When questioned about the Apple TV’s lackluster sales, Apple’s Chief Operating Officer Tim Cook said that Apple TV was “just a hobby.” That might have been the case at last years annual Goldman Sachs’ technology conference in San Francisco when delegates asked Apple’s COO the question, but not anymore.

Apple’s second release of the Apple TV came in the form of a trimmed down black case and a low price of $99. With NetFlix and MLB integration, Apple TV2 seemed much more appealing than the original.

With the introduction of AirPlay in iOS 4.3, Apple made your HDTV you already had start interacting with the iDevices you already carried.

Fast forward to yesterday, March 25 2011. AppleInsider is reporting that Morgan Stanley analyst Katy Huberty sent a note to investors yesterday that read “checks in Asia suggest Apple is working on a Smart TV prototype.” ┬áThe news has been traveling through the tech blogs like wildfire as everyone is intrigued to see what Apple will come up with next.

Are the folks that brought us the mouse and the click wheel ready to invade our living rooms for real this time? It’s possible. Huberty speculated that a Smart TV would be an opportunity for Apple to consolidate innovative hardware with their iTunes software and other technologies.

An Apple TV set would bring the iTunes Goliath media library into homes that weren’t using it before on other products. It could also bring technologies like FaceTime into the homes of the not-so-tech-savvy. If given access to Apple’s current App Store, an Apple HDTV would immediately turn into a gaming hub, compatible with all of your current iDevices.

Only time will tell what Apple has planned for the future. I think it’s very likely we start seeing Apple branded products outside of their current scope. And if the previous success of Apple’s previous products are any indication, whatever it is, they’ll probably sell millions.