Apple is teaming up with Sharp to develop a connected TV that may hit retail outlets as early as the second half of 2012, according to a report from Jefferies & Co. analyst Peter Misek.

Misek's report is sparking a barrage of speculation about the features that Apple's "iTV" could offer, including the ability to let viewers use voice controls and hand gestures to navigate TV and Web video content.

Apple still hasn't confirmed that it is building a TV. While Apple has been able to turn MP3 players and tablet computers into mass market products with the introduction of the iPod and iPad, the company faces many obstacles in building a connected TV, including keeping the costs competitive with TVs from Samsung, Vizio, LG, Sony and other manufacturers. Consumers that buy a TV from Apple would still have to rely on cable and satellite providers for pay TV programming, since Apple doesn't have deals with major programmers that would allow it to distribute 24-hour networks.  

While Apple may hope to use gesture and voice controls to offer consumers a unique TV, rival Microsoft is already offering gesture and voice controls to consumers that buy its Xbox 360 with Kinect consoles. Cable technology vendors such as Arris may also begin to supply cable operators with set-tops and program guides that would allow subscribers to navigate with voice controls.