Tim Cook Needs His Apple TV

CUPERTINO, Calif. ( TheStreet) -- Apple's ( AAPL) rumored plans to revolutionize the TV market herald an exciting new era for the gadget giant but pose a big test for CEO Tim Cook.

"It's definitely a test -- it's his first new product category as CEO," Brian White, an analyst at Ticonderoga Securities, told TheStreet. "It doesn't just have to be a good product -- you have to market it, you have to get people interested and manage the content providers."

Apple has not launched completely new hardware since the iPad's debut in early 2010, so Cook also will have to carefully manage the hype cycle that engulfs the company's launches.

Sterne Agee analyst Shaw Wu, though, thinks that managing content providers will be the toughest task. "From our understanding, what is holding back a real Apple TV from shipping are content partnerships and licensing terms that still need to be ironed out," he explained, in a note released on Tuesday.

While iTunes has a rich library of movies and TV shows, Wu notes that the service does not have live broadcast television. "One obvious way to bypass or offer this is via the traditional way where a user subscribes to cable or satellite," he explained. "But a more revolutionary, not to mention disruptive and differentiated way, is via the Internet or IPTV which would be more in-line with its iTunes and iCloud model."

The analyst, however, believes that cable companies could beat a path to Apple's door rather than risk losing subscribers, similar to the way the music industry had to embrace iTunes.

Bloomberg reported on Tuesday that Apple's TV project is being led by iPod and iTunes creator Jeff Robbin. Citing unnamed sources, Bloomberg reported that Robbin's involvement underlines Apple's desire to extend its vast technology reach into consumer living rooms.

Apple declined to comment on its TV plans when contacted by TheStreet.

Comments made by Steve Jobs in his biography, however, have further fuelled chatter that Apple is preparing to enter into the smart TV market.

Jobs, the late Apple CEO and co-founder, told his biographer that he had "finally cracked" the challenge of creating an integrated television set. The TV would be seamlessly synced with other devices and Apple's iCloud service, according to Walter Isaacson, author of the new book, Steve Jobs.

The comments suggest that Jobs had completed much the of the work for a new TV product before his death earlier this month, although Cook must now deliver on that vision. More reserved than his flamboyant and high-tempo predecessor, the new Apple CEO is nonetheless a logistics guru, and earned a reputation for delivering results during his time as the company's COO.

"I think that the TV product will be a big success and will re-invent the Smart TV category," said Ticonderoga's White, adding that this could be a $100 billion revenue opportunity for Apple. "I think that it will be the best Smart TV out there," he added.

White, in particular, is confident that Apple will easily eclipse other smart TV offerings such as Google TV, a joint effort from Google ( GOOG) and Sony ( SNE), as well as Samsung's products in this space. "These companies don't have the ecosystem and esthetics of Apple," he said.

In addition to its iCloud, App Store and iTunes, Apple could also build its Siri technology and FaceTime video conferencing into a TV product. Customers could thus replicate the experience of using gadgets such as iPhones, iPads and iPods on a technology that features in every living room.

Apple shares fell $4.41, or 1.09%, to $401.36 on Tuesday, mirroring the broader retreat in tech stocks that saw the Nasdaq slip 1.03%.

--Written by James Rogers in New York.

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