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This week: The Apple TV box has lost its purpose as content moves to more devices, why Apple isn’t (yet) requiring its employees to get vaccinated and how Google is trying to save its Pixel phone franchise.
The Starters
Apple Inc. started selling an Apple TV with a faster processor and a great new remote control in April. But neither upgrade, nor the set-top box’s previous features, justify spending $199 on such a device in 2021.
When Apple introduced the Apple TV in 2007, the rationale for buying one was clear: The box could store TV shows and movie files and pull media from the owner’s Mac onto the big screen. The next version in 2010 had its own unique place: It was a $99 cloud streaming device to watch Netflix, download video rentals from iTunes and AirPlay media from an iPhone or iPad. Even the 2015 model had its reason for being: the App Store.
But in recent years, the Apple TV has become a less obvious purchase for many Apple fans and content junkies. The app ecosystem is a flop, aside from big names like Netflix, Hulu, and YouTube and the occasional casual game. The box costs, in some cases, more than double what rivals sell for.
Most importantly, buying an Apple TV no longer gives users a content advantage. We are in the age of streaming services like Netflix, Amazon Prime Video and Hulu, and business models have shifted so that every service is available on every device—phones, tablets, TV sets, streaming sticks and game consoles.
Apple, known for its closed ecosystem, is even embracing the shift by offering many services on smart TVs and boxes made by competitors. Those services include iTunes movie and TV rentals, the Apple TV app, Apple TV+, Apple Music and AirPlay. Of course, that was intentional on the part of Apple, which sought new revenue sources when iPhone sales slowed around 2018.
That made the Apple TV a mostly pointless accessory, and consumers seem to agree: 2020 data from Strategy Analytics found that the Apple TV holds 2% of the streaming device market.
The product isn’t without its benefits, though, for the Apple ecosystem’s most loyal users. Integration with HomeKit, Fitness+, AirPods and the iOS remote app is useful. The new remote control and faster chip in this year’s version are definite improvements, and the box is getting SharePlay and Spatial Audio support later this year. Still, I don’t see these enhancements moving the needle for most people.
One idea for keeping the Apple TV relevant would be to bundle an Apple TV+ subscription indefinitely at no additional charge.
TV+ has started off slow. Analysis from Bernstein estimates Apple TV+ revenue of $2.2 billion in 2021, compared with $25 billion for Netflix last year. Apple’s initial content library was incredibly limited, and Covid-19 hit just months after launch, delaying new shows and filming on second seasons by up to two years.
But the tide may be turning: New content is coming; awards and nominations are stacking up; and, anecdotally, some shows like Schmigadoon! seem to be gaining fans.
If Apple wants to truly be effective, it could just cut the price of its box, make a cheap “stick” version with 4K or add features that actually make it worthwhile. But as of now, it’s hard to believe that will happen soon, especially with Apple engineers telling me that the company doesn’t have a strong living room hardware strategy and that there isn’t much internal optimism.
The Apple TV was an unusually rocky Apple product from the beginning. Remember when Steve Jobs often called it a hobby? The Apple TV’s software has gone through more interface overhauls than just about any other Apple product, and despite nearly 15 years of attempts, Apple hasn’t created anything close to a market leader.
Yet again, Apple does appear to recognize this, and it’s developing a combined Apple TV, HomePod and FaceTime camera home hub device for release around 2023. Will that version finally improve Apple’s offering in the living room? Only time will tell. But if the next big revamp doesn’t go well, it might be time for Apple to consider putting the Apple TV on the same shelf as other living room products like the iPod HiFi and high-end HomePod.
The Bench
Apple remains one of few major tech companies not requiring vaccines. Google, Microsoft Corp., Netflix, Uber Technologies Inc. and many others in the technology sector have announced that they will require staff to be vaccinated against Covid-19 before returning to the office. So far, Apple hasn’t followed suit, raising questions as to why.
While I believe Apple will likely instate the same mandate eventually, vaccines have become politicized. Apple has major offices in blue and red states, and requiring vaccinations at a company level would quickly become complicated. For instance, in Florida, where Governor Ron DeSantis has signed a law to ban businesses from mandating vaccines, Apple has multiple engineering and corporate offices in addition to 18 retail stores.
Apple had aimed to get all of its staff back to the office by September, before recently delaying the plan until October at the earliest. My hunch is that Apple will institute another delay to around February as Covid cases continue to rise.
Apple defended its new child safety features. This past week, Apple announced a trio of new features to combat the spread of explicit and abusive images of children: a new technology for analyzing photos in a user’s iCloud photo library, new search features in Siri and the ability to analyze photos sent to and from a child’s device for explicit material. Of the three, the first has become controversial among some privacy experts and even Apple employees. On Friday, Apple defended the features, saying they are not a backdoor and are not designed for governments to spy on citizens.
Google is trying to save the Pixel with its own chip. It is sort of ironic that after five years, Google’s flagship Android hardware offering has yet to make a real dent. With the Pixel 6, Google is doing everything it can to try to change that.
I held the upcoming flagship Pixel phone for a brief period of time recently, and I was impressed with its build quality, new camera array and some of the new technologies like an in-screen fingerprint reader and improvements to artificial intelligence in photos and voice recognition. But the upgrade most touted by Google is the new Tensor chip.
Google isn’t sharing any specifications or performance metrics, and it’s hard to believe the company will be able to successfully rival Apple or Qualcomm Inc. with its first-generation component. It’s no secret that the lagging sales of Pixel phones in recent years has presented Googlers with fears about the future of the company’s hardware unit, but the four-year investment in a custom processor could forestall those concerns. Still, I don’t think a chip will change Google’s position much—at least in the short term. And if the Pixel finally turns around, it could be too late.
Apple continues pushing Buy Now, Pay Later. The grand ambition for Buy Now, Pay Later is to launch a service as part of Apple Pay that will let users split up the cost of any purchase into installments. But until that time comes, Apple is making it easier to split up the cost of its own products.
Last year, the company rolled out Apple Card Installments, which lets users pay off the cost of iPhones, iPads, Macs and other Apple products over time through its Goldman Sachs Group Inc.-issued credit card. But as covered in this newsletter previously, the Apple Card is U.S. only.
To meet Buy Now, Pay Later demand in Canada, Apple plans to put out a similar program with Affirm Holdings Inc.’s PayBright on Aug. 11. This will let Canadians split iPad, iPhone, Mac and accompanying AppleCare purchases over 12 or 24 months, making Apple’s pricey products appear more affordable.
The Schedule
Google’s new low-end Pixel phone is just days away. Expect the low-cost 5A with a Qualcomm chip, not an in-house design, to go on sale in the next two weeks.
Post Game Q&A
Q: Why isn’t the Apple Card already available internationally?
Q: Will Apple launch a new consumer external display?
Q: Will Apple CarPlay and Android Auto ever come to Tesla?
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Why Should I Buy an Apple ($AAPL) TV Instead of Amazon Fire, Google Chromecast? - Bloomberg
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