Analysts see Apple-branded television set in 2012 that does games, DVR, FaceTime and more

I know what you’re thinking – analysts, right? While it’s true many “analysts” can’t tell their arse from their elbow, some predictions are worth observing. Katy Huberty with Morgan Stanley is again risking her credibility by re-iterating that Apple will take on television market with a new product category expected in the 2012-2013 time frame.

She code-named it a Smart TV, a full-fledged networked television with the shiny Apple logo on it. Checks with Asian component suppliers suggest Apple is developing a Smart TV prototype, says her Friday note to clients.

She’s calling for an intelligent set converging regular TV features with DVR capabilities, gaming and – why not – FaceTime video calling. In other words, an oversized iPad for your living room. Her wish list echoes that of Gene Munster who opined numerous times how Apple is best poised to take the emerging connected television market by surprise with an Apple-branded HDTV set. Billions are potentially up for grabs in this market, Huberty warns.

If Apple captures just one percent share of the television market by 2013, it can expect $4 billion of additional revenues, Huberty wrote.

It’s not immediately clear how Apple might innovate and how exactly the company expects to price-match inexpensive TV sets from Samsung and LG, especially given Apple buys its flat panels from these rivals. Maybe a Retina Display Smart TV would do the trick?