Thursday, February 16, 2017

What Happened With the Apple TV 4

Mark Gurman (tweet):

Apple doesn’t disclose how many Apple TVs it sells, but Chief Financial Officer Luca Maestri acknowledged in a recent interview that sales decreased year-over-year from the 2015 holiday season to this past 2016 holiday period. The research firm eMarketer says the fourth-generation Apple TV has steadily lost market share since its release in the fall of 2015; in January just 11.9 percent of connected television customers were using it, the research firm says, down from 12.5 percent in September. In part, the slide reflects competition from Amazon and Roku, whose boxes do the same and more for less money.


Apple had a backup plan if it wasn’t able to replace the existing cable box—the much-ballyhooed “skinny bundle,” a stripped down web service that would let viewers choose channels rather than paying for ones they don’t watch. Apple proposed bundling the four main broadcast networks and a handful of cable channels as well as on-demand TV shows and movies for $30 to $40 a month. The media companies were willing to engage with Apple due to concerns about the rise of online services like Netflix and the cord-cutting phenomenon.

But the two sides stumbled over cost, the composition of the bundles and negotiating tactics. The media companies blamed Apple’s arrogance; Apple blamed the media companies’ inflexibility. In the end, the talks fell apart, leaving Apple to tout stripped-down bundles from Sony PlayStation and DirecTV. After the negotiations foundered, Apple’s hardware team ditched the coaxial port.

Update (2017-02-18): Dan Moren:

It’s tough to figure out what that extra cash buys you, beyond the Apple brand. The previous version of the Apple TV, which was less powerful though still perfectly capable at its primary function of streaming video, cost a more comparable $99. Frankly, though I use the Apple TV every day, I’d be hard-pressed to find $50 more worth of functionality on the new model. (Most of that cost increase is probably attributable to the Siri remote, which I have mostly ditched in favor of a harder-to-lose and more user-friendly Logitech Harmony universal remote.)


We talk a lot about the “second screen” experience of people sitting in front of the TV: how they’re checking Twitter or looking actors up on IMDb or Wikipedia while watching. But when it comes to apps, it’s not the iPhone or iPad or MacBook that’s the second screen—it’s the Apple TV.

8 Comments RSS · Twitter

This identifies a big part of the problem:

"To a certain extent, the Apple TV is handcuffed by its parent's addiction to fat margins."

Triple the price of its competitors, and no Amazon Prime, who wouldn't choose it?

Getting beat to the punch on the "skinny bundle" by others doesn't help, but I never could see that direction working out for Apple for a wide variety of reasons.

The other big part of the problem is that Amazon simply ate Apple's lunch, slowly and methodically. More than half of US households now subscribe to Prime, with that percentage likely much higher among Cupertino's somewhat upscale demographic. Amazon then burned massive bonfires of cash to build up Prime Video, which Prime customers are getting as a heavily subsidized free throw-in, making it a must have on a streamer box. Then once critical mass was achieved Amazon really turned the screws on Apple by refusing to sell their streamer on their physical fulfillment service.

If I ran Apple and wanted to semi-salvage the otherwise doomed Apple TV project, I'd get incredibly humble about the situation, and cut a deal with Amazon where they let a full-fledged Amazon client sit on the Apple TV, with a 0% cut on Amazon's video commerce, all in order to get Prime Video. They could perhaps get Amazon to compromise in not allowing Amazon non-Prime results to show up in search results, and reciprocally get Amazon to allow an iTunes app on Amazon's streamer on similar terms. Even easier, they should let an iTunes app exist on Roku and Smart TV's. Obviously this would be an incredibly bitter pill for Cupertino to swallow, and it'd be contrary to all their hardware tie-in instincts, but if they don't let iTunes video thrive separate of hardware, and then try to compete on hardware on other grounds, such as AirPlay for one, the hardware trajectory is going to keep going down, and it'll take the service trajectory with it.

If they don't want to make nice with Amazon, the only other alternative is to ape Amazon's strategy: burn massive bonfires of cash for a long time on content, again open up iTunes to any other hardware that'll take it, sell their streamer at a loss, and wait years to see the reward. But given that I think Tim Cook would be ousted by Apple's shareholders by the blip in profits if he went through with that strategy, I'd say kowtowing to Amazon is the more likely of the two incredibly unlikely options.

So frustrating! I really want the ATV to succeed, mainly because I want a set top box that gets security updates. If I had half as much confidence in Amazon, the ATV wouldn't even be on my radar. The other consequence of this is that the ATV competes with refurbished Mini's and generic boxes running Plex or Kodi. If I'm paying half as much as an inexpensive lsptop for less than half the functionality, then maybe I should go back to the HTPC paradigm..

Eddy Cue isn't the effective deal broker we were led to believe. It was mostly Steve cutting good deals. Eddy’s org, while profitable from in-app game sales, is mostly not great.

Siri, iCloud, iBooks, iTunes, Apple TV—are all products gathering dust and struggling to rapidly iterated. His division is mostly an industry fast follower. A new exec in this space would be very welcome.

"Eddy Cue isn't the effective deal broker we were led to believe. It was mostly Steve cutting good deals."

1) I'm not sure anyone ever thought Cue was an effective deal broker.

2) The Steve-o "good deals" in this space were getting TV show rentals from Fox and NBC. But, both of those deals were planned to be very short-lived from the beginning. The NBC trial was a pure personal favor to Steve-o, and the Fox trial was a deal with Rupert in exchange for Steve-o promoting his ill-fated iPad daily paper.

3) Apple simply can't make good deals in this space, since the incumbents are scared to death of their market power, and refuse to let what happened to the music industry happen to them. For example, I thought their "skinny bundle" plans were always a dream because the incumbents want to either own it themselves, or let it exist in splintered and inconvenient form to protect their existing model. Cupertino's only option would be to stuff the incumbents' mouths with lots and lots of gold, and even if they wanted to do that, I think Cook's shareholders would rebel.

"Siri, iCloud, iBooks, iTunes, Apple TV—are all products gathering dust and struggling to rapidly iterated. His division is mostly an industry fast follower. A new exec in this space would be very welcome."

I think the problem is far deeper than the exec in charge. The problem is how the entire company views the service business as inextricably linked to the hardware business, and sees services as subservient to hardware. They're pale knock-offs of industry leaders by design. As long as Cupertino's strategy here holds, swapping out Cue for someone else won't change the underlying problem.

Their only two current goals with services are enhancing hardware lock-in, and poaching some revenue off of industry leaders by making their knock-offs defaults on their hardware.

Apple has lately (past 3-4 years, I reckon) not really innovated all that much in the media space. I just got a TV a couple months ago, for the first time since 2001, and I am astounded how great it works with online services. And it's a Samsung! The built-in interface for streaming is super quick and intuitive. It supports everything directly (Amazon, Netflix, YouTube...) except Apple services and some niche streaming services like MUBI. But the biggest feature is built-in Chromecast support. This is FUCKING AMAZING. So even though the TV itself doesn't support MUBI, the MUBI iPhone app supports Chromecast, so I still get a mostly-native experience using it on the TV. This is magic like I expect from Apple, but it's from Google and Samsung! And the whole goddamn 55" 4k UHD TV was $475 for Black Friday. So an Apple TV for $150? What's the value proposition? THERE IS NONE. When new TVs come with this stuff built in, and you can stick a Chromecast on your older TV for $30, why would anyone in their right mind pay $150 for ATV?

Apple used to be a leader in tech magic, but if I'm being honest, they are falling further and further behind. They are becoming a "jack of all trades, master of none". I can't understand why they don't just focus more on what they do well, instead of all these diversions into making cars, producing what look to be really shitty TV shows ("Planet of the Apps" --- UGH), all while letting their other products linger... Mac hardware in general, software like Pages, Numbers, Garageband... where are the updates? What about that feature where you can use Garageband to learn to play the piano? Did they ever release any more lessons? Apple is good at launching great products, and then basically letting them stagnate. Death by 1,000 cuts.

HomeKit is so far a joke. Hardly anything supports it.

CarPlay... another joke. Looks hokey and kludgy.

Apple Maps... still a joke compared to Google Maps.

Meanwhile Amazon is crushing it with streaming video, award winning shows. Echo and Alexa, supports damn near everything.

And I haven't even mentioned how ridiculously buggy Apple software has gotten over the past 5 years, and I'm just an end user (not a dev) ... I see bugs in iOS DAILY. And if they actually cared, reporting bugs would be done through something other than the huge joke that is Bug Reporter. I mean jesus fuck, the thing uses an interface modeled after iOS 6. They can't even bother to have a designer sit down for half a day and change the graphics in Bug Reporter to look more modern. That's how much they just don't give a shit. I filed bugs for 2 years straight up until about 6 months ago. Maybe 1/5th of them got fixed. The rest are still there after months or years and several OS updates being released. One huge bug I reported in Mac OS Finder has been open since 10.8 I think (something that worked right prior to 10.8, then they fucked something up... it's a bug not a feature change... and they still don't fix it, even though I'd guess it'd take 1 programmer less than a day to fix it because it's super simple).

I used to think of Apple as a company that made products that I want, that helped me in my life, that solved a problem I didn't know I had. But the last 2 or 3 years I haven't felt that way. The new MBP is a good example. I'd love to upgrade my mid-2009 15" MBP, but the new ones cut too much out, I hate the idea of dongles, they aren't upgradable at all, the touch bar sounds stupid, and they are way too expensive (much more than what I paid for my current MBP, and aren't computer things supposed to get cheaper over time?). I haven't even bothered to upgrade my iPhone 6s Plus either, which would be free for me on my T-Mobile plan. I like my headphone jack and the camera in the iPhone 7 isn't that much better, other than the dual lens thing.

Anyway... bleh. Apple's shit has started to stink. There will come a day soon when Android phones are just as good as iPhones – they are SO close already. Once that day comes, I may no longer be an Apple customer after being a fiercely loyal one for 30+ years. If people like me are on the way out the door, the alarms should be sounding... but Apple seems perfectly content to sell their dumbed down shit to masses of millenials and tweens who only care about what's trendy, not what's the best.

If the rumors about the iPhone 8 are true, that they are ditching Touch ID for a face scanner... I'm done.

"I just got a TV a couple months ago, for the first time since 2001, and I am astounded how great it works with online services. And it's a Samsung! The built-in interface for streaming is super quick and intuitive. It supports everything directly (Amazon, Netflix, YouTube...) except Apple services and some niche streaming services like MUBI."

FWIW, I always recommend folks do not connect their Smart TV's to the LAN. We've seen repeated skeevy things from multiple brands. Just in the news was one brand that spied on everything watched from any input. And even more prevalently are Smart TV's waiting a few months until after you've gotten them connected (avoiding returns) to start spamming your screen with ads, not just when you're browsing shows, but also when you're actually watching TV. A couple of brands started inserting ads when you change channels or adjust the volume!

Given how cheap the Roku and Amazon devices are, it seems best practices to use them instead, IMHO. (Plus, their remotes are far better than any Smart TV's cumbersome remote.)

(And ain't Mubi great? Also, check out FilmStruck, if you're not aware of it, which you likely already are.)

Apple needs to realize that the AppleTV is more of a service. The remote was poorly thought out from the beginning, a pain to use, easy to lose, and expensive to replace. ($70 - half the price of the device!?!)

If Apple thought about it more the way they do Maps I think they'd be better off by far.

More than a year in, I still don't like the Siri Remote. No one in my family does. Thankfully the old remotes are still supported.

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