• by David Goetzl  @dgoetzl, April 2, 2012

A new Wall Street report suggests Apple could make headway in the TV hardware market with a coming Apple TV product, but not the $60 billion-plus advertising market with programming that the devices may support. The Barclays research notes that content providers would be hesitant to cut deals with Apple, so as not to upset the current pay-TV landscape.

Broadband-service providers may place limits on Apple’s ability to distribute content by placing usage caps that would inhibit an over-the-top service, Barclays says. However, Verizon or AT&T could ink deals with Apple as a way to challenge entrenched cable operators.

Still, Barclays says should a meaningful number of subscribers desert a cable operator, an Apple TV tool could “potentially be used as a retention tool."

An Apple TV is not expected in 2012, but Barclays analyst Ben Reitzes says one “would represent a natural extension” of Apple products, where an iPhone or iPad could be used as a remote control and Siri as an interface. Apple, in short, could offer a superior product and simply outcompete entrenched TV manufacturers with a top-of-the line smart TV with Internet connectivity.

But launching an A-to-Z entertainment headquarters that puts it in the hardware and content business (even as it could make iTunes content available) would be challenging. Barclays suggests that resistance from content providers and broadband operators could have an Apple TV “end up resembling a large-scale iPad.”

Apple would struggle to launch a stand-alone pay-TV service with a full suite of channels, Barclays says. For one, networks would be wary of upsetting incumbent operators, but interested content providers would still leave Apple with all kinds of digital rights issues.

“Ultimately, we think an Apple TV can be a seamless gateway from the living room to the Internet and consist of an elegant, Internet-enabled TV and look similar to a large-scale iPad with apps for channels,” Barclays writes.