The latest Apple rumor has the computer maker entering the gaming console, taking on Microsoft, Sony, and Nintendo.

In a note to clients published Monday, Prudential Equity Analyst Jesse Tortora said his checks show the Cupertino, California computer maker is hiring video game designers. Mr. Tortora wrote that the hires could indicate a move into either the gaming console market or that Apple could add fresh gaming capabilities to its existing line of iPod music players.

If Apple attacks the gaming console market, it would put the company up against some various serious competition. However, such a move might be needed to keep Sony and Microsoft from dominating the digital living rooms.
Both Sony and Microsoft are relying on their consoles to push new technologies into the living room, posing a serious threat to Apple’s own digital lifestyle aspirations. Apple has been edging into the living room—building the ability to download feature films into its popular iTunes digital media store and announcing plans to introduce a set top box, code named iTV, that will allow users to more easily move downloaded films to their televisions.

However, those plans could be hampered by the game consoles being marketed by Microsoft and Sony. Microsoft has already introduced a movie download service tied to its Xbox Live service, and Sony’s plans to compete with Microsoft’s Xbox Live service with the Playstation 3 could soon push the electronics and media conglomerate in the same direction.

“Ultimately, we think Apple’s decision to enter the video game market could depend on its need to defend its position against the competition in the battle over the digital home,” Mr. Tortora wrote.