or Connect
AppleInsider › Forums › Mobile › iPod + iTunes + AppleTV › Roku CEO speculates Apple loses money on $99 Apple TV, analyst says it's break-even
New Posts  All Forums:Forum Nav:

Roku CEO speculates Apple loses money on $99 Apple TV, analyst says it's break-even

post #1 of 111
Thread Starter 
Though he offered no evidence to prove it, the CEO of Roku said this week that he believes rival set-top streamer Apple TV is a money losing product, though one analyst believes the device is more likely a break-even business for APple.

Apple TV vs Roku


"Apple TV is essentially an accessory for the iPad. They lose money, which is unusual for Apple," Roku's Anthony Wood said at the Re/code conference, according to Cnet. "If you're losing money, why would you want to sell more?"

After Wood's comments began gaining attention, analyst Horace Dediu of Asymco was asked via Twitter whether he believes the Apple TV does in fact lose money. Dediu said he considers the Apple TV to be a "Kindle-like product" for Apple that breaks even.

The Apple TV was Apple's fastest growing hardware in 2013, with sales estimated to have grown by 80 percent, reaching around 10 million units for the calendar year. That means Apple sold about $1 billion worth of set-top boxes to end users.




The disparaging comments from Wood aren't entirely surprising, as Roku and Apple TV are in a two-horse race for leadership in the set-top streaming accessory business. Data from the NPD Group shared with AppleInsider last year revealed that the two platforms dominate with approximately 80 percent market share between them.

The Apple TV has continued to see strong sales despite the fact that Apple has not updated the hardware in two years. There have been rumors that Apple is looking to introduce a new model in the coming months, with expectations that the platform might be expanded to allow a full-fledged App Store with downloadable channels and even games.

Apple TV


Competition is also expected to grow even more next week, when Amazon will hold an event where the company is likely to show off its own streaming device at an event in New York City. Amazon already serves up content through its Amazon Prime subscription and Amazon Instant Video services, and it will reportedly allow for delivery of that content to users' TVs with a new streaming accessory.

Google also entered the fray last year with its $35 Chromecast, a budget-minded simple HDMI dongle that works with apps on both Apple's iOS and Google's Android.
post #2 of 111
Well, let's see. It would enable Apple to sell more iPhone, iPad, iMac, MBA, rMBP, iPod Touch, more iTunes etc etc.
post #3 of 111

Wait a minute?  A CEO is spreading FUD about a competitor's product?

 

How strange...

post #4 of 111
I'm in the UK where it sells for £99. It's great value for what it does and I'll be the first to buy an updated version. I'm sure they make money on it - it's only a little box with a few electronics inside!!
post #5 of 111
Quote:
"Apple TV is essentially an accessory for the iPad. They lose money, which is unusual for Apple," Roku's Anthony Wood said at the Re/code conference, according to Cnet. "If you're losing money, why would you want to sell more?"

Wow, another CEO with shit for brains.
Send from my iPhone. Excuse brevity and auto-corrupt.
Reply
Send from my iPhone. Excuse brevity and auto-corrupt.
Reply
post #6 of 111
So what does that say about Roku, whose prices are generally lower than the Apple TV?
post #7 of 111
A breakdown of costs involved with the Apple TV 2 back in 2010 show it to cost apple approximately $64.00

Prices have no doubt decreased since then. I think the Apple TV is very profitable for Apple if you use the costs.

https://technology.ihs.com/388826/isuppli-teardown-reveals-apple-tvs-inner-ipad

The costs are for the Apple TV 2 but the 3 can not be much more, plus its two years old. Old tech A5 not cutting edge A7 processor. Memory prices have also decreased as well.

Roku boss has no idea what he is talking about.
post #8 of 111
I don't see Apple selling anything at a loss or even at break even. I'm sure they make a nice little profit on the Apple TV, especially as time has gone on and they haven't updated it.
post #9 of 111
My workplace bought a bunch of Apple TV devices for the conference rooms. No streaming media use here. Just used as wireless connectors to the projectors.

It is like a gazillion times easier.

And yeah, very likely to me that Apple has something like 15 to 20% margins on them. No more than $60 for the hardware and $25 for the cost of selling them.

The 2013 Apple TV uses a single core Cortex-A9 CPU and a single SGX 543 MP1. It's like a 6x6 mm SoC. What, $5 per chip for that? Wouldn't be surprised if the BOM is $40.
post #10 of 111

I'd be very skeptical about any third party analysis that claims to know what Apple's costs are, and even more so when the third party is clearly not impartial.

 

Either way we'll never know, since Apple isn't going to reveal anything.

post #11 of 111
Quote:
Originally Posted by iaeen View Post

So what does that say about Roku, whose prices are generally lower than the Apple TV?

You beat me to it.  Roku makes nice hardware and has some great features but the ecosystem surrounding the iOS universe trounces everything else at the moment.  Manufacturing costs are next to nothing, its a board in a plastic case.  The major components are ~ 3 years old, the R&D has long been recouped.

 

These are words of a nervous CEO.

Just say no to MacMall.  They don't honor their promotions and won't respond to customer inquiries.  There are better retailers out there.
Reply
Just say no to MacMall.  They don't honor their promotions and won't respond to customer inquiries.  There are better retailers out there.
Reply
post #12 of 111
The AppleTV is a perfect companion device for me and my family. I own the 1st and two 3rd gens. I have had family members purchase AppleTV's based on my experiences. It will stream all my media, allow me to purchase what I need, give me access to the best Netflix user experience and let me watch and keep up with my sports. I have ditched my cable, and even with paying for content, my TV watching is of a better quality and still far cheaper. I spend more quality time watching vs quantity of time. Most network television programming is not for me (reality nonsense) so apart from of few programs I am not really interested in basic cable network content apps. If I had to ask for more from Apple, it would be nice to have an option to subscribe to the specialty channels ie. HBO, Showcase, Star etc. without having a cable bill. More access to new weekly shows (I always buy the latest episode of Walking Dead), and a return to the rent TV shows for 99 cents format that the US had for a while (I hardly ever watch twice a purchased TV show. and I never purchase movies). I would also like iTunes radio and NBA in Canada where I live. Thank you Apple 1smile.gif
post #13 of 111

Hmmm and when/if Apple releases a real AppleTV I bet they'll be shitting their pants. I think their CEO knows this and is scared so he's spewing out FUD. If Apple releases what everyone wants I think its game over for the rest of the competition considering it can easy integrate with any Mac or iOS device (ecosystem). 

 

To a customer, they could care less if its a money maker. If its a good quality product, they're going to buy it. 

Mac Mini (Mid 2011) 2.5 GHz Core i5

120 GB SSD/500 GB HD/8 GB RAM

AMD Radeon HD 6630M 256 MB

Reply

Mac Mini (Mid 2011) 2.5 GHz Core i5

120 GB SSD/500 GB HD/8 GB RAM

AMD Radeon HD 6630M 256 MB

Reply
post #14 of 111
I think Apple may have been breaking even on the Apple TV two years ago, when it was last updated, but now they are probably earning profit on each sale due to lower component costs and a fully developed production capability. If Apple keep the $99 when they update the Apple TV with an A6 or A7, 1GB of DRAM, 16GB or 32GB of flash, 802.11ac Wifi, and Gigabit Ethernet in order to support an App Store (including games) and 4K movies, then I believe Apple would be struggling to break even for the first several months. Regardless, I guess that Apple's margins on the Apple TV are lower than for most of their hardware.
Mac user since August 1983.
Reply
Mac user since August 1983.
Reply
post #15 of 111
It's not an accessory for an iPad, although AirPlay is f'n awesome. We use one everyday to stream Netflix Amanda iTunes at home. Works great. Roku is super clunky and ugly. Sorry little CEO dude. It will be sad to watch Apple bury you with the next iteration of the product.
post #16 of 111
Quote:
Originally Posted by mcarling View Post

I think Apple may have been breaking even on the Apple TV two years ago, when it was last updated, but now they are probably earning profit on each sale due to lower component costs and a fully developed production capability. If Apple keep the $99 when they update the Apple TV with an A6 or A7, 1GB of DRAM, 16GB or 32GB of flash, 802.11ac Wifi, and Gigabit Ethernet in order to support an App Store (including games) and 4K movies, then I believe Apple would be struggling to break even for the first several months. Regardless, I guess that Apple's margins on the Apple TV are lower than for most of their hardware.

 

 

Hmmm...will the A6 or A7 even support 4k resolution? This would be very nice to see and would put it out in front of its competition in that respect. I don't think any of its competition has 4k at this point and depending on what processor/video they have in it, it could take a little bit for them to catchup. The biggest thing if Apple gets 4k, is it needs to get content on the AppleTV in 4k or else obviously its worthless. 

Mac Mini (Mid 2011) 2.5 GHz Core i5

120 GB SSD/500 GB HD/8 GB RAM

AMD Radeon HD 6630M 256 MB

Reply

Mac Mini (Mid 2011) 2.5 GHz Core i5

120 GB SSD/500 GB HD/8 GB RAM

AMD Radeon HD 6630M 256 MB

Reply
post #17 of 111
the utilite computer, has approx. the same internals, and it is sold by compulab at 99 dollars. this co mpany, of course, is making them for a profit.
Apple , of course, sells a magnitude more of the appleTV which is the "same" as the utilite, thus apple at a minimum is covering all of it's costs on the appleTV.
(they are most likely breaking even at the start if the manufacturing of the Apple TV, now profit!)

So it took two years for compulab to get the components at a cost that it is worth making the utilite, thus The Apple TV is making a profit.

the utilite that i am referring to is the single core freescale i.MX6 cortex-A9, compulab also makes a dual core model, and a quad core 1.2Ghz freescale i.MX6 cortex-A9 model at 219$
post #18 of 111
Another doofus CEO who'll probably be eating his words and licking his wounds at some point soon....
post #19 of 111
Mr. Wood,

You're not very smart if you state you don't know why Apple would want to sell more of something that they don't make money on. This practice is very common throughout business.

Why do ink jet printers almost give away the printers?

Why does Keurig sell their coffee machines for next to nothing?

My last question is most important. How did you every become CEO of a company?
post #20 of 111
Quote:
Originally Posted by macxpress View Post

Hmmm and when/if Apple releases a real AppleTV I bet they'll be shitting their pants. I think their CEO knows this and is scared so he's spewing out FUD. If Apple releases what everyone wants I think its game over for the rest of the competition considering it can easy integrate with any Mac or iOS device (ecosystem). 

To a customer, they could care less if its a money maker. If its a good quality product, they're going to buy it. 

Roku has their own TV on the way.

http://blog.roku.com/blog/2014/01/05/introducing-roku-tv/
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
Reply
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
Reply
post #21 of 111
Quote:
Originally Posted by razorpit View Post
 

You beat me to it.  Roku makes nice hardware and has some great features but the ecosystem surrounding the iOS universe trounces everything else at the moment.  Manufacturing costs are next to nothing, its a board in a plastic case.  The major components are ~ 3 years old, the R&D has long been recouped.

 

These are words of a nervous CEO.

 

I agree that the iOS universe pretty much trumps everything else out there... but I don't agree that the Apple TV trumps everything out there -- it's too limiting in its scope. I mean, it doesn't even have access to Amazon Prime and I can't use things like Plex Media Server or even the Time Warner Cable app (we don't have a cable box in our bedroom, and running the straight cable to it only gives us the first 71 or so channels and only the local channels are in HD). With the TWC app, I can watch pretty much the full lineup; all in HD.

post #22 of 111
Quote:
Originally Posted by dasanman69 View Post


Roku has their own TV on the way.

http://blog.roku.com/blog/2014/01/05/introducing-roku-tv/

 

We'll see if it gets the content Apple hopefully gets. And doing an actual TV...now thats a money loser right there! I see the CEO eating his own words a year from its release. 

Mac Mini (Mid 2011) 2.5 GHz Core i5

120 GB SSD/500 GB HD/8 GB RAM

AMD Radeon HD 6630M 256 MB

Reply

Mac Mini (Mid 2011) 2.5 GHz Core i5

120 GB SSD/500 GB HD/8 GB RAM

AMD Radeon HD 6630M 256 MB

Reply
post #23 of 111

Then what does this say about Google selling a device in the same category for 1/3 the price?

post #24 of 111
I don't think the margins are as high as other Apple products but I would be surprised if Apple isn't making a nice profit on each sale.

Quote:
Originally Posted by THT View Post

The 2013 Apple TV uses a single core Cortex-A9 CPU and a single SGX 543 MP1. It's like a 6x6 mm SoC. What, $5 per chip for that? Wouldn't be surprised if the BOM is $40.

If I'm not mistaken it's using a dual-core SoC that has one of the cores disabled, which is likely the result of the dual-core chip not being good enough for t's primary usage in an iDevice. This means those Apple TV chips are essentially free for Apple since they would have otherwise been junk.

This bot has been removed from circulation due to a malfunctioning morality chip.

Reply

This bot has been removed from circulation due to a malfunctioning morality chip.

Reply
post #25 of 111
Quote:
Originally Posted by macxpress View Post
 

 

 

Hmmm...will the A6 or A7 even support 4k resolution? This would be very nice to see and would put it out in front of its competition in that respect. I don't think any of its competition has 4k at this point and depending on what processor/video they have in it, it could take a little bit for them to catchup. The biggest thing if Apple gets 4k, is it needs to get content on the AppleTV in 4k or else obviously its worthless. 

 

It depends on the content.  I know some people who claim that the 3rd generation Apple TV is glitchy with fast action movies, but I've never seen it with my own or my friends'.  The 3rd generation Apple TV is probably fast enough to display very easy 4K content.

 

I suspect the timing of the 4th generation Apple TV might depend in part on Apple signing new contracts with the content providers.

Mac user since August 1983.
Reply
Mac user since August 1983.
Reply
post #26 of 111
Wonder what he'll say about the pending Amazon box? Roku having Amazon is a standout feature for them. It's why I bought one. An Amazon box would be a major competitor to Roku from that aspect but probably won't be a flexible as the Roku.
post #27 of 111

Given Tim Cooks mastery of supply chain management and the economies of scale Apple enjoys on component purchases, I doubt Apple is losing money on each Apple TV.

post #28 of 111
Quote:
Originally Posted by MachineShedFred View Post
 

Wait a minute?  A CEO is spreading FUD about a competitor's product?

 

How strange...

Ballmer's gone.... There's a vacuum in the Anti-Apple FUD world (don't you hear that giant sucking sound?, especially after all the MS love about the iPad yesterday)...  and nature abhors a vacuum

post #29 of 111
Quote:
Originally Posted by razorpit View Post
 

You beat me to it.  Roku makes nice hardware and has some great features but the ecosystem surrounding the iOS universe trounces everything else at the moment.  Manufacturing costs are next to nothing, its a board in a plastic case.  The major components are ~ 3 years old, the R&D has long been recouped.

 

These are words of a nervous CEO.

in a world that is about to have a a real 'damn the profits, full marketshare ahead' player in the TV internet STB world.   

 

This is the correct thought thread.  Roku could 'play' when appleTV was a 'hobby.'  But Apple is reaching out to the content owners, creating 'apps' (internet channels), and having these integrate to the non STB world (ipad, iphone, ipod).   And with Amazon coming into the market, Roku is now a small time player with a 6 shooter caught inbetween two powers with unlimited ordnance looking at very profitable real estate when taken at scale.

post #30 of 111

As soon as I read "Apple loses money..." in the title, I knew it was BS.  Apple NEVER loses money on anything, or does that $160B+ in cash reserves contradict that?

post #31 of 111

Apple TV is a very basic product, in a lovely package. The A5 inside is 2 years old, it only has about 8GB of storage and, what 512BM of RAM - it's very cheap to build, no battery, no display. Apple are not losing money on it.

 

Roku 3 is actually cheaper but might even cost more to make given Roku's lower sales and lower buying power. If Roku can make money, Apple certainly can.

 

The guy is clearly an idiot.

Do not overrate what you have received, nor envy others.
15" Matte MacBook Pro: 2.66Ghz i7, 8GB RAM, GT330m 512MB, 512GB SSD

iPhone 5 Black 32GB

iPad 3rd Generation, 32GB

Mac Mini Core2Duo 2.26ghz,...

Reply

Do not overrate what you have received, nor envy others.
15" Matte MacBook Pro: 2.66Ghz i7, 8GB RAM, GT330m 512MB, 512GB SSD

iPhone 5 Black 32GB

iPad 3rd Generation, 32GB

Mac Mini Core2Duo 2.26ghz,...

Reply
post #32 of 111
Quote:
Originally Posted by macxpress View Post

The biggest thing if Apple gets 4k, is it needs to get content on the AppleTV in 4k or else obviously its worthless. 

 

The problem with 4k is the standards are still in flux. And there's things like Dolby Vision around the corner. General feeling over at AVS Forum is that more 4k displays are coming out this year, but the formats and standards to support it aren't quite there yet. It may take another year or two for that side of the equation to stabilize.

 

Will Apple release a 4k capable aTV without the 4k environment being rock solid (see Blu-Ray)? Or is it really all just software things that need to be finalized and will Apple feel they can follow the standards where they may end up?

 

- Jasen.

post #33 of 111
Apple doesn't sell hardware at a loss. Next question!

I do like that the CEO says "loses" instead of "looses" 1smile.gif
post #34 of 111
TRANSLATION: "Apple TV competes so aggressively with Roku on price that we are having lots of trouble making any money selling our Roku boxes. And if Roku can't make a profit, we just don't understand how Apple can."

I admit to being a Fanatical Moderate. I Disdain the Inane. Vyizderzominymororzizazizdenderizorziz?

Reply

I admit to being a Fanatical Moderate. I Disdain the Inane. Vyizderzominymororzizazizdenderizorziz?

Reply
post #35 of 111
Quote:
Originally Posted by jungmark View Post

I do like that the CEO says "loses" instead of "looses" 1smile.gif

Unlike many here. lol.gif
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
Reply
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
Reply
post #36 of 111
If Apple spent a little time on making the iPad/iPhone Remote app better, the ATV would be a much better product. Example: to switch between various apps onscreen you have to back out of the one you are in and then find the other app and go through the same procedure to relocate where you were. How about a "Last" button like every remote in the world has! Or the ability to quickly store your viewing locations so you can scroll to them. This isn't brain surgery%u2026but obviously Apple is treating the product exactly like what Jobs called it: a hobby.
post #37 of 111
Quote:
Originally Posted by AppleInsider View Post

Though he offered no evidence to prove it, the CEO of Roku said this week that he believes rival set-top streamer Apple TV is a money losing product.

Isn't this the CEO that likes to dress up in women's clothes? There's no evidence to prove it unfortunately but I assume it must be the case. iSuppli estimated the gross margins at 35%:

https://technology.ihs.com/388826/isuppli-teardown-reveals-apple-tvs-inner-ipad

So that's some evidence vs no evidence. Hmmm, which to choose?
post #38 of 111
Quote:
Originally Posted by CustomTB View Post

Wonder what he'll say about the pending Amazon box? Roku having Amazon is a standout feature for them. It's why I bought one. An Amazon box would be a major competitor to Roku from that aspect but probably won't be a flexible as the Roku.

Amazon says they have no plans for a streaming set-top box.
melior diabolus quem scies
Reply
melior diabolus quem scies
Reply
post #39 of 111
Quote:
Originally Posted by jungmark View Post

Apple doesn't sell hardware at a loss. Next question!

I do like that the CEO says "loses" instead of "looses" 1smile.gif

 

Even if it did, or just break even, its still making, money off the content sold on it. Kind of the opposite of the the iTunes/iPod thingy where the iTunes store was breaking even to sell more iPods. Either way, Apple is not losing money on this product. I can't really see how he can make a statement like that anyways without something to back it up. How the hell does he know how much Apple is making off an AppleTV, how much it costs to build/sell one, etc. Maybe Apple is getting better prices than Roku. 

Mac Mini (Mid 2011) 2.5 GHz Core i5

120 GB SSD/500 GB HD/8 GB RAM

AMD Radeon HD 6630M 256 MB

Reply

Mac Mini (Mid 2011) 2.5 GHz Core i5

120 GB SSD/500 GB HD/8 GB RAM

AMD Radeon HD 6630M 256 MB

Reply
post #40 of 111
Quote:
Originally Posted by iaeen View Post

So what does that say about Roku, whose prices are generally lower than the Apple TV?

I'm also pretty certain Roku isn't taking 30% on all the people that sign up for Netflix and Hulu, as Apple does from AppleTV....

 

Also pretty certain Roku doesn't have a comparable offering to the iTunes Store, which is a cash cow.

New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: iPod + iTunes + AppleTV
AppleInsider › Forums › Mobile › iPod + iTunes + AppleTV › Roku CEO speculates Apple loses money on $99 Apple TV, analyst says it's break-even