Apple TV and Making the Wrong Decisions

August 24th, 2017

Year after year, Apple customers may have felt that the Apple TV set-top box had a future. Once it hit the second generation, as a tiny device capable of receiving streaming video, the possibilities seemed rich. While the second generation was limited to 720p HD, it was enhanced to 1080p, the maximum HD resolution, in 2013. Two years later, the third-generation Apple TV was discounted from $99 to $69.

You might have felt Apple was doing that as a holding action, as an all-new model was being developed.

As Tim Cook continued to tout Apple’s interest in the living room, it didn’t seem that much was going on. Well, there were rumors once upon a time that Apple was developing a smart TV set, which grew out of a pointed quote in the authorized biography of Steve Jobs. There were reports of prototypes and then — nothing. Maybe Apple tried to make it happen, but couldn’t find a place for yet another TV in a very saturated market.

It’s not the same as smartphones or tablets, where there was unrealized potential, and Apple found ways to make a difference. At the time the iPhone and iPad arrived, there were huge numbers of potential customers who had yet to partake of smartphones and tablets.

But what about Apple TV?

Well, it wasn’t altogether certain what Apple planned to do beyond using iTunes and streaming from Netflix and other services. For a time, there were rumors that Apple was planning its own subscription TV service. But the entertainment companies wouldn’t cave as quickly as the music compares did in the days of Napster. So whatever Apple wanted, the industry wasn’t buying it.

Indeed, there were rumors that the fourth-generation Apple TV was meant as the front end of this new service. When the plans fell apart, Apple cobbled together something with support for third-party apps, an App Store, and Siri to help bring it all together.

To be fair, Apple has not told us any of this. It’s just a matter of speculation, informed and otherwise.

But the late 2015 Apple TV lacked support for 4K and HDR — the latter was still being developed by the way — and thus might have been considered out of date before it was released. With list prices of $149 and $199, for the 32GB and 64GB models, it was regarded as way overpriced compared to the competition.

The most expensive Roku, the Ultra, lists for $109.99 including 4K and HDR. These features are also found in the $89.99 Premiere+. Roku boasts thousands of apps. And if you don’t care about 4K and the other frills, you can get a Roku Express for $29.99. It’s a basic streamer, a casual purchase, which you can buy them at Walmart and other large retailers.

After all, most people do not have 4K sets — at least not yet. So even the cheap stuff makes sense. Well, I haven’t tried them, so I can’t attest for their readability. But if you Google “Roku Sucks,” you’ll find a litany of problems, particularly with its erratic interface. But if all you want is Amazon and Netflix and maybe Hulu, it may not even matter so much.

Unfortunately, the proliferation of cheap streamers hasn’t helped Apple’s cause. So far at least, people are not seeing the Apple TV advantage, and thus sales are dropping. According to a Parks Associates survey, Roku’s share of the streamer market rose from 30% in the first quarter of 2016 to 37% in the second quarter of 2017. Amazon’s Fire TV and Fire Stick streamers now garner 24% of the market. And, despite a lack of hardware success in most markets, Google has managed to hold onto an 18% share among streamers.

Apple TV? 15%

And don’t forget that most new smart TV sets also offer the major streaming services with interfaces of varying quality. VIZIO depends on Google, and there are TV sets using Roku’s interface.

Now it’s not that Apple is unaccustomed to holding a small share of a market. Consider the Mac. Even the iPhone, which sells more than any other company’s individual model, has a worldwide market share in the teens. It’s overwhelmed by Android, largely because of the cheap stuff, and Apple still earns the lion’s share of profits.

So I suppose you could rightly state that it doesn’t matter that Apple is fourth in the market among set-top boxes, or that it’s falling further and further behind the competition.

But I do see a problem. While Apple can certainly make compelling arguments for Macs, iPhones and iPads, does the Apple TV really offer enough goodies to deserve a higher price? While the features no doubt work well, how many customers really use them — or care about them? Is it more about the tight integration with Apple’s ecosystem, or just the desire of some people to choose an Apple TV because they have other gear from the company?

I don’t pretend to have all the answers. It may well be that Apple is content to have a small share of the market, and is again taking a holding pattern as it develops ways to flesh out the product. Support for 4K and HDR would help. Also a $50 price reduction to make it more competitive, but that’s just me.

So is the Apple TV moving in the wrong direction, or is it just too early to see Apple’s end game? Remember that Apple often plays long ball, rather than focus on the last quarter, this quarter, or the next. There may be a really amazing game plan in place that’ll truly revolutionize the living room experience as Apple has hinted, only we mere mortals haven’t seen any of it yet.

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4 Responses to “Apple TV and Making the Wrong Decisions”

  1. sam says:

    Well said!

  2. dfs says:

    You limit your consideration of AppleTV’s usefulness to watching prepackaged stuff distributed by streaming services. But it has other uses you don’t take into account. You can use it to watch on t. v. the video content you have stored on your Mac (and also, for that matter, it’s a way you can pipe your tunes into your den and feed them through the more sophisticated sound system you probably keep there if you have one). This video content probably consists of a.) stuff ripped off commerical disks, and more interestingly b.) the video you have taken, and perhaps edited, yourself. Apple has created video software for your use and includes it in the OS bundle just like it does software for handling still photos. Video cameras are getting cheaper all the time and presumably some folks are using all this stuff to create their own video content. Such people need a means whereby they can sit back and watch it on the big screen in their dens. AppleTV provides that means.

    • gene says:

      That’s why I mentioned the integration with Apple’s ecosystem, which includes all that. But you need to realize that most people probably aren’t that deeply in to any of that except in the most casual way.


  3. John says:

    You nailed it in the last paragraph. Apple TV may not be great and is worthy of criticism, but we can’t see the big picture. It’s like looking at a stock price for the last two or three days. A year from now that uptick or downturn means nothing.

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