Apple's (AAPL +0.33%) set-top box, called Apple TV, has largely remained the same since 2010. The device's lack of progress during this period has reflected the tech giant's obvious decision to focus on other products. But next week Apple will finally launch a complete redesign of the product, signaling the company's newfound interest in revolutionizing the TV experience. Here's what the new set-top box means for investors.
Apple TV. Image source: Apple.
An overhauled Apple TV
The new Apple TV isn't very notable when it comes to the guts inside the box. It will sport the A8 chip used in the iPhone 6 and iPhone 6 Plus and come in eight GB and 16 GB storage options. And the shape of the set-top box remains nearly the same as its predecessor -- only slightly taller.
But don't let the uninspiring hardware of the box itself fool you. The first thing consumers are going to notice about the new Apple TV is the new Siri Remote -- a huge improvement from the old Apple TV remote with only a few buttons. The Siri Remote sports Bluetooth 4.0 wireless technology, its own accelerometer and gyroscope, a rechargeable battery, and a touch screen in addition to its built-in buttons. With Siri at users fingertips, the way users interact with their TVs will be entirely different than the previous Apple TV experience.
Apple TV. Image source: Apple.
And the biggest game-changer of all is the launch of an App Store for the Apple TV.
"It all starts by recognizing that apps are the future of television," reads Apple's website.
Making apps and new ways to interact with the TV possible, the new Apple TV operates on its own dedicated OS called tvOS.
Apple has big hopes for its redesigned Apple TV. When asked in a recent WSJ interview whether or not the Apple TV will represent a fundamental shift in the way consumers experience television, Cook was firm in his answer.
"I think it will be, yes. The first thing that is required in a TV is that you have to have a platform," Cook said. "You have to have a foundation. What we've done is announce the foundation -- and I've never been so confident in that, that this is the foundation of the future of TV."
An important piece of Apple's ecosystem
The biggest takeaway form the redesigned Apple TV for investors is its focus on apps. There's not enough commentary on how critical app sales are to the bull case for holding Apple stock for the long haul.
It's not the potential revenue from apps that investors should get excited about, even though this could be a meaningful driver over the long haul. Instead, the rosy outlook for tvOS apps resides in how they will reinforce the "stickiness" of the overall Apple ecosystem.
Apple's app sales are a representation of an increasingly invested customer base. The more time users spend on iOS apps, the more entrenched they are in the growing Apple ecosystem. Bringing an app store to the living room, where consumers spend several hours a day watching TV, is an important step for Apple in keeping switching costs for its customers high.
Going forward, Apple's moves in the television space will likely be more pronounced. With this Apple TV overhaul, the company has officially declared the category more than a hobby.
And this is only the beginning of Apple's new "foundation" for television, Cook suggested in his interview with the WSJ, "The starting gun has been fired."
Apple TV orders are scheduled to begin on Monday, Oct. 26, and shipments are set to begin by the end of the week.
