Apple TV Set Closer To Becoming Reality: Report

By Alexandra Burlacu | Dec 14, 2012 01:49 PM EST

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Rumors of an upcoming Apple TV set have been intensifying lately, and a new report indicates the sets might arrive sooner than expected.

The Cupertino giant is reportedly working with Asian component suppliers to test several designs for TV sets, suggesting that Apple is moving closer to expanding its range of offerings to the living room as well.

A new Wall Street Journal (WSJ) report cites executives at some of Apple's suppliers, saying that the company has been testing designs for a large-screen high-definition set. According to two of the WSJ's sources, Hon Hai Precision Industry, which assembles Apple's iPhone and iPad, has been working with Japan's Sharp Corp for several months.

"It isn't a formal project yet. It is still in the early stage of testing," one of the sources told the WSJ.

The idea of Apple producing its own television set has been making rounds for quite some time, but Apple CEO Tim Cook brought it back into the spotlight earlier this month. During an interview with NBC, Cook dropped the biggest hint yet that a new product offering may be in the cards.

"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 said in the interview. "It's an area of intense interest. I can't say more than that."

Apple typically tests and develops products internally before starting tests with outside suppliers. Working with suppliers in Asia indicates that the project has moved further along, and is closer to becoming reality. On the other hand, it does not guarantee that a project will actually see the light of day. Apple has been testing TV prototypes for several years, and still hasn't decided to push the large-screen set onto the market.

Apple's archrival Google has been making software for TVs and set-top boxes, but none of it has gained much traction yet. Apple's foray into the TV set market would ramp up competition with some of its biggest suppliers, including Samsung Electronics. The South Korean company is a major Apple supplier, and is also the world's biggest TV-set maker by shipments.

"The potential for consumer lock-in that the television creates will likely drive platform companies to continue exploring the space," Goldman Sachs recently said. "As such, while the battle is just getting started on this front, we see it as having the potential to either further entrench current winners, such as Apple, or completely disrupt the market once again."

Consumer-electronics manufacturer Hon Hai, more commonly known as Foxconn, has been expanding into large HD TV sets this year. Back in July, Foxconn Chairman Terry Gou's investment firm took a 37.6 percent stake in a liquid crystal display factory owned by Sharp.

The factory in question, located in Sakai, Japan, is particularly suitable for manufacturing LCD panels 60 inches or larger for TV sets. This year, Hon Hai started assembling 60-inch sets for Vizio Inc., using panels from the Sakai plant.

Meanwhile, the Cupertino giant has been in talks with cable-television operators, including Time Warner Cable Inc., about making a set-top box that would carry live television. It remains unclear at this point, however, how a large-screen TV would improve Apple's TV strategy.

First of all, Apple doesn't seem to have any deals in place with operators to sell such a device. Moreover, Apple has tense relationships with cable companies and content owners, which means that getting them on board may prove to be quite a challenge. Over the past few years, Apple has not enjoyed much success in convincing entertainment companies to grant it right for TV offerings.

Apple's current television hardware, the $99 set-top Apple TV, seems to be picking up steam, but sales remain small nonetheless. In the quarter through September, the company sold just 1.3 million. Could a new Apple TV spice things up?