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TheStreet Open House

Is an Apple TV the Next Big Innovation?

Stocks in this article: AAPLGOOGNFLXAMZNCTRL

NEW YORK (TheStreet) -- Yesterday on TheStreet, I read Rocco Pendola's Apple Must Do a TV. In a nutshell -- or in his words, in the shell of a nut -- Pendola says that Apple (AAPL) would be more likely to succeed by focusing on a TV than the iWatch. 

I couldn't agree more. While I'm not against the iWatch -- because it is likely to account for some revenue -- it won't be the game-changer that investors want. 

It's really hard to introduce blockbuster product after blockbuster product. And growing revenues at a high rate for a company Apple's size isn't exactly a piece of cake either. Apple shares opened today at $530 even, down 5% year to date but up 17.8% over the past year.

I wholeheartedly agree that Apple could revolutionize the living room. But whether that's done solely with a physical TV is the real question. 

My biggest concern has to do with product turnover and the replacement cycle. Unlike smartphones, there's no need to upgrade to a new TV every couple of years. Once a consumer buys a TV, the product generally lasts a long time.

For example, I've had at least three or four different smartphones in the same time that I've had one TV. As Apple is known for its superior, high quality products, why would I need to replace an Apple TV five or 10 years after I buy one? 

Second, as television prices continue to sink, how will Apple be able to maintain its typical expensive prices? I don't know that Apple could. It would result in a direct hit to margins if the price of the company's TV set declined. 

Still, the living room has a lot of potential. It's not really being tapped by Netflix (NFLX), nor by Google (GOOG) with its Chromecast. Slingbox and Roku have made a few advances, as has the current Apple TV, but nothing that should be a considered a blockbuster revolution by any means. 

Nearly all of our devices -- smartphones, tablets, computers, MP3 players -- have advanced incredibly over the past decade. But with the exception of quality, the TV, and more broadly, the living room, has hardly changed at all in the last 20 years. 

Apple needs more than a TV set. Incorporating Siri, along with the iPhone and iPad as a remote would be nice. But there needs to be a way to turn the TV into something more. 

And I don't mean connecting to Netflix, Hulu or Amazon (AMZN) Prime video either. 

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