break or Rachel cooks meat into her trifle. And, Siri could learn your viewing habits and remind you of programming ahead of time.

Apple's challenge may prove less a matter of software - or content - but one of packaging. Apple TV is palm sized and its remote is artsy, but Apple has a long history of designing beautiful and simple, fully integrated hardware and software products. It's likely Apple isn't content with its plug in Apple TV solution.

And equally unlikely Apple would follow Google's lead in embedding their software into OEM televisions. This leaves Apple with the prospect of designing and building its own Siri driven television - a time consuming and costly project.

A lot of the hard work has already been done. The current Apple TV shares components with the iPad, which is good news for suppliers including Broadcom. And, Apple's well versed in display given its long history building computer monitors. With Siri, Apple finally has the intuitive control it needs to differentiate itself.

Given Apple's deep pockets and the big market opportunity, Apple is one of the few companies who could pull off such a massive project. If it does, Apple could capture a huge share of the 206 million television units sold in 2011.