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Looks like Apple (Nasdaq: AAPL  ) still considers Apple TV a hobby.

The 3.0 version of the Apple TV software gets a few minimal upgrades, such as access to Web radio and iTunes Extras and iTunes LP, once known to us Mac addicts as "Cocktail."

This is what you call an upgrade, Apple? Not good, and not worthy of being called a competitor to TiVo (Nasdaq: TIVO  ) or the varying video-on-demand services offered by (Nasdaq: AMZN  ) and Netflix (Nasdaq: NFLX  ) .

But it's actually worse than that. We're past the point that Apple should get a pass on Apple TV. This isn't cute anymore. It isn't even a hobby. It's a waste of money dressed as a research and development project, but without much development. Apple can do better.

Check that; Apple should do better. Resources aren't an issue. This is a company with $34 billion in cash and securities available to invest, but which largely sits in the equivalent of a passbook savings account.

Why, Apple? You're facing significant competition in every market, including video-on-demand. You know the names; Netflix and Amazon, sure, but also Comcast (Nasdaq: CMCSA  ) , Dish Network (Nasdaq: DISH  ) , DirecTV (NYSE: DTV  ) , and of course, TiVo. Every one of them is playing hardball as you indulge your hobby.

Hobbies are for kids, not Hollywood. Maybe, like NBC's ill-fated show Trauma, it's time Apple TV was canceled. What do you think? Please take a moment to vote in our poll and then add your comments in the space below.

Amazon, Apple, and Netflix are Motley Fool Stock Advisor selections. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the market-beating Rule Breakers stock-picking team. He had stock and options positions in Apple at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy just snuck up on you. Boo!

Read/Post Comments (14) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 30, 2009, at 5:55 PM, largesse wrote:

    I love how you're playing innocent about the reasons why Apple TV isn't a bigger deal than it is right now. You know darn well that this is a question of revenue sharing and DRM with the studios. Have you looked at Netflix's Q3 2009 earnings and net income? $423.1 million revenues; $30.1 million net income, for a 7% profit. That's tiddlywinks in comparison to Apple's lines of business, and it shows just how little the studios are willing to give.

  • Report this Comment On October 30, 2009, at 6:11 PM, disposableident wrote:

    AppleTV is fantastic. I know 8 or 10 other people who have one and we all love them.

    Everything in your iTunes library is now on your TV. What's not to love? Music, movies, TV shows, home videos, and even your family photos!

    I'm sure Apple has something bigger in mind. More movies and television available for download on-demand, live streaming news & sports, video games, etc.

    No doubt the studios (film/television) are a big holdup. It can't be done unless there's a lot of content at affordable rates.

    Meanwhile Apple keeps growing their installed base, and consumers buying AppleTVs now (millions so far), keep enjoying what it is today.

  • Report this Comment On October 30, 2009, at 6:15 PM, tanderson44 wrote:

    My wife and I both love our Apple TV. And adding Internet radio via the 3.0 update is huge in my opinion, greatly expanding its usefulness via my TV sound system. I don't care if it's considered a hobby or a full-fledged business by Apple. I just don't want Apple to discontinue its development!

  • Report this Comment On October 30, 2009, at 6:23 PM, disposableident wrote:

    Wow. Apple added Internet radio with the new update?

    My grandmother would probably use one.

    Maybe Apple is selling these by the boatload and just doesn't want the competition to know there's a valuable market here.

  • Report this Comment On October 30, 2009, at 6:37 PM, marv08 wrote:

    The Apple TV is a device for connecting your iTunes content (stored on the Mac or PC) to TV sets and amplifiers across the house. And it does that beautifully. Comparing it to things it is not intended to be does not help.

    The VoD market is more than big enough (in the future) for multiple players and the margins are pathetic and will only get worse. If multiple companies offer the same thing, people choose what is most convenient - and that is why Apple invests in improving the iTunes Store and the software giving the users access to it, while others are always multiple steps behind with their browser based mess. Apple sells devices and content for a profit, while others struggle to get subscribers (in a time when nobody wants to commit to "plans") or learn that ad-supported models fall apart. You suggest they should heavily invest in copying these failures?

    We have 6 Apple TVs already and I plan to buy a 7th one next week... While I have a Mac Pro, a MacBook Pro, an iPhone and multiple iPods, I consider the Apple TV my favorite Apple device of all times - it does exactly what Apple is best at: make things convenient and usable. Nothing to configure, all content from all Macs in the house is available, quality is great, no Xbox or PS3 like fan noise and hardware troubles, every iPhone/touch works as a remote... more than satisfied with it.

  • Report this Comment On October 31, 2009, at 2:03 AM, anna90 wrote:

    How is this Apple product not on top like the iPhone and iPod? I love it. Am I just delusional? I don't think so.

    Make it work Steve Jobs.

  • Report this Comment On October 31, 2009, at 12:59 PM, AaronGaz wrote:

    Why do I always feel like the responses to any Mac thread are pre-manufactured. Its like they have an army of board trollers who look for Apple posts.

    Apple TV sucks, it is overpriced and it is redundant, why would I want to pay for cable and and Apple TV.

    Slingbox works just as well and has no reoccurring fees, plus it uses your existing cable connection and you can watch it anywhere in the world, not just at your TV set. As far as streaming music to your stereo, if you need an Apple TV to figure that out, no wonder you think it is a good deal.

  • Report this Comment On October 31, 2009, at 1:48 PM, aboutjack wrote:

    Tim, you apparently are not a person who is dedicated to an Apple-based multimedia lifestyle, using iTunes for media management, iTunes Store for media purchases, and iPhoto for photo management on your Mac. If you were, you would (a) be within the customer base for the Apple TV product, and (b) understand the pleasure it is to own and use this product -- IF you are within the target customer group.

    You and the hyper-critical posters here who are complaining that the Apple TV is not some other type of product confuse me. Why would you want a product that is terrific at doing what it is designed to do for people it is designed to serve to not be that and instead be some other product entirely?

    I am within Apple's target customer base here, have an Apple TV unit connected to our family's flat panel, and just love the convenient, smoothly integrated access it provides to all of our Mac-based/iTunes-centric multimedia content. The 3.0 software only made a great product even better for us.

  • Report this Comment On October 31, 2009, at 3:43 PM, AtlantaXX wrote:

    Apple TV is not a competitor to Tivo. It is by far, the absolute best best device for allowing you to buy/rent video and audio from your TV quickly and efficietly. It also serves up my media files stored on my PC better than any other device. It seems that the users of these devices are quite happy with them while you "experts" continue to complain. Have you ever used one? Seriously, I mean used one in your home for what it is intended to do? I doubt you have. I bought one for me, loved it so much then bought 4 more for family - they love them and that included my 88 year old grandmother.

  • Report this Comment On October 31, 2009, at 5:06 PM, TMFMileHigh wrote:

    'Afternoon all,

    Thanks for your comments.

    Mostly, I think this proves my point: Apple has more than enough evidence at hand to make a decision. Here, the commenters suggest that Apple TV is already a product, a good one at that, and should be handled as something more than a hobby.

    And for the record: I am *exactly* the type of customer Apple is targeting with this almost-product: Long-time Mac user, committed iTunes user, use iPhoto for the family album, etc.

    My problem with Apple TV is that it isn't sufficiently differentiated in a market where there are already too many alternatives for playing back movies, video, and other content.

    Happy Halloween and Foolish best,

    Tim (TMFMileHigh and @milehighfool on Twitter)

  • Report this Comment On November 01, 2009, at 1:29 AM, aboutjack wrote:

    Tim, first, thanks for stepping back in and joining the comment thread. Many writers these days don't. Next, let me dig a little into what you mean by the product not being well differentiated form other options on the market. As far as I can tell, it's the only TV box with flawless functionality sync and e-commerce integration to the iTunes store and my iTunes application library. Are you aware of another such iTunes Store front end product I have missed?

    I think the big (massively so) element influencing many of these reactions, including yours, is the difference between those of us happily buying content from the iTunes Store, and those of us who do not. I am guessing that your primary video source is *not* paid content from the iTunes Store. Right?

    For anyone who takes a widely egalitarian approach to sourcing multimedia content, the Apple TV box is not the right product to interface to the family TV. It is not built to support non-QuickTime codecs, nor to provide a front-end interface to any online stream source other than the iTunes Store.

    However, for me and other customers who principally buy our media from the iTune Store, the Apple TV is quite nearly the perfect product -- and is clearly differentiated as such.

    Again, I think those being critical here are folks who do not primarily buy their media from the iTunes Store.

  • Report this Comment On November 01, 2009, at 3:51 PM, exeter17 wrote:

    I believe you mispoke when you compared it to Cocktail. Cocktail is a GUI into running maintenance scripts.

  • Report this Comment On November 02, 2009, at 7:46 AM, jantinucci wrote:

    Good morning,

    I enjoyed reading this over coffee this morning. I am an avid Apple TV user and my first thought was that I do not compare this product to those mentioned in the article such as TIVO. It is so much more than an 'on demand' product. My main purpose of use is the iTunes library for my home theater. But again, it is so much more than that. Is their another product that does what this does? Completely and maybe even more? I also enjoy the uTube feature too with my account. I can watch my playlists in glorious HD and have full audio resolution. Just my input here.

    Joe from RI

  • Report this Comment On November 05, 2009, at 12:42 PM, chriscabrera wrote:

    The old adage "If it ain't broke, don't fix it" comes to mind here. I was a long-time Blockbuster user, then Netflix, then back to Blockbuster on-line and finally I found Apple TV. I may be missing something, but my kids and I think its the greatest service ever. We sit in the home theater and preview tons of movies and rent/buy the wants we want..and seconds later are watching in HD! BTW- for the record I love TIVO too and have it on all of my DTV boxes...maybe I'm missing some other great things, but for me Apple TV is awesome and I tell everyone about it. I guess I wasn't too surprised to see that my local Blockbuster is closing...everything is going to the cloud, and for good reason.


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