Apple Is Not Building a TV, Or Maybe It Is

Updated from 8:50 a.m. to include CFO comments in the ninth paragraph.

NEW YORK (TheStreet) -- It's long been rumored that Apple (AAPL) will eventually release its own television set, changing the way we watch television forever. However, a new book on Apple, Haunted Empire: Apple After Steve Jobs, may tell a different story. Or it may not.

In the new book, written by former Wall Street Journal reporter, Iwatani Kane, Steve Jobs at his last top 100 meeting, (Apple holds meetings for its top 100 employees every year to discuss new products, a very secretive meeting), said that Apple would not be building a television, simply because the economics didn't work. "TV is a terrible business," Jobs is quoted as saying. "They don't turn over and the margins suck."

Pretty damning comments, right?

Not so fast, my friends.

Jobs was notorious for saying one thing in public, and doing another. Just look at his stance on several of Apple's biggest products: video iPod, iPad mini, iPhone, etc. In the past, he had damned all of these products in one way or another, the most recent being the iPad mini.

On Apple's fiscal fourth-quarter earnings call in 2010, Jobs took a swipe at 7-inch tablets, saying the size of the devices, most of them running Google's (GOOG) Android operating system, was not conducive to a great app experience. Here are his comments in full:

"I'd like to comment on the avalanche of tablets poised to enter the market in the coming months. First, it appears to be just a handful of credible entrants, not exactly an avalanche. Second, almost all of them use seven-inch screens as compared to iPad's near 10-inch screen. Let's start there. One naturally thinks that a seven-inch screen would offer 70% of the benefits of a 10-inch screen. Unfortunately, this is far from the truth. The screen measurements are diagonal, so that a seven-inch screen is only 45% as large as iPad's 10-inch screen. You heard me right; just 45% as large

If you take an iPad and hold it upright in portrait view and draw an imaginary horizontal line halfway down the screen, the screens on the seven-inch tablets are a bit smaller than the bottom half of the iPad display. This size isn't sufficient to create great tablet apps in our opinion."

Now, the iPad mini is one of Apple's best selling products, helping Apple to sell 26 million iPads in its most recent quarter. "Customers are loving the new iPad Air and iPad Mini, with Retina Display, introduced in October, and response to the more affordable iPad Mini has been very strong," Apple CFO Peter Oppenheimer said on Apple's fiscal first-quarter earnings call.

Jobs was notorious for this kind of stuff, so it's difficult to read too much into this, especially considering he told his authorized biographer, Walter Isaacson, something completely different. The following is a passage of text from Jobs' biography, entitled, Steve Jobs:

"'I'd like to create an integrated television set that is completely easy to use,' he told me. 'It would be seamlessly synced with all of your devices and with iCloud.' No longer would users have to fiddle with complex remotes for DVD players and cable channels. 'It will have the simplest user interface you could imagine. I finally cracked it.'"

Also See: What Exactly Will Be in the Apple TV?

The rumor mill about an Apple-branded television set has gone on for as long as one can remember, with people speculating based upon Jobs' comments in the biography. Wall Street analysts have gone so far as to include a TV set in their estimates, because that's how sure they were/are Apple was/is making one. New CEO Timothy D. Cook has only helped further fuel the speculation about an Apple-branded television set in interviews.

In an interview with NBC's Brian Williams in late 2012, Cook said that TV was an "area of intense interest" for Apple. "When I go into my living room and turn on the TV, I feel like I have gone backwards in time by 20 to 30 years," Cook told Williams at the end of the interview. "It's an area of intense interest. I can't say more than that."

Apple has been wildly successful with Apple TV, its $99 set-top box, that had previously been referred to as a hobby. "It's a little more difficult to call it a hobby these days," Cook recently said, at Apple's annual investor meeting, announcing Apple TV had generated more than $1 billion in revenue in the past year.

I highly doubt that Apple's living room ambitions are limited to a $99 set-top box, and continuously adding content to it, whether it's HBO Go, WatchESPN, WWE Network or The Beatles. If the reports are true about Apple building its own content-delivery network (CDN), then Apple is indeed working on something more grandiose than just continuing to build out its software and services, helping generate more revenue from its iTunes/Software/Services segment.

What the television set has to offer consumers is still anyone's guess. It could come in any number of sizes, with 32-inch, 37-inch and 50-inch the most rumored sizes. It could have access to the App Store, Siri and iCloud, and potentially offer much easier controls than today's televisions, perhaps using just the iPhone or iPad as a remote. The possibilities are endless for what Apple could have in its own television set.

It's easy to look at Jobs' comments at the top 100 meeting, and take them for truth. Jobs, for all his talents, was extremely adept at talking out of both sides of his mouth to the media, investors and sometimes his own company, you can take these comments with a huge grain of salt.

--Written by Chris Ciaccia in New York

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