Apple thought low-cost TV dongle would ruin its premium reputation

AppleInsider

A new report has detailed some of the inner-workings of Apple TV+, including how the company shelved plans to build a low-cost dongle because it didn't want to tarnish its premium reputation.

Credit: Apple

On Friday, The Information published a deep dive into Apple's streaming service and the company's plan for growth. Alongside the company's ramp-up, the report also revealed behind-the-scenes details about Apple TV+.

For example, there was much discussion about creating a low-cost streaming dongle to compete with the likes of Roku or Fire TV. One of the champions of the idea was Tim Twerdahl, a former Amazon executive who had worked with the Netflix team that eventually broke off and formed Roku.

Twerdahl reportedly argued that a low-cost dongle would make it more affordable for users to access Apple TV+. Ultimately, Greg Joswiak and Phil Schiller overruled Twerdahl, saying that they didn't want Apple to get into the business of making cheap, low-margin devices. They also didn't want a cheap Apple-branded device to affect its reputation for premium hardware.

That left only the Apple TV, a device that is, at its cheapest, much more expensive than competitors from Roku or Amazon. Twerdahl eventually left the company. Although Apple doesn't appear to be making a cheap dongle, it has worked to get its streaming service on as many platforms as possible. That includes a dedicated button on Roku, which industry insiders say can cost as much as $1 per device.

Hollywood executives also note that there are certain quirks about working with Apple. Despite its deep pockets, some sources say that Apple refuses to cover budget overruns on projects, instead insisting that partners eat the extra costs.

Apple's secrecy culture also plays a part. Apple was initially hesitant to heavily market shows like "Mythic Quest," opting to treat its debut like a new hardware release. One source said that collaboration between hardware, software, and Apple TV+ departments is difficult because executives in one part of Apple have no idea what their counterparts in other areas are working on.

"Apple is Jetsons on the outside and Flintstones on the inside," said one Apple source familiar with Apple TV+ production.

The Cupertino tech giant also refuses to buy advertising for its original shows and films on Facebook or Instagram. It promotes those shows with free posts on the platform, and allows studio partners and actors to do the same.

Apple still has a broader strategy for growth, which may include buying additional studios or acquiring sports rights. However, the report suggests that Apple "has never been a serous contender." Although there has been discussion of licensing older movies and TV shows, Apple has reportedly shelved those plans.

So far, the focus appears to be centered on original shows and movies. Even though its catalog is still relatively small, Apple believes its cheaper $4.99-a-month price justifies that.

But the company is still working on ramping up its selection of originals. Earlier in 2021, it was reported that Apple was working on securing studio space in Hollywood for future shows and films.

Read on AppleInsider

cpenzone

Hmmm... I understand their thought process here but perhaps you make a quality 'lower' cost dongle and sell it at a loss in order to spur more subscriptions.  The hole razor/razor blade strategy. Just strip out the ability to play games and run higher intensity apps. 

neoncat

"Apple is Jetsons on the outside and Flintstones on the inside," said one Apple source familiar with Apple TV+ production."

Oh man. Someone better get Apple some aloe for that savage burn.

jgreg728

They don't need to make a cheap dongle. Just lower the freaking price of their HD box already. No reason for that 5 year old piece of hardware to still cost anything above $80, let alone $150.

cpenzone

jgreg728 said:

They don't need to make a cheap dongle. Just lower the freaking price of their HD box already. No reason for that 5 year old piece of hardware to still cost anything above $80, let alone $150.

The Apple TV 4K features the A12 which first appears in 2018... so you're right, it's older but it's not 5 years old.  Also, the new remote is bad ass.

rob53

jgreg728 said:

They don't need to make a cheap dongle. Just lower the freaking price of their HD box already. No reason for that 5 year old piece of hardware to still cost anything above $80, let alone $150.

You mean this piece of garbage? The one that could almost be considered a regular desktop computer? The Apple TV is more than a simple streaming device, it's also a TV gaming device that has a lot more power than any of those cheap sticks. Even the remote has more electronics in it than the cheap streaming sticks. If you don't need the capabilities of the Apple TV then simply buy a TV with streaming built in instead of adding a stick.



Checked and I can use this image for non-commercial usage.

mike1

cpenzone said:

Hmmm... I understand their thought process here but perhaps you make a quality 'lower' cost dongle and sell it at a loss in order to spur more subscriptions.  The hole razor/razor blade strategy. Just strip out the ability to play games and run higher intensity apps. 

The razor/blade analogy does not apply here.

As I mentioned in another post yesterday,there is nothing to be gained by offering a low-cost dongle. Apple doesn't do loss leaders. The argument that it would drive subscriptions is without merit since Apple TV+ is now available from every Roku and Amazon device as well as built in to virtually every Smart TV sold today.

dhawkins541

cpenzone said:

jgreg728 said:

They don't need to make a cheap dongle. Just lower the freaking price of their HD box already. No reason for that 5 year old piece of hardware to still cost anything above $80, let alone $150.

The Apple TV 4K features the A12 which first appears in 2018... so you're right, it's older but it's not 5 years old.  Also, the new remote is bad ass.

The apple tv HD with 32GB of storage for $149 has an A8 did you not actually read the post or just trigger post a response? That processor came in the iphone 6 in 2014. 

mikethemartian

neoncat said:

"Apple is Jetsons on the outside and Flintstones on the inside," said one Apple source familiar with Apple TV+ production."

Oh man. Someone better get Apple some aloe for that savage burn.

Does that mean if you open up the Apple Watch there is a tiny grumpy wisecracking bird in there that shrugs “It’s a living”.

Kopfschmerzen

rob53 said:
If you don't need the capabilities of the Apple TV then simply buy a TV with streaming built in instead of adding a stick.

Oh man. What if I already have a TV? Should I really throw out the whole thing? Or still buy a stick? 

lonestar1

Good decision. It’s hard to see what an Apple dongle could do that Roku or Fire don’t. 

Hreb

Classic Innovator's Dilemma.  Apple didn't want to sell a low-priced product in this segment, so instead they choose not to be competitive in this segment at all.

Japhey

cpenzone said:

jgreg728 said:

They don't need to make a cheap dongle. Just lower the freaking price of their HD box already. No reason for that 5 year old piece of hardware to still cost anything above $80, let alone $150.

The Apple TV 4K features the A12 which first appears in 2018... so you're right, it's older but it's not 5 years old.  Also, the new remote is bad ass.

You’re correct, but jgreg728 wasn’t talking about the Apple TV 4K, he was talking about the Apple TV HD. And he has a valid point. 

StrangeDays

designr said:

I, for one, would prefer fewer "boxes" sitting under my TV. Once I'm confident the DVD movies I own are consistently available on streaming services, maybe the DVD player goes away. I've not purchased an Apple TV (yet) in part because the built-in apps on my Samsung seem good enough for me and I have access to all the stuff I want/need.

We only have one box, the ATV. I used the Movies Anywhere network to unlock most of my DVDs as streams linked to Movies Anywhere and included into my iTunes library. It was a buck or two per movie. The ones that didn’t support it are sitting on a shelf, tho I could rip them to my Plex NAS server and use the ATV for them too. Haven’t used my DVD/BD player in years and don’t imagine I will much ever. Streaming is just that much more convenient. 

Japhey

designr said:

The interesting thing here, long-term, is what consumers will want. Ultimately I suspect they don't care about the box (and how much computing power it has), they're buying it for access to the content and, to some degree, perhaps a nice UI to navigate all of the content.

I, for one, would prefer fewer "boxes" sitting under my TV. Once I'm confident the DVD movies I own are consistently available on streaming services, maybe the DVD player goes away. I've not purchased an Apple TV (yet) in part because the built-in apps on my Samsung seem good enough for me and I have access to all the stuff I want/need.

This suggests that Apple getting their Apple TV interface as the default software on other brand's TVs (e.g., Amazon) would be a good play. But that's likely a tough sell to those companies.

I'm guessing most consumers likely feel the same. In this particular space, it's about the content, not the device, so Apple's core competencies and competitive advantages are probably "muted" a bit (at least compared to something like iPhone or the Apple Watch for example).

Don't get me wrong, the Apple TV UI looks wonderful and I might appreciate it more if I buy one. And I get that the box needs a certain amount of capability to achieve that. But, it's still about the content (and a bit about the UI).

With all due respect, how can you possibly feel comfortable telling other people what the Apple TV is or isn’t when you don’t even own one? To believe that the only important thing about the ATV is the content and the UI is to completely misunderstand the device on anything but the most basic of levels. If those were really the only features that mattered, then the ATV would cease to exist, as people would be able to find those elsewhere (albeit, without the Apple polish). I could list for you the dozen or so reasons why the ATV is so much more than simply content and UI, but instead I will just recommend that you take the plunge and pick one up for yourself. Obviously, by your parenthetical “yet”, you have considered it in the past. Don’t wait any longer. By the low bar you have set in your mind, I promise you will not just “appreciate it more”…you will love it. 

rob53

Kopfschmerzen said:

rob53 said:
If you don't need the capabilities of the Apple TV then simply buy a TV with streaming built in instead of adding a stick.

Oh man. What if I already have a TV? Should I really throw out the whole thing? Or still buy a stick? 

Depends on how old your TV is and whether you like how movies and TV shows look on it. Android-based TVs have been sold for maybe 8-10 years. It's nearly impossible to buy a TV without some form of Android running on it (hate this) and TVs are dirt cheap. You can get a 40" TV for $300. Maybe put the cost of your streaminging stick towards a new TV and enjoy how things look. If you have an expensive TV, then why are you wanting a cheap TV stick. Your TV deserves better.

cincytee

Greg Joswiak and Phil Schiller overruled Twerdahl, saying that they didn't want Apple to get into the business of making cheap, low-margin devices. They also didn't want a cheap Apple-branded device to affect its reputation for premium hardware.

This is an unfortunate case of falling for one's own PR and missing the real point. Offering premium products means Apple creates a TV dongle that just works better than the competition's and sells for more than theirs – not they don't enter the category at all. The attitude cited in the article is a sad condescension toward customers.