OPINION

Apple Doesn’t Need No Stinking Streaming Media Stick!

In the first three quarters of 2014, the Google Chromecast and Amazon Fire TV made stunning gains in sales activity versus the market-leading Roku and the No. 2 device from 2012 and 2013, the Apple TV, according to a study that made the rounds this week.

Roku snapped up 29 percent of sales (down from 46 percent in 2013), while Google Chromecast rose to claim 20 percent of device sales, edging past the Apple TV sales share of 17 percent (down from 26 percent), Parks Associates reported. The Amazon Fire TV, which didn’t even appear until April, is already in fourth place, with 10 percent of sales.

“Nearly 50 percent of video content that U.S. consumers watch on a TV set is non-linear, up from 38 percent in 2010, and it is already the majority for people 18-44,” noted Barbara Kraus, director of research for Parks.

“The market is changing rapidly to account for these new digital media habits. Roku now offers a streaming stick, and Amazon’s Fire TV streaming stick leaves Apple as the only top player without a stick product in the streaming media device category,” she observed.

There is a bit of a leap in Kraus’ statement, as she seems to imply that Apple is not changing to account for these new digital media habits because it does not have a cheaper streaming media stick itself (just an old-school puck). Never mind that the aging Apple TV still does its job better than, just as well as, or nearly as well as all of the competitors in most every category.

As for the data, there’s no need to cry wolf here. Just because someone bought a US$35 streaming media stick (like the Chromecast) doesn’t mean it’s being used in a significant way. The widely circulated stats say nothing about the level of usage inside of households or even how many units of each device actually are in households right now. Plus, Parks doesn’t reveal how much revenue flows through those devices — streaming media subscriptions, or rented or purchased content.

Not Apple’s Battle

Of course, Google and Amazon have very different approaches from Apple. The more Google knows about its users, the better it can target them to generate advertising revenue. The larger the number of Prime customers Amazon has, the more products it can sell. Streaming media could be a loss leader for Amazon, much like a specially priced gallon of milk might be for a grocery store.

Apple’s sales models are more direct. Buy or rent video. Use it on any Apple device. Sell more Apple hardware. Sell more apps. Make it all work together seamlessly. Sure, streaming media devices are all similar — right now. However, I believe that Apple’s vision for its next Apple TV is significantly different — which is why Apple doesn’t need a streaming media stick to compete with this new sales push, which certainly will extend into the holidays.

Apple just needs a better Apple TV — and the hardware form factor and a $40 price point are far from its key concerns.

Why?

I believe that Apple isn’t worried about battling it out to deliver the best streaming media device. Seriously, that’s not a very lofty goal. Nor is having more devices built into HDTVs or sold into homes. Right now, as near as I can tell, most streaming media usage is focused primarily on streaming TV shows and watching movies, much of them filtered through Netflix and Amazon Prime.

So, would Apple want to build a cheap streaming media stick — which may be limited in its performance and upgradability over a few years — just so it can have more people streaming Netflix content through its Apple TV?

Right now, I believe that most of the streaming media device purchase activity is highly focused on streaming TV and movies. It’s not about apps. It’s not about games. It’s not about family photos or slinging smartphone content to a big screen TV.

I believe that Apple is thinking far ahead and is willing to lose sales right now to the competition.

Living Room of the Future

Seriously, does anyone believe that a company with Apple’s resources has not built a streaming media stick yet because it can’t do it? Apple easily could have released a streaming media stick in time for the 2014 holidays. Why hasn’t it? Personally, I believe that Apple has not made a significant new Apple TV hardware change yet because Tim Cook knows that Apple’s next move in this “no longer a hobby” space should be significant.

We already know that Apple’s upcoming Apple Watch will be able to control an Apple TV. The old ones or some new one that only Tim Cook has at home? It doesn’t matter. What will matter in the next battle for the living room will be far greater — continuity with a consumer’s Apple home.

That means being able to pause your Apple TV and take a phone call by tapping your wrist. Being able to make a leap forward in time. Cook repeatedly has said that it feels as it the TV experience has been left behind, that it’s old and unchanged. In Apple-speak, that’s an invitation to believe that Apple is working on modernizing the experience.

A stick form factor at a $40 price point does little to push the living room experience. Apple’s next Apple TV move has the potential to make a much bigger impression, and that’s what I expect out of Apple here — something that focuses less on the device or even the price and instead focuses squarely on the user experience. What will make walking into your living room and sitting down on the couch a much more pleasant, fun, engaging or relaxing experience?

That is where Apple is heading in 2015 with the Apple TV.

Apps and HomeKit

What Apple truly brings to the living room is a ready-to-rock-and-roll app ecosystem with developers hungry to start exploiting the Apple Watch — and sometime soon, the Apple TV. This is where a big leap will be made: apps and games and new ways to view and control and interact with content.

I also believe that Apple has already set the stage for its vision of “continuity,” and the next Apple TV will be part of that. How would a family get closer together via FaceTime with a streaming media stick? Apple might not include a camera on its next Apple TV, but I bet Apple has considered it. That’s because it’s a connective feature — both for families and business meeting rooms.

As for HomeKit and home automation devices that should work seamlessly together, it’s hard to image that Apple would leave out the Apple TV. It is easy for me to imagine, however, that an ambitious and powerful streaming media device might need a form factor larger than a streaming media stick to do all of these things really well.

All of this is why I find the Parks Associates data interesting but relatively meaningless — especially as more and more HDTVs are being sold with relatively functional “smart TV” capabilities for streaming media via Netflix, HBO, Hulu or Amazon.

I don’t believe that Apple cares much about having the best streaming media experience.

I do believe that Apple very much wants to make a big leap forward in the living room… and a simple device that is mostly just a conduit for streaming media is not it.

Think bigger, more inclusive, more transformative. That’s what Apple is heading toward — even as other streaming media sticks fill holiday stockings this season.

TechNewsWorld columnist Chris Maxcer has been writing about the tech industry since the birth of the email newsletter, and he still remembers the clacking Mac keyboards from high school -- Apple's seed-planting strategy at work. While he enjoys elegant gear and sublime tech, there's something to be said for turning it all off -- or most of it -- to go outside. To catch him, take a "firstnamelastname" guess at WickedCoolBite.com. You can also connect with him on Google+.

5 Comments

  • So I’ve been an Apple TV user for several years since the very first 40GB one came out. And I can see the benefit of streaming content from the cloud on services like Chromecast. But let me tell you I bought a chromecast….used it…and then gave it away. Why? Because I have a PC serving up 2TB of movies that I have bought or ripped from my own collection over the years. For streaming content like movies, music or pics locally from inside your own home network, the apple tv is the best. I have no need for cloud streaming and I can’t even upload any of my movies to google’s ecosystem. I do not watch a lot of internet content (netflix only) because I pay for DirecTV.

    The Apple TV is easy to use, easy to set up and works great. I have one hooked up to every TV in my house. My 10, 7, and 2 year old love them and CAN use them. Yes, the 2 year old can too. And just so everyone knows I DO NOT drink the apple Kool-Aid. I own and android phone (GS5) and build PCs for a living. There is not one mac computer in this house.

    All of this being said, it would be cool if it was a stick. That still streamed my stuff from my server. And it would be cool if I didn’t have to have iTunes opened….

    • I’ve thought for some time now that the apple business model has no room to be in the middle of the pack. From the late 80’s and early 10’s apple suffered an extremely Sharp decline in customers.

      People make fun of Microsoft products (lol zune) but the company maintains dominance by putting itself out there. Even if failure is imminent.

      I don’t think apple TV will matter much more anyways. Half the TV manufacturing is done by the same companies that make cell phones. (Android based) and that damn Google is just so cozy with them.

      • Hey Stephen–

        Thanks for extending the conversation. About this point in particular, the tech world is littered with devices that people bought but stopped using — a low cost of entry sometimes makes it easy for lots of people to try something out. I’m sure most of us have purchased something that we thought we would use but it turns out we didn’t so much after all. I have three buddies who wore fitness trackers for a few months and then abandoned them, just like some reports found earlier this year. The Chromecast came under fire earlier this year when a Parks Associates study said that the number of Chromecast owners who used the device at least once a month declined about 5% or so from Q3 2013 to Q1 of 2014. General tech press had a field day with that. Google came back and said something like, usage of Chromecast devices within a 7-day period is actually up 40%. But they weren’t comparing the same sort of statistic. They both might be right. An Apple enthusiast will obviously use an Apple TV a lot more than a casual consumer. And a Google Chromecast fan will obviously increase their usage of Chromecast over time, especially as it becomes enhanced. The question that none of the data answers is this: Of every 10 people who bought a device, how many people use it in a some sort of significant way for a significant period of time?

        As for me, my usage is split between my Apple TV and my Amazon Fire TV. About 50-50, actually. Plus, I have a Fire TV stick sitting on my desk right now. Why? It was cheap. I’ll use it a little, certainly, maybe even pack it around for use outside the home. And yet, for personal content, my Apple TV gets used. When I buy TV shows, Apple TV. Rent movies? Apple TV. But which leads to me spending more profitable money? I’m not sure. I buy all sorts of things from Amazon, in addition to being a Prime Member. And quite a bit from Apple, too.

        What I’ve been trying to say is that Apple doesn’t need to create a me-too streaming stick. And Microsoft doesn’t either (the Xbox does more anyway) . . . because I believe that most of this streaming stick activity has more to do with streaming Netflix, etc, than anything truly exciting in the living room.

        So why hasn’t Apple made a cheap and small stick? Isn’t Apple obsessed with making things thinner and smaller?

        I believe Apple hasn’t done that because Apple wants to deliver the next "leap" in the living room and home. The price and form factor is far less relevant than whatever Apple is cooking up. For instance, instead of a streaming stick, how about a home automation and enhancement hub that works via HomeKit to help manage all the internet-connected devices and appliances in your home?

        Google is probably working on such a device, too. For Google, a Chromecast is a gateway to such a bigger device. For Apple, there’s already millions of Apple TV owners waiting to upgrade. Plus, Apple has hundreds of retail stores around the world. There is no compelling reason for Apple to sell an Apple TV in the stick form factor — the wins for a company of Apple’s size would be small potatoes. With the Apple Watch coming out — the success of which is critical to Apple’s reputation — I believe Apple is working on a more interesting leap ahead rather than an Apple TV stick that offers up the same basic features.

        I have no loyalty to an app that streams Netflix or the hardware that delivers it. But what if Apple produces a device that does so much more? That’s what I think Apple is working on. A stick would be chasing Google’s innovation, not leap-frogging it. I think Apple’s going for the leap. (And unfortunately, I think the study that sparked this whole piece seemed to imply that Apple wasn’t innovating because it hadn’t produced a stick like currently selling competitors.)

        –Chris

  • "As for the data, there’s no need to cry wolf here. Just because someone bought a US$35 streaming media stick (like the Chromecast) doesn’t mean it’s being used in a significant way. T"

    So…you downplay the popularity of streaming and AFFORDABLE solutions because …why? That’s a rhetorical question of course, but here’s a tip: If you are going to write on a NEWS site, be sure to remove the rose-colored glasses first and not vomit your opinion as fact. Google and the rest produce cheap solutions that work because not everyone has or want to spend $99 or more on an Internet TV device. The stick is hidden and gets out of the way. End of story.

  • This is typical Apple fanboy stuff whenever Apple loses market share, and it hits all the usual talking points, including attacks on the Amazon and Google business model, the old "sales don’t mean usage/revenue" canard and "Apple provides a better user experience" (entirely subjective and many disagree incidentally including the many people who own BOTH Apple AND Android products) resort.

    Here is the deal: Google innovated in this space by coming out not only with a new form factor, but function based on the cloud. Apple and its fans spend years panning the innovations of its competition before eventually adopting it – only to then claim that "Apple did it better."

    Second, the Fire TV is not a dongle. It is a full-featured streamer just like Roku and Apple TV. (And if you think that people are not using Fire TV to buy and rent movies and music you are nuts.) Amazon merely came out with a dongle option in response to the phenomenal success of Chromecast (Roku did also). But if no one was using Chromecast or if it wasn’t generating revenue, why would Roku and Amazon copy it? They have access to industry figures that we do not, and the first rule of business is that replicating failure makes no sense.

    This is why everyone hates Apple fans: their bitterness towards the success and good ideas of everybody else. It isn’t so much that Apple doesn’t "need" a dongle as it is that Apple is nowhere near good enough as a cloud company to invent a technology like Chromecast, let alone fashion a viable true competitor (instead of merely an HDMI dongle streamer like Roku rushed out with) in less than a year. Apple is so behind in the cloud that it can’t even offer iCloud – which is merely storage with no advanced features – without Microsoft Azure. But instead of admitting that another company invented something that Apple did not because it is better than something than Apple, you make unfounded claims that the products are loss leaders used to data mine consumers and similar.

    Incidentally, Google doesn’t merely offer Chromecast. They also offer Nexus Player, a fully-functioned media streamer similar to the Apple TV that is a combination of the Apple TV’s hardware-based form and Chromecast’s cloud function. (It is similar to Fire TV, except better.) We do not have sales figures for the Nexus Player, but – as was the case with the better Android phones – if Google and its partners continue to offer superior products and technology, the result will be strong sales that Apple will be forced to respond to. When that happens, please, no more churlish, peevish responses from the Apple fans like this.

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