At a glance, Apple TV
appears to be—unlike most of the company's products—a failure. Years
after its introduction, sales are minimal and its impact on the market
is nearly impossible to detect. The price is down to a negligible $100
(it was $299 when it launched in 2006) and most people I talk to don't
fully understand exactly what the product does. (No, you don't need a
Mac to use it.) Yet, despite its slow start, Apple TV is still the
company's best chance to dominate the living room.
Compared to the iPad, the product is almost laughable. Apple CEO Tim Cook discussed the Apple TV
briefly at the D10 conference this week. "Last year we sold … 2.8
million Apple TVs," Cook said. "This year, just in the first six months
of our year we've sold 2.7."

By contrast, Apple has sold more than 69 million iPads since they
launched in 2010. For any company other than Apple, it would be time to
spike the football.
Despite the fact that Apple TV sales are low, they are growing, and
that's enough to keep Apple investing in a product that, in the past,
has been referred to as "a hobby."
While the iPad may be the reason Apple is the most valuable tech
company in the world right now, Apple TV is how it can maintain that
position.
The living room is wide open for digital disruption. Cable companies
are losing their monopolistic grip on the content that gets shown on
television. More than 3 million U.S. couch potatoes cancelled their
cable subscriptions last year, largely in favor of Internet-based alternatives.
People are tired of paying for 500 "premium" channels they don't watch.
For the same price, they can get a streaming package from Netflix,
Hulu, or Amazon Prime and buy the top tier shows on iTunes. Apple
already offers one of the best à la carte services on the market, so now
all it needs is to partner with (or buy) a company for streaming. Apple
Netflix, anyone?
Will Apple ever release its mythical iTV? Maybe. But it is really
just a big monitor. Apple already makes monitors that can be used to
watch video content. Making a bigger one—say 42 inches—and adding
VESA-mounting brackets isn't revolutionary. It is just a big, dumb LCD.
There are few reasons to put the processing power inside the TV, but
there are lots of reasons not to.
Besides, making HDTVs is a terrible business right now. Truth is, the
HDTV boom came and went. HDTV penetration in the U.S. is about 63
percent and many of those homes already have multiple sets. Even
established HDTV vendors are having trouble making money. Pioneer and
Hitachi left the market. Sony and Sharp are reporting losses in the HDTV
divisions. When Sony's Kaz Hirai spelled out the three core product
segments, he listed digital imaging, gaming, and mobile. HDTVs didn't make the list.
In general, people only upgrade their HDTVs every six to eight years.
Does that sounds like a business in which Apple should play? Especially
when it can sell you a $99 box that will provide all the interactivity
and content without the expense, risk, and overhead of making HDTVs?
Apple TV is revolutionary in a manner similar to the iPad. It took
years to build momentum, it had to wait for broadband to become
ubiquitous, for content deals to be struck, and for hardware prices to
come down. It didn't create a new market overnight, like it did with the
iPad, but the momentum is building. And after all, Apple doesn't need
to create new customers for Apple TV. It simply needs to upsell the
millions of current iTunes users who want to access their media
libraries on their TVs.
Every Apple TV sold is at least another $10 per month of revenue from
movies, TVs shows, and podcasts. Do a deal with HBO, and suddenly Apple
TV is another platform for HBO GO. None of this requires making an
actual HDTV, but it puts Apple in the living room anyway.
So no, Apple TV isn't the iPad, but it is far from a failure.
This article comes from:http://www.pcmag.com/article2/0,2817,2405100,00.asp?kc=PCRSS03069TX1K0001121