updated 02:02 am EST, Thu January 24, 2013
Now a half-billion dollar industry, but still a 'hobby'?
Ask anyone with an Apple TV (particularly the latest, $99 black iterations) and they will tell you they absolutely love it. In the conference call with analysts earlier today, Apple CEO Tim Cook started off by saying that "the most important thing [to Apple] is that customers absolutely love our products. Not just buy them, but love them." The Apple TV embodies this concept, but even after record 60 percent year-over-year growth in 2012, Cook still echoes former CEO Steve Jobs' description of it as "a hobby."
Nevertheless, it has carved out its own niche in the market -- becoming a $500 million dollar business that many companies would be very content with. Apple sold two million of the tiny units during the holiday quarter, more than 600,000 more than in the year-ago quarter (which had an extra 14th week in it, making the achievement even more impressive). The numbers, which rival the sales of Nintendo's Wii U during the same period (and more than double the number of Microsoft Surface tablets sold over the holidays), are small only when compared to Apple's flagship products, such as the nearly 48 million iPhones or 23 million iPads sold in the company's fiscal 2013 first quarter.
The product, for those who aren't familiar with it, acts as a wireless bridge between media content stored in iTunes and modern HDTV systems, which are often attached to state-of-the-art sound systems as well. The Apple TV unit enables Macs and iOS devices to "throw" content such as movies, music, photos and even the desktop of the device itself (in a mirrored mode) to the large-screen televisions. The device also offers various free and paid services, such as facilitating Netflix subscriptions or offering video content from the Wall Street Journal, sports events and movie trailers for films still in cinemas.
Even as-is, users often describe it as a "transformative" device that changes their leisure lifestyle. It is one area where Apple has had considerably more success than Google, which has struggled with its GoogleTV offering. Though more restrictive by default than the multi-format capabilities of a "home media center" PC or NAS setup, it's also simpler and more elegant than most other offerings at an affordable price. It has found a home with consumers who don't wish to spend much if any time "managing" media collections or converting files -- though hackers have found that they can generally "jailbreak" some editions of the device and install third-party software to let it play non-iTunes video formats and other files.
Cook and Jobs before him have often said called the Apple TV a "hobby" because it represents a move into the living room, but where that move might take the company remains unknown. As consumers have seen in recent years, the industry itself is unsure of the future of television: fewer people are watching it, households are "cutting the cord" of cable in droves, and gimmicks such as 3D and integrated "smart" features have thus far failed to impress. The high cost of entry on the best-quality sets -- a factor that seems set to climb much higher with the introduction of larger and 4K-compatible HDTVs coming soon -- has been seen to be not worth the investment by increasingly busy consumers who turn as much to streaming mobile connections or iPad viewing as conventional TV, when they watch TV at all.
The Apple TV has often been overlooked by pundits eager to see the long-rumored Apple-branded (or at least Apple-partnered) HDTV set, which Steve Jobs revealed in his biography would have "the simplest interface imaginable." Such a device would, since it comes from Apple, be expected to disrupt an industry many observers feel is in strong need of the kind of digital revolution Jobs brought to the music and movie segments (and which, much initial resistance, he eventually was given those industries' highest honor for).
While the rumor mill is more sure than ever that 2013 is the year we will finally see an Apple HDTV set with some revolutionary features, it's worth noting that Cook himself says he "can't live without" his Apple TV and routinely encourages nearly everyone he meets to try one. He has also said that television is "an area of intense interest" for Apple and that "there's a lot Apple can contribute to this space." It is possible that what Jobs -- and now Cook's team -- have in mind could be more evolutionary than revolutionary, a clever blending of existing technologies (such as the iPod and iPad were) rather than a reinvention as the iPhone was.
In the meantime, millions of households per quarter will discover the simple pleasure of the existing Apple TV -- and bring a bit of Apple to their TV set.