Why Apple, Google, and Amazon are making set-top TV boxes

“Google on Wednesday unveiled Android TV, the successor to last year’s Chromecast dongle and the 2010 Google TV. Amazon in April launched Amazon Fire TV,” Philip Elmer-DeWitt reports for Fortune. “Apple is still noodling with its Apple TV, now in its third or fourth iteration, depending how you count.”

“None of these devices are expected to be huge money makers. Apple TV generated $1 billion in revenue last year, about a thirtieth of what the iPhone generates each quarter,” P.E.D. reports. “So why are they doing it?”

“The answer, says Creative Strategies’ Ben Bajarin, can be found in the attached chart, taken from Mary Meeker’s Internet trends slide show. It shows consumers around the world spending less time in front of their PCs and more time looking at their smartphones and televisions,” P.E.D. reports. “Americans, for example, spend an average of 2:52 hours a day staring at their smartphones and 2:45 hours staring at their TVs.”

Read more in the full article here.

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10 Comments

  1. Apple could quietly start a rumor that they were working on an ‘iBidet’ and every other major CE company would start scrambling to be ‘first’ to release one.

    The reason Sony, Amazon, Google, et al are releasing a TV box is because they don’t wanna get ‘iPoded’. Microsoft tried making the Xbox a TV set-top and got severely hammered by hard core gamers; but that’s another story.

    MDN has compiled a *loong* list of companies that were put out of business by Apple. I am, of course, referring to the ‘More Blood on the Click Wheel’ articles.

    The companies currently copying Apple’s hardware are also trying to anticipate what Apple will do next so that they don’t get caught flat-footed; this is the reason for all the ‘iWatch’ and ‘iTV’ hysteria.

    There is absolutely no proof that they exist, but those companies are so terrified by Apple’s market-redefining capabilities that they feel they can’t take the risk of it *not* being true, so, they start working on products that Apple is only rumored to be working on.

    The point is, set-top TV boxes are being released because Apple is being copied and no-one wants to get left behind. The only thing is, they are too busy looking at where the puck was.

    Now, about that iBidet…

    1. I think there’s much more to it than that.

      Much of what Apple does, while brilliant, is about packaging things off the shelf in a way that results in a really great premium product. Modern Apple doesn’t do things before those components are ready and while they’re increasingly getting involved in the development of the components, they still are mostly about brilliantly packaging what’s available.

      The point being, that a hockey puck shaped device that attaches to the TV came to be not because of any wild prediction of Jobs or radical innovation from Apple, but rather because H.264 came to be. Baking H.264 into hardware came to pass. Higher speed Internet connections became common. HDMI based TVs became standard. Companies like Netflix changed to streaming models. ARM design became powerful enough. Component costs came down. Etc…

      Like the MP3 player, smartphone, and tablet, Apple wasn’t the first to market here. Far from it. And like these other markets, competitors weren’t trying to “out-Apple” Apple, instead, they simply weren’t “getting it right”… yet.

      Ironically, Apple seems to be repeating a cycle of being late to the set-top box market. The current offering is pretty out-of-date compared to the competition.

      This may not be a bad thing if Apple eventually does make a move here and leapfrog the competition.

      1. Kevin, you said ” is about packaging things off the shelf in a way that results in a really great premium product.” and I disagree. Apple does so much more than just repackage off the shelf items.
        They research over and over what to build. Why should they build it? Questions get asked and product developed.

        Most other companies are so focused on making MONEY that they build and sell anything that functions. Sell it, make money, fix it later, if at all. Fleece the customer as many times as possible.

        Apple takes the time and makes the effort to do a really great job. i have Mac Minis from 2005 and 2007 that still run great. While they are not the newest, they are still running great, doing the job that they were designed for.

        ” And like these other markets, competitors weren’t trying to “out-Apple” Apple, instead, they simply weren’t “getting it right”… yet.” ——- They were trying to sell crap before Apple set the standard. Apple takes the time to get it right Perfect??? NO, but great and they make it better.

        Just saying.

        1. “They research over and over what to build. Why should they build it? Questions get asked and product developed.”

          Right, but they “package things off the shelf in a way that results in a really great premium product.”

          Deconstruct the iPhone… Almost all of the components there are either designed and built by others or Apple designed on top of and built by others (A series chips). The same is true with the Apple TV, and pretty much every other product.

          When the iPhone came out, it wasn’t, “wow, look, Apple invented a touchscreen!” It was that Apple saw that the time was right for a touch screen because capacitive touchscreens had evolved to the point of being functional, along with ARM processors, batteries, and everything else.

          The fact is, anyone else could’ve built that next generation phone had they just been looking at the same components off the shelf and putting it together the way Apple did. Sure, the OS would’ve been different (worse) and other details lacking based on a lack of drive for perfection, but the Galaxy S could’ve existed without the iPhone had someone just been looking on the shelf of available components.

          “Most other companies are so focused on making MONEY that they build and sell anything that functions.”

          True, it’s not just so much that they’re money focused, but rather they’re taking a shotgun approach and trying to do everything to see what works. When you have a lot of resources, this tends to work to a degree… it’s a bit like a nitrous boost in a car. You may crash, your engine may explode, and at best it’s a short term boost, but it does do something. Google and Samsung are doing this with some success today, but it’s a very different approach from Apple’s approach of having a small executive team building the products they want (which also has some potential downsides).

          “They were trying to sell crap before Apple set the standard. Apple takes the time to get it right Perfect??? NO, but great and they make it better. “

          My comment was more in terms of addressing things like Roku and the Fire TV. They’re not trying to out-Apple Apple, or “pre-copy Apple”, they’re simply looking at what’s on the shelf and putting things together. For some reason, Apple hasn’t been doing this with the Apple TV, and apparently is hitting the downside of having an executive team that only wants to build what it wants itself.

  2. ATV only generates $1B per year. The entire industry I work in is about a $250M business of which we do not have majority share. If we earned $1B we’d be ecstatic.

  3. Thats what I would do is put out false leaks so the competition wastes there times doing that. Anyone watch the Google I/O? I felt like I was watching Apple Keynotes from the past few years. But these leaks of the iPhone 6 and stuff have to stop its only hurting Apple and giving the competition an edge!

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