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Apple TV Will Have Us Waving at the Camera, Analyst Says

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Not only has Comcast asserted that new Apple TV hardware is under way -- one analyst suggests it will sport motion-sensing technology.

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Back in November, Apple (NASDAQ:AAPL) took a $350 million gamble on the Tel Aviv-based company PrimeSense, which specialized in motion-sensing technology and was responsible for designing the original Microsoft (NASDAQ:MSFT) Kinect gaming device. (See: What Will Apple Inc. Do With Its Latest (Rumored) Acquisition?)

Theories began to swirl about what exactly Apple would do with PrimeSense and its expertise in detecting movement and control gestures in a three-dimensional environment. Chiefly, many saw it as a logical integration into a soon-to-be-revamped Apple TV. After all, gesture-based controls were popping up in Samsung (OTCMKTS:SSNLF) and LG television sets -- as well as the Xbox One -- and Apple might be keen on paying some extra attention to its relatively ignored set-top box.

Of course, there was still the possibility that PrimeSense -- like many acquired companies before it -- was bought strictly for the patents and would summarily die a quiet, strangled death before any product saw the light of day.

However, according to analyst Ming-Chi Kuo of KGI Securities, Apple may in fact put PrimeSense technology to good use and release that motion-sensing Apple TV box yet. In his latest research note this week, Kuo foresees an upgraded Apple TV hitting shelves this fall. The updated set-top box will recognize movement and gestures, similar to the Microsoft Kinect, and will reportedly eliminate the need for a physical remote. That's a far cry from the endless tapping that Apple TV users are accustomed to in order to navigate menus and enter in search queries into the on-screen keyboard.

While Kuo confidently predicts gesture-based controls, he isn't sure how the new Apple TV UI will differ from the current generation or whether this upgraded model will debut with its own App Store. But Kuo sees an Apple TV App Store as an inevitability, which should please fans.

However, those fans won't be happy to hear that there probably won't be a full HDTV set coming from Apple this year and that it may not ever be produced. According to Kuo, Apple would need to update and foster its TV ecosystem before debuting a television set. "Considering the high cost involved in creating a TV supply chain, we don't expect the iTV to debut before the TV ecosystem improves," he says.

Although many analysts have predicted an upgrade to the Apple TV this year, Kuo has a respectable track record that gives his claims some extra weight. In January 2013, Kuo presented a time line for Apple releases that accurately included the iPhone 5S, the iPhone 5C, and an iPad Mini with a Retina Display.

Not only that, a new set-top box from Apple was substantiated this week in Comcast (NASDAQ:CMCSA) and Time Warner Cable's (NYSE:TWC) filing to the FCC ahead of the hearing for the potential merger. Here's an excerpt (emphasis ours):

Today, Google (NASDAQ:GOOG) competes as a network, video, and technology provider, and eight out of nine of the next Google Fiber markets the company announced are in Comcast or TWC areas. Apple tablets are viewing platforms for cable services even while Apple offers an online video service, Apple TV, and explores development of an Apple set-top box. Microsoft just announced that it will feature ads on the Xbox One, creating a new video advertising platform. And just last week, Amazon (NASDAQ:AMZN) announced its own set-top box while it continues to leverage its unequaled sales platform and family of competitive tablets to promote its burgeoning Prime Instant Video business.

So, how would Comcast and Time Warner Cable be aware of such a device? Last month, Apple was rumored to have been in talks with Comcast to deliver live TV and on-demand video via the Apple TV -- possibly this upcoming model. But unfortunately, it's unlikely to be a huge departure from a mere Comcast app on a menu screen. (See: An Apple-Comcast Deal Probably Won't Fix Big Cable.)

In light of Chromecast's success, the Android TV announcement, and the recent debut of the Amazon Fire TV box, major tech players are paying extra attention to the media center market. Hopefully, a new Apple TV will keep the momentum going and help put some worry into the black, greedy heart of Big Cable.

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No positions in stocks mentioned.
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