Apple TV holds 2% market with streaming devices industry

[Realityck]

per this article Strategy Analytics: Samsung Leads As Global TV Streaming Device Population Reaches 1.1 Billion

The research, which tracks quarterly deployments of TV and video streaming devices across 27 major countries, finds that Samsung is the leading brand, with 14% of devices in use, followed by Sony (12%), LG (8%), Hisense (5%), TCL (5%) and Amazon (5%). The analysis also shows that the Tizen platform is the leading player in TV streaming, accounting for 11% of deployed devices, followed by WebOS (7%), PlayStation (7%), Roku OS (5%), Fire OS (5%), Android TV (4%) and Xbox (4%). The platform environment is still relatively fragmented since many older, often proprietary systems are still in use.

Apple is at the back of the pack as represented with only 2%. What needs to change?

 

[Audit13]

Apple doesn't make TVs, Blu-ray Disc players, or gaming consoles which would put it at a disadvantage.

Apple TV boxes are more expensive as well with a Firestick costing 1/4 the price of a ATV 64 GB 4k.

I'd be more interested in the margins and revenue driven by the ATV and its strong ties to the iTunes and App Store.

 

[nutmac]

tvOS at 2% compared to 3% for Chromecast, 5% for Roku, and 5% for Amazon Fire TV is much higher than I expected. It makes me wonder how much higher tvOS would be if Apple can make a cheaper, simplified Apple TV.

 

[Realityck]

Believe it or not I've seen people online think they can get mostly the same just having the Apple TV app on their TV. So Apple putting the app on TV's is good for Apple TV + but not so beneficial to growing Apple TV sales.

Yes it would be nice if Apple could partner with a aggressive TV manufacturer that wants to sell a product that runs a Apple TV environment.

 

[Audit13]

Don't think hardware is where Apple makes much money, it's in the app and streaming side.

 

[Juicy Box]

From an investors' perspective, I could find this troubling.

From a consumers' perspective, marketshare is almost meaningless. IMO, Apple had a much better product relative to the competition when they hardly had a marketshare of anything.

IMO, Apple TV is the best streamer out there, but it is expensive, so it will not sell well.

It is just a little sad that the ATV4K is considered just a streamer box.

The ATV4K has becoming just an overpowered streamer, overpriced for what it does, but not of what it is capable of.

Believe it or not I've seen people online think they can get mostly the same just having the Apple TV app on their TV. So Apple putting the app on TV's is good for Apple TV + but not so beneficial to growing Apple TV sales.

I have seen many times where people do not know the difference between Apple TV, Apple TV+, and Apple's TV app.

Not just anywhere, I am seen this on tech forums like MR.

Don't think hardware is where Apple makes much money, it's in the app and streaming side.

I remember seeing something in the past about the ATV margins, stating that Apple was selling them about at-cost. I assume this has only gotten worse as there is no longer any other devices that use the A10X, so no benefiting from economies of scale.

They might be making money with apps and services related to the ATV, but you are correct, they are not making any money with the HW sales.

The recent conflicting rumors of the new ATV, most saying Apple will be replacing the A10X with the A12, some saying A12X, and some say A14.

While I would much rather see something like the A12X, I think that the A12 could potentially reduce the per unit cost for the ATV from economies of scale, either creating a profit margin, or a cheaper device. I guess there could be a balance between the two.

I suspect that Apple would probably keep the savings for themselves..

The thing is, the A12 is barely an upgrade from the current A10X, especially when it comes to its GPU performance.

 

[McScooby]

Don't think hardware is where Apple makes much money, it's in the app and streaming side.

You're joking right, at least 60% margin as I can get a screen, microphones and speaker for £200 more, otherwise why would they bother, they wouldn't be slow in jacking the price up it that were the case?

 

[Rigby]

That's precisely the reason why they left their walled garden with the Apple TV app and brought it to other platforms. Streaming services must be multi-platform today to achieve good reach. As long as the Apple TV (box) sells enough to get all the important apps, I don't really care if it has a small market share. tvOS also has the inbuilt advantage that it's easy to port iOS apps to it (where Apple has a much larger market share) ...

 

[Audit13]

You're joking right, at least 60% margin as I can get a screen, microphones and speaker for £200 more, otherwise why would they bother, they wouldn't be slow in jacking the price up it that were the case?

60% margin on an Apple TV box? Any source for this?

 

[Apple_Robert]

At this rate, Apple is never going to have a meaningful share of the streaming market. I think they are happy with enough to warrant customers purchasing products that allow them to stream their favorite channel or service. As long as Apple can do that part better than the competition for Apple users, Apple will be happy.

That is my hypothesis.

 

[McScooby]

60% margin on an Apple TV box? Any source for this?

I thought Apple aimed to 60% in all their products. If the latest iPhone is double the price, think about it. They was speculation on the price on other threads when the 4K launched I think subject to a flippant TC remark IIRC. The bulk of the expense would go on R&D/software, but think about it, what is in there a chip & a flash drive, remember it's 2.5x the price of the ATV3 you think it's more?🤣 (almost forgot about the remote that retails at £60, is that worth £60 of build?)

 

[Audit13]

I thought Apple aimed to 60% in all their products. If the latest iPhone is double the price, think about it. They was speculation on the price on other threads when the 4K launched I think subject to a flippant TC remark IIRC. The bulk of the expense would go on R&D/software, but think about it, what is in there a chip & a flash drive, you think it's more?🤣 (almost forgot about the remote that retails at £60, is that worth £60 of build?)

I don't recall seeing anything about Apple aiming for a 60% margin across the board.

I cannot comment on the cost of the remote as I have no knowledge of what's inside. I used my remote exactly once and that was to set up the device.

 

[McScooby]

I don't recall seeing anything about Apple aiming for a 60% margin across the board.

I cannot comment on the cost of the remote as I have no knowledge of what's inside. I used my remote exactly once and that was to set up the device.

Can't say I've much interest in it, maybe I'm getting it confused with revenues here (which will now be greater) https://www.cnbc.com/2019/01/29/apple-discloses-services-margin-for-the-first-time.html
or might be this I'm getting confused with https://www.fool.com/investing/2018/06/30/heres-what-affects-apples-iphone-gross-profit-marg.aspx
Whatever it is, you can be sure it's not being sold at cost.

 

[Audit13]

Can't say I've much interest in it, maybe I'm getting it confused with revenues here (which will now be greater) https://www.cnbc.com/2019/01/29/apple-discloses-services-margin-for-the-first-time.html
or might be this I'm getting confused with https://www.fool.com/investing/2018/06/30/heres-what-affects-apples-iphone-gross-profit-marg.aspx
Whatever it is, you can be sure it's not being sold at cost.

I don't recall saying they were being sold at cost and I'm not really sure what the margins would be.

I'm not concerned since I got my ATV for free from DirecTV

 

[McScooby]

I don't recall saying they were being sold at cost.

Don't think hardware is where Apple makes much money, it's in the app and streaming side.

Maybe your idea of not much money and mine are maybe not the same?👍

 

[Audit13]

Maybe your idea of not much money and mine are maybe not the same?👍

Probably. I'm not a wealthy person and entered the Apple ecosystem by buying used.

 

[McScooby]

Probably. I'm not a wealthy person and entered the Apple ecosystem by buying used.

Neither am I, but you can be sure that when apple sells a product & doesn't advertise it much they won't be just making a wee bit of money from it, it'll hold it's own.

 

[Juicy Box]

Don't think hardware is where Apple makes much money, it's in the app and streaming side.

You're joking right, at least 60% margin as I can get a screen, microphones and speaker for £200 more, otherwise why would they bother, they wouldn't be slow in jacking the price up it that were the case?

60% margin on an Apple TV box? Any source for this?

I thought Apple aimed to 60% in all their products. If the latest iPhone is double the price, think about it. They was speculation on the price on other threads when the 4K launched I think subject to a flippant TC remark IIRC. The bulk of the expense would go on R&D/software, but think about it, what is in there a chip & a flash drive, remember it's 2.5x the price of the ATV3 you think it's more?🤣 (almost forgot about the remote that retails at £60, is that worth £60 of build?)

I don't recall seeing anything about Apple aiming for a 60% margin across the board.

I cannot comment on the cost of the remote as I have no knowledge of what's inside. I used my remote exactly once and that was to set up the device.

Can't say I've much interest in it, maybe I'm getting it confused with revenues here (which will now be greater) https://www.cnbc.com/2019/01/29/apple-discloses-services-margin-for-the-first-time.html
or might be this I'm getting confused with https://www.fool.com/investing/2018/06/30/heres-what-affects-apples-iphone-gross-profit-marg.aspx
Whatever it is, you can be sure it's not being sold at cost.

I don't recall saying they were being sold at cost and I'm not really sure what the margins would be.

I'm not concerned since I got my ATV for free from DirecTV

It isn't officially from Apple, but this will probably be the best source showing the profit margin (or lack of one) for the Apple TV:

Gruber: Apple TV is Sold at Cost, HomePod at Slight Loss

On the latest episode of The Talk Show, Daring Fireball's John Gruber discusses Apple TV and HomePod pricing and whether Apple is charging too...

www.macrumors.com

This was from a while back, so I assume the situation has only gotten worse since Apple lost economies of scale:

I remember seeing something in the past about the ATV margins, stating that Apple was selling them about at-cost. I assume this has only gotten worse as there is no longer any other devices that use the A10X, so no benefiting from economies of scale.

 

[McScooby]

Still don't buy that. Check the Apple refurb prices. UK retailers & US sell heavily discounted HomePods all the time at below refurb prices, so either Apple makes a loss on each product sold on their site & refurbs or an even bigger loss selling to retailers. Apple didn't get to where it is today being a loss leader.

 

[Juicy Box]

Still don't buy that. Check the Apple refurb prices. UK retailers & US sell heavily discounted HomePods all the time at below refurb prices, so either Apple makes a loss on each product sold on their site & refurbs or an even bigger loss selling to retailers. Apple didn't get to where it is today being a loss leader.

You might be right, but there isn't anything supporting that line of thinking.

If you read other tech sites covering the same story, it says:

The Apple TV 4K is sold by Apple for $179, and Gruber says that his source has told him that’s effectively what it costs Apple to make. The A10 chip powering the Apple TV is believed cost Apple around $26, which would imply that other parts within the Apple TV account for the majority of the device’s cost, as well as marketing and R&D.

So, Gruber is including marketing and R&D to the margin, which isn't really that hard to believe with Apple's increase in R&D. I would argue against the addition of marketing making an impact on the profit margin, as I think that Apple hardly advertises the Apple TV.

Another thing to keep in mind is the reported unit cost for the A10 chip @$26 at the time of the iPhone 7 launch. But, Apple used the A10X variant which I would assume cost more than the A10 at the time of the launch of the ATV4K, but another thing to keep in mind is that Apple doesn't use that chip in anything anymore. So, I would suspect that the per unit cost for the A10X chip has increased quite a bit since the launch of the ATV4K.

Another thing that is worth mentioning is this:

Gruber notes that Apple margins company-wide are generally right around 38 percent

If you look at the specs of the ATV4k, the closest device would probably be the 2017 iPad Pro, which is almost like an Apple TV 4K, but with a display. The 64GB iPad Pro was $800, and the 64GB ATV4k was $200.


While Apple may not be losing money per ATV4k sold, I would bet that there is at least some truth to Gruber's claims, and maybe Apple may not be making nearly the profit that it is used to with other devices.

 

[McScooby]

What supports my line of thinking is common sense.
TC isn't going to go all in on a product without looking at margins, it's the first thing you do in business, be it a company the size of apple or your local convenience store.
Everything in the quotations hinges on a source close to Gruber, so straightaway it's hearsay.
If you're going to look at R&D, then that will have a finite cost to get it off the ground (it's how they split the R&D costs per product that counts), ongoing costs can be added to the services side and how the software supports it, which again will have finite costs as once you reach subscriber/sales parity/income from apps sold on app store it's all profit.
iPad is a misnomer as build costs will be higher there & apple will recoup that separately, so whilst the chip is the common denominator that's where the similarity ends.
Mass producing a chip will drop the price not increase it as the build process of the chip can be streamlined as the process is bedded in.
It all boils down to what you believe; what common sense tells you or some secretive unknown source.
For a truer comparison look to the competition, what they sell for, because again margins will be included there.
If anything, Apple would have a huge head start with iOS which again would mean lower costs.

 

[satchmo]

Frankly I’m surprised at 2% how close Apple TV is to the competition.

It doesn’t seem like Apple has even paid much attention to the product rarely upgrading it.

The market still seems to be up for grabs. A lower priced option could generate greater interest but it’s the chicken and egg scenario. Content is still rather sparse. Covid didn’t help.

 

[nutmac]

At this rate, Apple is never going to have a meaningful share of the streaming market. I think they are happy with enough to warrant customers purchasing products that allow them to stream their favorite channel or service. As long as Apple can do that part better than the competition for Apple users, Apple will be happy.

I think Apple realized that, hence cancelled Apple-branded TV project and Apple TV app on other platforms.

The future of Apple TV is probably safe, thanks to HomeKit (only Apple TV and HomePod can reliably function as a HomeKit hub) and Apple Arcade. But it is unlikely to rise beyond the niche of serving Apple fans.

I have 3 TVs at home, but only 1 Apple TV. I will buy another one when and if new Apple TV is released but I am in no hurry to get another for the 3rd set.

 

[McScooby]

Frankly I’m surprised at 2% how close Apple TV is to the competition.

It doesn’t seem like Apple has even paid much attention to the product rarely upgrading it.

The market still seems to be up for grabs. A lower priced option could generate greater interest but it’s the chicken and egg scenario. Content is still rather sparse. Covid didn’t help.

Devices isn't the current main goal for apple though I don't suspect, it's the platform i.e. AppleTV like Prime or Netflix which is on most if not all of the devices mentioned.
By having their own device it adds to the profit or owning the whole apple experience, but the AppleTV platform is what's the key driver now. They're probably thinking that as the AppleTV didn't originally sell well (classed as a hobby with no thanks to lack of advertising) they'll attack it from the content side of things which will then act as a driver to sell the hardware. They should've just bought Fox/Disney or at least got in early to offer a strategic partnership when opportunity arose, but apple being apple thinks it can create a better service rather than buy into one. Hook folk with the content and offer exclusives on the locked-in hardware side in the future.
As for Covid, I'd guess that's accelerated growth, much like what Disney+ reported recently and if it didn't questions would have to be asked.

 

[Juicy Box]

It doesn’t seem like Apple has even paid much attention to the product rarely upgrading it.

Yeah, I mentioned earlier about the lack of advertising for the ATV and how many people do not even know that there is a difference between Apple TV, Apple TV+, and the Apple TV app.

Even non-tech people know what a Fire TV is, but more often than not, I have to explain to people I talk to what an Apple TV actually is.

Apple just doesn't seem to care about it. Maybe Gruber is right and the margins are not nearly as good on the ATV than on other Apple devices, so Apple pays it a lot less attention.

If you watch any of the Keynotes where the ATV or tvOS is mentioned, it is not even a blip on the radar compared to Apple's other products. During the 2020 WWDC, Apple spent more time on just AW hand washing than talking about tvOS.

Maybe they are saving the good stuff for later, but this treatment of the ATV isn't unusual during the Keynotes.

Just look at Apple's website on the TV related HW, services, apps, and accessories. You have to scroll half way down the page before getting to the ATV4K:

TV & Home

Simply connect Apple TV, HomePod mini, and other accessories to experience a smart home that runs flawlessly across your devices.

www.apple.com