“Apple TV Is Constrained By Apples Addiction To High-margin”: Bloomberg On Why Apple TV And Not Changed The Market

Bloomberg published an article about why Apple failed to revolutionize the field of television consoles with the release of the latest version of Apple TV. The journalists studied the history of the device and spoke to some of the developers of the company. In February 2017 the team Apple has moved the former head of Amazon Fire TV Timothy Terdal.

As noted by Bloomberg, the new place Terdal will be engaged in the development of the Apple TV — will bring a new look and content, and hardware devices. “The arrival of Terdale the company coincided with the testing of a new, fifth-generation Apple TV. Likely, the company will introduce it this year. Sources familiar with the situation and plans of the Corporation, claim that the new product has the working title J105 is capable of playing 4K videos and transfer more saturated colors,” writes the newspaper.

Most likely, new features will help boost sales of consoles — consumers are increasingly choosing TV format 4K. But by themselves, these improvements are unable to turn Apple TV into an innovative product caliber iPhone. As the author writes material, the leaderships vision regarding the Apple revolution in the field of television, which should make Apple TV that is constantly changing. It was only supposed to replace other STB of cable TV, used buyers.

This did not happen. The team then discussed the opportunity to turn Apple TV into a games console — such as Microsoft Xbox or Sony Playstation. But these plans the leadership rejected.

Among other things, initially it was assumed that buyers of the console will give commands to the device;. In the process of development and testing it became clear that to do this is inconvenient, and buyers were forced to converse with a remote control. In the end, Apple decided to turn the TV into a giant iPhone, which will also store and downloadable applications. “I did not sign it,” says one of the employees who agreed to speak with Bloomberg on condition of anonymity.

“We wanted to do something revolutionary, and came to the evolutionary,” he continues. Former Piper Jaffray analyst Jim Munster believes the Apple TV turned out to be something of a hobby. “Why is Apple basically does this.

You either do something well or not do it at all” — he said. Apple does not disclose sales volumes of set-top boxes, but CFO Luca Maestri in one of his interviews admitted that in the holiday season of 2016, sales were lower than in the same period in 2015. Research company eMarketer believes that Apple TV keeps losing market share — in January 2017 she was 11.9%, although in September 2016 was set at 12.5%.

“Of course, the console does not yet play an important role in the core business of Apple, but it is Central to the ecosystem services of the company. The living room is the place where people shop, consume content, read the media. And services in the past financial year brought Apple $25 billion and is the second largest line of business of the Corporation after the iPhone,” notes Bloomberg. The editorial Board writes that Apple representatives declined to comment on the material or to provide journalists the opportunity to talk with Terdalam.

History Apple TV is a story of gradual development, the author writes material. The first console was released in 2006 and was intended to stream video from iTunes to TV. The next version was released in the fall of 2010, and with it, users can play the TV content from the Internet.

The last console version was released in September of 2015 — several months later than planned. “Journalists and experts agreed that the new version was much better than the previous. It allows you to download apps from the App Store, is equipped with a voice recognition function and made of glass with a remote that also serves as a controller for games.”. The cost of the latest version of Apple TV is $149.

“This is more than twice as expensive than the previous version, $60 more expensive than Amazon Fire TV, at $20 more expensive than the most expensive console Roku. The experience of watching TV, a new console doesnt change. Some episodes still have to buy through iTunes and services like Hulu need to pay separately.”. While initially, the author writes material, Apple planned to completely replace the cable box, Apple TV.

It was assumed that the user will be able to pay for everything at once, and the Corporation will share the revenue with cable operators and streaming services. New app TV, Bloomberg continues, was to give users access to shows and sporting events in real-time. However, after the launch it became clear that with the app you can view video from your iTunes library and the iTunes Store — function, to which the owners of consoles has access to that.

One of the new elements was the Watch Now bar on which are your favorite shows and movies and user recommendations. Some developers from Apple, which managed to talk to Bloomberg, sorry, that is not immediately offered the leadership to make recommendations and preferences on the start screen. Now, they say, implementation of such a function would require too many resources. “Apple was a backup plan in case to displace the cable box will not be able to reorient the device to an audience that would like to pay only for selected channels and shows, not to pay for the ones shes not looking.

It was assumed that the user will be able to choose from several combinations of channels cost from $30 to $40 a month,” continues the author of the material. Traditional media companies were willing to cooperate with Apple — they also felt threatened by the growing number of Internet services like Netflix. However, the agreement of the parties and could not — the stumbling block was the price and combination of channels. “Media accused Apple of arrogance, Apple accused failed partners in the lack of flexibility.

The negotiations failed”. The designers of the Corporation say that the interface of the new version of the console is far from perfect, and the team offered a much more innovative options. Now the user sees the familiar grid of application icons.

One of the ideas of the designers was to put on the home screen are four tabs — music, video, games and other things. Another option is to allow users to run the preview application by moving the controller icon. “In a sense, the direction of the Apple TV are chained by addiction to Apple is a high margin. The Corporation does not transfer, when they are forced to lose money on the product — even if it could compensate them for the expense of content”, — writes the edition.

Some engineers immediately offered to give users the ability to play 4K videos, but it would require a more expensive processors and inflated operating costs. Consequently, would reduce margins or increase the cost of the product — it would be unaffordable for the market. The new top Manager will bring the experience of Amazon and Roku. “For Apple, it is critically important to rectify the situation with the television console — otherwise it will almost certainly lose the fight for the living room of the buyer,” concludes Bloomberg.

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