Roku CEO speculates Apple loses money on $99 Apple TV, analyst says it's break-even
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 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.
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.
"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.
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.
Comments
Wait a minute? A CEO is spreading FUD about a competitor's product?
How strange...
Wow, another CEO with shit for brains.
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.
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.
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.
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.
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.
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 $99 when they update the Apple TV with an A6 or A7, 1GB of DRAM, 16GB or 32GB of flash, 802.11ac Wifi, and Gigabit Ethernet in order to support an App Store (including games) and 4K movies, then I believe Apple would be struggling to break even for the first several months. Regardless, I guess that Apple's margins on the Apple TV are lower than for most of their hardware.
Hmmm...will the A6 or A7 even support 4k resolution? This would be very nice to see and would put it out in front of its competition in that respect. I don't think any of its competition has 4k at this point and depending on what processor/video they have in it, it could take a little bit for them to catchup. The biggest thing if Apple gets 4k, is it needs to get content on the AppleTV in 4k or else obviously its worthless.
Apple , of course, sells a magnitude more of the appleTV which is the "same" as the utilite, thus apple at a minimum is covering all of it's costs on the appleTV.
(they are most likely breaking even at the start if the manufacturing of the Apple TV, now profit!)
So it took two years for compulab to get the components at a cost that it is worth making the utilite, thus The Apple TV is making a profit.
the utilite that i am referring to is the single core freescale i.MX6 cortex-A9, compulab also makes a dual core model, and a quad core 1.2Ghz freescale i.MX6 cortex-A9 model at 219$
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?
Roku has their own TV on the way.
http://blog.roku.com/blog/2014/01/05/introducing-roku-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.
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.
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.