NEW YORK (TheStreet) -- Harvard Business School professor Clayton Christensen is the architect of and the world's foremost authority on disruptive innovation. On Friday he re-tweeted Todd Sherman's forecast that Apple's (AAPL) app-enabled television could be the biggest disruption in the video game space since the Wii enlarged the market.The tweet links to M.G. Siegler's Feb. 14 piece in TechCrunch that reiterates the case made by Xbox team founder Nat Brown who commented, "Apple, if it chooses to do so, will simply kill Playstation, Wii-U and Xbox by introducing an open 30%-cut app/game ecosystem for Apple TV. I already make a lot of money on iOS . . . I will be the first to write apps for Apple TV when I can and I know I'll make money." Many have questioned the relevance of an Apple HDTV as they observe the commoditization of the market. However, Apple's software solutions seem to be enough to differentiate Apple's offering in terms of disruptive innovation. The potential of App Store gaming is only one reason for consumers to buy the product. In prior posts at EconomicTiming.com, we've speculated that Apple might be the first to fix the archaic living room infrastructure that contains multiple remote controls for multiple devices unable to communicate with one another. In an interview with NBC's Brian Williams, Tim Cook mentioned that when he goes into his living room and turns on the TV he feels like he's gone back in time 20 to 30 years. A universal remote application that enables an iPad, iPad mini or an iPhone to control all living room technology would fill a major need. As a third component to Apple's potential for disruptive innovation, it is widely known that cable and satellite providers charge consumers for large quantities of content that are never viewed. If Apple allows users to cut the cord and purchase television content in an a la carte method, the cost savings will provide incentive to purchase the product. It's interesting that Clayton Christensen would endorse Apple's potential for disruptive innovation at a time when investors are shunning the stock. Perhaps Christensen sees an opportunity that others are missing.
Apple's "Einhorn Cash Catalyst" rally came to a short-term end last week as Tim Cook failed to spark enthusiasm with his comments at the Goldman Sachs conference. This is the latest development in a perfect storm of events that has caused Apple stock to spiral into a five-month correction. It's been a long five months for Apple investors but with products like Apple TV on the horizon, positive uncertainty will return. In the portfolio, we sold a portion of our AAPL June calls on Friday in order to stay true to our commitment of re-allocating Apple in $5 increments. After five months of underperformance, we refuse to add to positions until Apple finds upward stability. We plan to sell the rest of our June positions if Apple drops below $450. We'll add to positions if the stock finishes above $465. The same approach is on the table with Netflix ( NFLX). So far our initial allocation is off to a good start. We'll add to it if the stock can close above $200 on Wall Street's infatuation with the company's original programming and international growth prospects. Of course the television is only one of Apple's potential disruptors for 2013. We've been discussing the potential of a wrist-iWallet as well. Judging from comments regarding iWallet, the biggest barrier to entry is the payment infrastructure. Is the world really ready for iWallet? Scanning devices to receive payment are fragmented throughout the retail industry. At first glance this appears to present a problem for Apple but perhaps this fragmentation will provide the world's most trusted brand with an edge over its competitors. The iPad continues to gain credibility as a retail tool. Nordstrom is the latest retailer to begin implementing iPods and iPads into its payment structure. If enough retailers follow the trend it will provide Apple with a pre-distributed network to receive secure payments through iWallet. The evolution of iWallet's infrastructure is happening before our eyes and yet Wall Street is favoring Google ( GOOG) (GOOG is up 20% over the last three months as AAPL has dropped 20%) even though its largest Android client, Samsung, is planning to release its own OS in the fourth quarter.
How many retailers will trust Samsung's brand new OS to take secure payments? How many retailers will adopt Android as a payment system if Samsung isn't on board? Apple's advantage appears compelling to say the least. This stock will have a run in 2013. The positive uncertainty of disruptive innovation is returning. Buy Apple near a low or buy Google near a high? One is out of favor and the other isn't. We believe this trend is about to change. At the time of publication, the author was long AAPL. Follow Jason Schwartz @applesummit