Apple TV No Longer a Hobby

Event Summary

September 1, 2010 -- Apple announced the new Apple TV, which offers a simple way to watch movies and TV shows on a HDTV for just $99. Apple TV users can choose from the largest online selection of HD movies to rent, including first run movies for just $4.99, and the largest online selection of HD TV show episodes to rent from ABC, ABC Family, Fox, Disney Channel, and BBC America for just $.99. Apple TV will ship in approximately four weeks.

Quick Take

Analytical Summary

• Current Perspective: Positive on the re-launch of Apple TV, because the living room was the only area where Apple had almost no presence, and the new Apple TV is poised to break out of Apple’s self-described “hobby” status. It was always too difficult to explain the Apple TV value proposition to average consumers. The new version features a dramatically lower price ($99, down from $229) and a greatly simplified purpose: it streams rented movies, TV shows, and Netflix Watch Instantly content. Consumers have many alternative ways to accomplish those tasks, but with a low price and strong brand, Apple TV should have a chance at establishing itself next to many more televisions than in the past.

• Vendor Importance: Moderate to Apple, because Apple TV sales do not meaningfully affect the company’s revenues, but the digital living room is important strategically. Apple TV still streams content from PCs and Apple’s mobile devices via AirPlay, enhancing the value of Apple’s entire product line. A successful Apple TV leaves the company with the option of opening up the device to apps down the road.

• Market Impact: Moderate on the digital home devices market today, because anything from Apple is going to have outsized impact, and the company has finally hit on a combination of price and functionality with consumer appeal. However, if the new Apple TV successfully establishes a beachhead for Apple’s content on the TV today and then Apple adds apps down the road, its market impact will be extremely high over the long term.

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Competitive Strengths and Weaknesses

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