Apple TV Needs a Refresh … Now

Apple needs to transition its set-top box from hobby to business before it's too late.

Apr 5, 2014 at 1:30PM

The set-top box market is booming. In fact, Apple's (NASDAQ:AAPL) set-top box TV sales soared 80%, year over year, in the company's most recent quarter, according to estimates from Apple analyst Horace Dediu of Asymco. Even more, the playing field is still wide open, with only an estimated 35 million set-top boxes sold globally so far. But despite the obvious opportunity in the market, Apple has been moving at a snail's pace with its television plans. And now with Amazon (NASDAQ:AMZN) stepping up to the plate with an offering that is clearly better, is the e-commerce giant snapping up opportunity that was supposed to belong to Apple?

Apple Tv Apple

Apple TV. Image source: Apple.

Amazon's disruptive move
It's been more than two years since the last Apple TV set-top box refresh. That's about nearly twice the average time it usually takes Apple to unveil a new version of the streaming media device. And the last update was fairly minor, with the major selling point being 1080p versus the older version's 720p -- a difference I could care less about (hence my 720p Apple TV model in my living room).

But even for those who did upgrade, Amazon's new Fire TV is irrefutably a better alternative at the same $99 price the Apple TV and the Roku retail at.

Fire Tv

Fire TV. Image source: Amazon website.

While loyal Apple costumers were sitting around and waiting for Apple's next big TV move, Amazon took upon itself the liberty to provide some of the features Apple TV users have craved for years. Beyond the typical streaming of TV shows and movies found on competing set-top boxes, Amazon's Fire TV also offers an add-on gaming controller for $39 to be coupled with games for the box, essentially promoting the Fire TV to gaming console status for casual gamers. And the biggest selling point of all? The ability to search using your voice -- I would speculate that most set-top box users today would agree such a feature would be incredibly useful.

From hobby to business
Should Apple investors lower their expectations for the company's opportunity in this new and fast-growing market?

Piper Jaffray's longtime Apple analyst Gene Munster is a bit worried.

"We still view a launch of an Apple Television in 2014 as likely," he wrote to investors Tuesday (via Fortune), "but note that each month that passes without credible feedback from the supply chain reduces our confidence."

Apple Tv

Apple TV's AirPlay feature. Image source: Apple.

But given the consistently high loyalty of Apple's customer base and the stickiness of its ecosystem, Apple could save itself from the threat of Amazon stealing its incremental opportunity simply by bringing its new version of the Apple TV to market quickly.

Persistent rumors have suggested that Apple will, indeed, be bringing the much-improved set-top box to market this year. Some speculation even suggests we'll see the device as early as April. Apple CEO Tim Cook fanned these rumors into flames earlier this year when he said at the company's annual shareholder meeting that he no longer considers Apple TV a hobby.

But if Apple doesn't move soon, investors might want to begin to discount their expectations for Apple's opportunity in the living room. Fortunately, Apple TV is a small business for the company, so it wouldn't alter the thesis for Apple stock much. But this shouldn't prevent investors from taking the Fire TV and Apple's failure to refresh its set-top box seriously, because the opportunity down the road is far bigger than the existing size of the market today.

This opportunity could put the set-top box market to shame
If you think Apple's opportunity in television is big, just wait until you see this. One hundred of Apple's top engineers are busy on this new project in a secret lab. Fortunately, you don't have to wait for Apple to unveil the details of its new device to decide whether you want to invest in this opportunity. In fact, you can invest in it right now, for just a fraction of the price of Apple stock. Click here to get the full story in this eye-opening new report.

Daniel Sparks owns shares of Apple. The Motley Fool recommends and owns shares of Amazon.com and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers