Late last week, The Information speculated that Apple may soon slum it with the likes of Roku, Amazon, and Google by releasing a (gasp!) affordable streaming stick or dongle.
On the surface, the idea makes sense: Streaming sticks are popular. For under $100, they’ll give your TV a zippy, modern interface, every app you could ask for, and coveted technologies like 4K resolution and HDR, all in a sleek and slim package. What’s more, Apple is pushing its new TV service and may be looking for an accessible way to peddle its new TV shows and movies.
But this is Apple we’re talking about — the trillion-dollar company that made $1,000 smartphones the new normal. Here’s why Apple probably won’t be making a cheap streamer anytime soon.
The Apple TV 4K is (finally) a hit
For most of its existence, Apple hasn’t seemed to care much about the Apple TV. The previous-generation Apple TV was left to sit on its laurels for the better part of two years while rivals added 4K and other features, and news regarding the box barely received mention at the company’s many elaborate, turtleneck-inspired hardware events.
Things are changing with the new(ish) Apple TV 4K, which finally added industry standards like HDR (including Dolby Vision) and, of course, 4K Ultra HD resolution. According to a recent report from Thinknum, which has been tracking sales from Best Buy during the holiday season, the Apple TV 4K is the second hottest seller in streaming right now, ranking just behind Amazon’s much more affordable Fire TV Stick 4K. How does a $180 streamer sell nearly as well as one offering similar features for as low as $35? We’re glad you asked.
Applers gonna Apple
Love them or hate them, Apple fans are loyal. They buy an Apple product for the unmatched experience, a slice of luxury that’s attainable for the average Joe. And they don’t care that it costs a lot more than competing products.
They don’t care that it costs a lot more than competing products.
That means Apple doesn’t seem to need an affordable streamer, even to support its TV service. If sales of the $1,000 iPhone X proved anything, it’s that Apple fans will find a way to afford its gear. As such, it doesn’t really benefit Apple to make a device that would undercut sales of its pricey Apple TV 4K. And in all likelihood, a cheaper streaming stick would dim the premium experience Apple users have come to expect, from unboxing to operation. That brings us to our next point.
Apple doesn’t really do “affordable”
Apple has long been known for making products that cost more, and there’s no sign of the ridiculously profitable company changing course anytime soon. The iPhone is a prime example. While Samsung, LG, HTC, and multiple other phone makers have long offered cost-conscious phones for low-income users, Apple has barely dipped its toes in the water.
Sure, there have been exceptions like the iPhone 5C and SE but, if anything, Apple seems to be going in the other direction. As mentioned above, Apple has made a $1,000 phone not only acceptable, but also extremely popular. An AppleInsider report reveals the iPhone X was the brand’s top selling phone in the first and second quarters of 2018. Apple’s decision to kill the SE last year shows a willingness to simply disregard the midrange-to-budget handset market.
We can see similar trends throughout Apple’s hardware lineup, too, from its $350 HomePod (among the most expensive smart speakers on the market) to its $1,300 iPad Pro.
Where’s the moola?
This might be surprising given how many companies sell them, but cheap streamers don’t make much money. There’s just not a big profit margin on a tiny networked computer that costs less than a budget Bluetooth speaker. In fact, Roku — the unofficial king of cheap streamers — makes way more money from ad sales and licensing fees than hardware like its $50 Roku Premiere+ or even its $100 Roku Ultra.
There’s not a big profit margin on a networked computer that costs less than a Bluetooth speaker.
As reported by CNBC, Roku (which is still trying to eke out a profit) made just $73.3 million on hardware in 2018’s third quarter, while pulling in $100.1 million in revenue from its “platform” segment. The latter includes everything from ads on the screen and quick keys on the remote itself (no, Vudu is probably not your favorite streaming service), to a small share of the spoils from Roku users’ streaming subscriptions. Google and Amazon also seem to view streaming hardware as more of a bridge to revenue than a profitable enterprise.
Apple obviously wouldn’t mind earning some extra cash from ad sales, but it doesn’t really need to. The company basically prints money, and not just from its pricey hardware. Apple’s service sales jumped up last quarter from $7.9 billion to $10 billion.
All this to say, while it would obviously be intriguing to see Apple enter the cutthroat space of affordable streamers, unless something drastic happens to change the company culture, we wouldn’t hold our breath.
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