Blog Post

Apple TV Stays on its “Hobby” Horse

Awww, come on, Apple (s AAPL)! Yet again, you have offered little insight into how your foray into the set-top box world is faring. Apple Insider sat in on today’s first quarter earnings call and quotes COO Tim Cook as saying:

“there was a tremendous tickup year over year [for Apple TV]. In fact unit sales were up over 3 times vs the year-ago quarter. However let me be clear, we still consider this a hobby.”…

“It Is clear the movie rental business is working and there are more customers who want to try it. We will continue to invest there, because we believe there is something there for us in the future.”

Thanks for being so “clear.” Three times over what, exactly? The year-ago quarter was before the product’s big reboot last January, so you’re leaving us to assume that sales really sucked wind.

This is not the first time that Apple has referred to the device as a “hobby.” The company even gave a heads up during its last conference call that Apple TV would remain a hobby through 2009.

It would be dumb to count Apple out, or presume that Jobs & Co. are unaware that the set-top world is rapidly evolving around them. Netflix (s NFLX) is on a tear embedding itself on many devices, and TVs from the likes of LG, Sony and Vizio are plugging directly into the Internet to access VOD content from Netflix and Amazon (s AMZN).

Apple has won big by waiting before. The iPhone wasn’t the first smartphone on the market, just the coolest. But will that strategy pay off when they don’t control the entire process? People choose iTunes over Amazon for music because it’s the easiest, most seamless way to get music on their iPods. Since people are watching video on a non-Apple television set, they aren’t as shackled to iTunes for video content.

Apple can tout the excitement people have about its movie rental service, but in order for Apple TV to make a real leap to the mainstream, it needs to offer TV show rentals. I like watching Battlestar Galactica, but I don’t need to own it (especially that last season, ugh). Apple has access to the content from all the broadcast networks and the important cable ones. Offer people cheap rentals (in HD), and suddenly they have more incentive to dump their cable provider.

Apple’s got the cash and the smarts to let the the smaller entrants into the set-top space kill each other off — but if it waits too long, Apple’s new hobby could be wishing it had been more serious about its TV efforts.

20 Responses to “Apple TV Stays on its “Hobby” Horse”

  1. The bottom line here is that the living room is still a tough nut to crack if offering a separate box. The cable and satellite cos really have a stranglehold on the living room here in the US. (I wish we’d see a UK Freeview-esque movement which might open up the set-top box space.) Additionally, Bruce’s point is well taken. AppleTV is still too much of a closed ecosystem (without hacking) which in keeps many of the early adopters away – who often kickstart new tech adoption.

  2. As long as the AppleTV remains such a closed system, it will continue to have about as much relevance as the iPod would if it only played content purchased through iTunes. IOW, none. If Apple wants to make AppleTV successful it needs to create a user experience based off of what boxee does, open, flexible and user-focused. Otherwise even the term “hobby” will be overly generous.

  3. Steve Jobs has huge ties to both Apple and Disney. So why doesn’t Apple find a way to bring Disney-owned ESPN channels to Apple TV? Wouldn’t that make it more of a standout device?