Apple, Inc.: The War For Your Living Room Stretches Beyond Borders

And this time, we're not talking about Android and the smartphone market.

Jul 16, 2014 at 8:00AM

For as much as we talk about Apple (NASDAQ:AAPL) and Google (NASDAQ: GOOGL)(NASDAQ: GOOG) in the battle for your living room, you'd think there was no one else competing to serve your eyes with delicious, televised, on-demand candy.

The envelope, please ...
And yet, you'd be wrong. Roku is the most-used streaming media player in the U.S., Parks Associates reports. Of households that have a set-top box, 44% use a Roku most while 26% use Apple TV most. The gap has widened since 2013, when 37% of streaming media player owners used Roku most and 24% used Apple TV most, Parks says.

Bear in mind that Parks' data is only reflective of the estimated 20% of the U.S. households with broadband access. Were this a horse race, we'd be just out of the gate and into the opening furlong. Even so, in the U.S., the trends favor Roku. Last year, "other" box suppliers saw their share of the market shrink about as much as Roku's share expanded:

Parks Associates

A global conflict
Yet the news isn't all bad for Apple. Parks estimates the worldwide installed base for Apple TV at 20 million versus 8 million for Roku as of the end of 2013. Tiny numbers when you consider the increasing popularity of American television and cinema is Europe and Asia. Netflix alone serves over 46 million paid subscribers across the globe. As its membership rolls grow, so too should the market for Apple TV, Roku, and alternatives.

If there's a loser here, it might be Chromecast. Roughly 6% of U.S. broadband households have one. Among the owners that Parks surveyed, monthly use of the device for watching Internet video on TV dropped to 73% in the first quarter from 78% in the third quarter of 2013. Perhaps that's why Google touted  forthcoming support for Chromecast mirroring at last month's I/O developer conference.

Parks doesn't weigh in on the specific potential for Fire TV. But there's also no doubt that's mere interest in the market is a threat, and could "awaken the sleeping giant that is Apple," research director Barbara Kraus said in a press release announcing the findings.

Back to the Mac maker
All of which tells me, as an investor, that this is going to be an interesting space to watch in the coming years. Parks agrees, estimating that global sales of streaming media players will rise 23% annually from about 20 million last year to over 57 million in 2018.

How much of an opportunity is that for Apple and its peers? Not as big as you might think, especially when you consider that streaming media players tend to run $99 or less. The unknown is iTunes, which accounted for $4.6 billion in fiscal second quarter revenue and ranks as Apple's second-fastest growing business. A larger installed base of Apple TV users should lead to more digital rentals and sales, allowing for accelerated software and services revenue growth while producing higher margins and improved profits. And that's without factoring in the potential impact of iOS games playable via an Apple TV. So even if we aren't talking iPad numbers -- remember, it wasn't long ago that the Mac maker referred to Apple TV as a "hobby" -- this is a real, vibrant, and growing opportunity from which Apple seems well positioned to profit.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple, Google (A and C class), and Netflix at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool recommends, Apple, Gartner, Google (A and C shares), and Netflix. The Motley Fool owns shares of, Apple, Google (A and C class), and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.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.

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