Roku CEO Anthony Wood had some surprising comments on Apple’s Apple TV box last night.
“Apple TV is essentially an accessory for the iPad. They lose money, which is unusual for Apple,” he said at a mini-event thrown by technology site Re/Code. “If you’re losing money, why would you want to sell more?”
CNet’s Joan Solsman covered the event and reported the Wood’s quotes. It’s unclear how Wood knows if Apple is losing money. Solsman says Wood characterised his Apple TV comments as speculation. Wood makes and sells a similar product, so he probably has a good idea of the profitability of Apple TV.
Recently, Tim Cook called Apple TV a billion-dollar business. He was including sales of movies and TV shows in that figure.
The Apple TV sells for $US99, which for Apple is a very low, and competitive price. Independent analyst Horace Dediu estimates that Apple breaks even on the Apple TV, which would be unusual for Apple. It typically prices it products higher than rivals to protect its profit margins.
Apple is reportedly planning to release a new version of the Apple TV this year. The next Apple TV is said to focus on gaming. It may also work as a cable box for Comcast subscriber allowing users to watch streaming live television.
If the hardware is truly unprofitable, then Apple will have to make its money on app and content sales. Apple’s app and content business is actually one of its underappreciated businesses. The iTunes busines was up up 19% to $US4.4 billion in Q1 2014 making it one of the fastest growing businesses at Apple.
Last year, Cook said Apple’s magic is that it does hardware, software, and services. A new Apple TV could be proof of that combination.
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