It’s a slow news week in the streaming world, which means it’s a great time to think about what’s wrong with Apple’s TV hardware strategy.
Bloomberg’s Mark Gurman led the charge, writing this week that Apple should launch a cheap streaming dongle—maybe even one without a remote control—to better-compete with the likes of Roku and Fire TV. Daring Fireball’s John Gruber chimed in next, arguing that the Apple TV hardware is fine as is and just needs a somewhat lower price if anything.
Respectfully, they’re both wrong. While I’m a big Apple TV fan who has one in my living room, neither a slightly cheaper model nor a much cheaper dongle will make Apple’s TV platform relevant. The solution is still the obvious one, which is for Apple to make an actual TV.
Limited reach
Analysts have speculated about an Apple television for about 15 years now, and as Gurman reports, Apple considered making a TV-like device a couple of times over the past decade. Ultimately, the company concluded that the manufacturing challenges were too great and the profit margins too thin.
Instead of making its own television, Apple has distributed its Apple TV and Apple TV+ service on rival streaming and smart TV platforms, while treating the Apple TV streaming box as a kind of side project. This allows Apple to avoid the obstacles of TV hardware and focus on making money from services, which are the fastest-growing part of Apple’s business. (Services revenue, which includes things like subscriptions and App Store commissions, brought in $25 billion last quarter.)
But there’s a problem with this approach: Apple has no control over what other streaming platforms put in front of their users, and those platforms tend to favor self-promotion and paid promotion over unbiased recommendations. On their own, they have no incentive to help Apple TV+ become more popular.
This helps explain why Amazon started selling Apple TV+ subscriptions through its Prime Video marketplace last month. Those who sign up through Prime get all the same content, but using Amazon’s app and billing system. Apple is so desperate for distribution on rival streaming platforms that it’s now willing to give Amazon a revenue cut and cede total control of the user experience for those who sign up for Apple TV+ via Prime.
Apple might not be in such a weak position if its own platform was more successful. But in 2022, Comscore found that Apple TV made up just 5 percent of connected TV devices in U.S. homes that stream video, versus 28 percent for Roku and 30 percent for Fire TV. Apple is almost entirely dependent on rivals for distribution on televisions, and it’s becoming a liability.
TV time
I agree with Gruber that a cheap Apple TV streaming dongle wouldn’t make sense. Apple is never going to win on price against companies like Roku, whose platform is optimized to run on inexpensive hardware, and going downmarket would risk sacrificing the speedy, uncluttered experience that makes tvOS great.
Selling a streaming dongle without a remote, as Gurman suggests, is an even worse idea. Viewers have moved on from that concept and expect a real remote with their streaming devices, which is why Google gave up on Chromecast after years of bleeding market share to Roku and Fire TV.
If Apple doesn’t want to be a prisoner of rival streaming platforms, the only real solution is to make a TV that people want to buy more than anything else.
While Apple may have worried about commoditization in the past, demand is emerging for premium TVs that stand out. Samsung, for instance, sold roughly 1 million of its Frame TVs between the years of 2017 and 2020, and then sold 1 million more in 2021 alone. The market for these TVs—whose luxurious bezels made of premium materials—is now large enough to have spawned imitations from budget brands Hisense and TCL.
We also know that demand exists for opinionated TVs from reputable brands. Roku entered the TV business with its own-branded sets because it wants to do what other TV makers won’t, such as including a premium remote in the box and building in better-than-usual TV speakers. In the first quarter after introducing its own sets, Roku said they helped contribute to a 33 percent increase in device revenues.
Most importantly, smart TVs are now the predominant way that people access streaming services, having overtaken standalone streaming boxes back in 2022 according to Conviva. As a platform that only exists on external streaming boxes, Apple’s tvOS is on a path to irrelevance.
A smarter home hub
Those factors alone would justify an Apple television, but a TV set would also tie into Apple’s growing smart home ambitions. As Gurman has reported, Apple may release a wall-mounted tablet for smart home control next year, along with a “HomeOS” platform built on the same software as Apple TV, with Apple Intelligence playing a pivotal role in automation. Analyst Ming-Chi Kuo also expects the company to start selling its own security cameras in 2026.
The TV is the biggest screen in the house, and the one people spend the most time looking at–other than their phones. It’s a natural hub for automation, information, and voice control, and Apple has been building more smart home features into tvOS for these reasons.
But other smart TV platforms from companies like Samsung, Amazon, and Roku have their own smart home features built in. If you’re happy enough watching TV from those interfaces, you’re not going to click over to the Apple TV input just to access Apple’s version. An external Apple TV box will always be in contention with what’s built directly into the television.
I’ve made the case for an Apple television several times over the years; but as time goes on, the argument only gets stronger.
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