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Apple's iTV Set Looks Likelier Than Ever

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Last week, AppleInsider uncovered a patent for a universal remote app that Apple (AAPL) filed in September. Designed to control a variety of devices, this app is intended to eliminate the hassle of both remote control overload and a lack of a unified UI scheme. Whether for a TV, DVR, DVD Player, or media software on your laptop, the app would maintain a constant control layout.

It also furthered evidence that Apple is indeed developing an actual TV set, something which Piper Jaffray (PJC) analyst Gene Munster has been predicting for a while. Along with Steve Jobs' brief reference to "cracking the code" to the TV industry and Cupertino putting money into manufacturing facilities for giant LCD screens, rumors had already been circulating that Apple would soon deliver a Smart TV.

And now, according to a note to investors, Munster spoke with a "major TV component supplier" that Apple had inquired about "various capabilities of their television display components." In light of this new revelation, the analyst remains convinced of an eventual iTV release and places its launch around late 2012. Then again, Munster had previously estimated an Apple iTV by the end of 2011 which, as you're aware, didn't surface.

Nevertheless, there's still the matter of how Apple would revolutionize the TV industry -- something which the Apple TV never quite managed to do. Munster foresees three possible scenarios of how Apple could change the game.

On the more staid and safer end, Munster foresees a TiVo (TIVO)-like system where live and cable TV listings are laid out and operated with a unified DVR/guidance software interface, simplifying search, discovery, and recommendation. But seeing as how TiVo and TiVo clones already populate the industry, including offerings from cable companies themselves, this would be even less than a safe route. This would be a nonstarter.

Going one step further, Apple could take a cue from Google TV (GOOG) -- but hopefully delivering a far more solid product. Apple could integrate online content with network television similar to how Google TV software was installed into Sony (SNE) sets -- but hopefully with a better controller. Netflix (NFLX) and Hulu Plus implementation would be nice, but given the downloadable options from iTunes Store, that wouldn't necessarily be guaranteed. Far more likely would be an iTunes Store channel embedded along with network television -- maybe quick links to full series while watching an episode of an available program.

But the biggest shakeup to the cable industry, Munster hypothesizes, would be an à la carte option, something for which cable subscribers have been clamoring for decades. The system would allow for customers to subscribe to specific TV shows, regardless of network, to create a content package unique for every individual. Obviously, such a venture would be nigh impossible for most companies, but Apple -- with its $90 billion just burning a hole in its pocket -- could possibly make it happen.

Although Apple wasn't present at this year's CES, it loomed large over the countless Smart TVs and media centers -- all of which fell short a complete package. Without a "shuffle" option or the ability to quickly program a night's worth of entertainment by highly specific parameters, live television can't be replicated and remains indispensable for the average TV viewer.

Perhaps by joining the party late -- aside from the set-top box hobby -- Apple could fix what its predecessors got wrong and produce something truly revolutionary.

After all, it wouldn't be the first time.

(See also: Minyanville at CES: What Smart TVs and Media Centers Still Can't Get Right and iPhone Can't Match Android's Versatility, Says Steve Wozniak)

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POSITION:  No positions in stocks mentioned.