TBR's Gottheil, however, points out that while Apple TV can access Google's ( GOOG) YouTube and Flickr, it cannot show most Web-based content.

"A full Web browser would significantly enhance any home theatre installation," he added. "The Web is rapidly emerging as the dominant delivery system for video, including television and movies."

By adding a full Web browser to Apple TV, the consumer tech giant would significantly shake up both the home media market and the Internet space. To make a useable browser, though, Apple would have to enable Flash video in the Apple TV browser, according to Gottheil. The company would also need a touchpad remote and wireless keyboard to make a "theatre-size" iPod Touch, he added.

Shares of Apple dipped 18 cents, or 0.10%, to $172.75 in pre-market trading.

Apple has not yet responded to a request for comment on this article from TheStreet.

Written by James Rogers in New York.

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