Apple (NASDAQ:AAPL) could launch its new Apple TV soon, which will reportedly be powered by an A8 chip and cost between $149 and $199. If those rumors are correct, the new "Apple TV 4" would be a big upgrade from its predecessor, which is powered by an A5 chip and costs just $69.

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Apple TV. Source: Apple.

Apple is expected to unveil the new Apple TV alongside its next-gen iPhones at its Sept. 9 event. TechCrunch claims that the new device will feature a dedicated store for apps and games, an SDK for developers, and a new remote equipped with motion sensors, a touchscreen, and a microphone for Siri integration. Apple previously stated that the Apple TV would serve as a central hub for HomeKit compatible smart home devices. The device is also expected to host its upcoming streaming video service, which will reportedly cost $40 per month.

Those new features sound impressive, but I think Apple may have overestimated its appeal. If the new Apple TV really costs around $200, it could be quickly marginalized by competing devices.

The business of set-top boxes
In the United States, Roku, Google (NASDAQ:GOOG) (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), and Apple (NASDAQ:AAPL) accounted for 86% of the streaming device market last year, according to research firm Parks Associates.

Roku and Google's Chromecast were the market leaders in 2014, respectively accounting for 37% and 19% of streaming device usage in the United States. Apple TV ranked third with 17%, while Amazon came in fourth with 14%. But in terms of overall U.S. shipments, Apple slipped to fourth place, mainly because it didn't launch a new streaming device last year.

Prior to Google's launch of the Chromecast in July 2013, Parks Associates stated that Roku accounted for nearly half of all U.S. streaming shipments while Apple contributed over a fourth. This means that Chromecast's big gains reduced Roku and Apple's market shares. The Chromecast had two main selling points: its low price tag of $35 and its convenient dongle form factor. The success of the Chromecast forced both Roku and Amazon to launch comparably priced streaming sticks.

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Google's Chromecast plays games, too. Source: Google.

Meanwhile, the price of set-top boxes kept declining. Today, Roku's most expensive set-top box, the Roku 3, only costs $110. Like the Apple TV 4, it has a microphone-equipped remote and the ability to play games. Amazon's Fire TV set-top box offers the same features for just $99.

Overplaying its hand
It could be tough for Apple to sell its new Apple TV for $149 to $199, especially when the cheaper third-generation version lost ground to Google and Amazon. That competition likely caused Apple to slash the price of the latest Apple TV from $99 to $69 back in March.

Apple might believe that its brand appeal will allow it to sell the new Apple TV at higher prices, but past sales figures indicate that its set-top box remains largely ignored by Apple customers. In March, CEO Tim Cook revealed that 25 million Apple TVs had been sold to date -- up from a cumulative total of 20 million in April 2013. Selling about 5 million Apple TVs a year pales in comparison to the 169 million iPhones and 68 million iPads Apple sold in fiscal 2014.

It might seem unfair to compare set-top boxes directly to smartphones and tablets since it's a considerably smaller market. However, demand for streaming devices is rising as the smartphone and tablet markets plateau. NPD Group estimates that 25% of U.S. households will own at least one streaming device by the end of 2015, up from 16% last year. That steep growth means that Apple can't keep pace with the market by simply selling 5 million devices per year. The more logical move for Apple to take is to sell the new Apple TV at a lower price and use it as a loss-leading ecosystem play like Amazon's Fire TV.

What does this mean for investors?
The Apple TV doesn't matter much to the company's financial growth. The device remains clumped together with the Apple Watch, iPod, Beats products, and other accessories in its "other products" category, which only accounted for 5% of Apple's sales last quarter.

But if Apple is serious about using the Apple TV as a launchpad for its streaming TV efforts, it makes more sense to charge a lower price to compete against Roku, Google, and Amazon. Instead, Apple seems to think that its brand appeal will convince people to buy a $200 set-top box -- which could be a flawed strategy for a niche device.

Leo Sun has no position in any stocks mentioned. The Motley Fool owns and recommends Amazon.com, Apple, Google (A shares), and Google (C shares). 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.