Apple TV shipments to more than double next year, analyst predicts
With new hardware options and an app store, Apple TV is expected to substantially increase its revenue potential, says JP Morgan analyst Rod Hall.
Lance WhitneyContributing Writer
Lance Whitney is a freelance technology writer and trainer and a former IT professional. He's written for Time, CNET, PCMag, and several other publications. He's the author of two tech books--one on Windows and another on LinkedIn.
The new Apple TV could see its shipments rise to 24 million next year from 10 million this year and 6 million last year, analyst Rod Hall said in an investors note released on Thursday.
Unveiled on Wednesday, the next-generation of Apple TV comes packed with several new features and enhancements, including support for the Siri voice assistant, a remote control that responds to your touch, an app store and ways to search for content across a variety of different services, such as Netflix and Hulu. Available in October, the new Apple TV will sell for $149 with 32 gigabytes of storage and $199 with 64GB.
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Apple TV faces competition from a number of similar services, including Roku, Google (with its Chromecast TV plug-in) and Amazon Fire TV as a way to stream video content. Apple's device also lets you watch videos from the iTunes store on your TV. The Roku 3 is considered by many to be one of the most formidable set-top boxes for streaming as it offers voice search and a headphone jack for private listening. The new Apple TV has voice search and other new features, which should give it a more competitive edge. But will it be enough of an edge?
"The new Apple TV features the A8 processor found on the iPhone 6," Hall said. "Apple said that the new product provides 1080-pixel resolution, which should be adequate given low 4K TV penetration. We do, however, expect Apple to drop the A9 chip (a more powerful chip used in the new iPhone 6S and 6S Plus) sometime in the next 12 months to provide a 4K option. In addition, Apple announced a new remote control with motion sensors and support for console-style Bluetooth game controllers. With these new hardware capabilities and an app store we expect the revenue potential of the Apple TV to expand substantially."
Hall said he expects total shipments to be split 60:40 between the 32GB and 64GB versions of Apple TV. He also sees the bulk of Apple TV shipments coming to North America and Europe due to the greater availability of content in these regions versus the rest of the world.
"The new Apple TV focuses on an improved interface including voice with Siri as well as a touch screen remote," Piper Jaffray analyst Gene Munster said in an investors note late Wednesday. "We believe the company significantly improved control and discovery via the new interface, which should yield a better user experience."
Though Munster said he believes the new Apple TV is unlikely to meaningfully contribute to Apple's overall revenues, he said the new device shows that "the company still has the ability to innovate in relatively untapped markets."
But IHS analyst Lee Graham wasn't quite so impressed with the new Apple TV. In a note released Wednesday, Graham said although the new version is a big step up for Apple, many of the features introduced in the new Apple TV are already found in similar streaming devices. TiVo and other products have universal search, which lets you search for content among different channels. Roku, Fire TV and Android TV also have voice search, while gaming is available on other platforms as well.
IHS remains conservative on the prospects for Apple TV, due in part of the increased price over the current model. The holiday season will be a key time to see whether the new Apple TV can win over consumers. In the meantime, IHS expects Chromecast to outsell Apple TV around the world this year with 10.3 million units versus 10 million units, respectively. Still, Apple may be content to sell Apple TVs to a large number of iOS users as opposed to the average consumer, an outcome that would still prove profitable for the company, according to Graham.