Why Apple shouldn’t make a streaming device for cheap skates

The internet – that’s people who probably spend too much time on it – loves nothing more than to speculate about what Apple might do. Or even better, some Apple should to do. The more foolish among us are brazenly sold to say what Apple shall to do.

Let’s be so bold today. (And possibly silly.) There’s been quite a bit of criticism about the possibility of a cheap Apple TV dongle. And on the one hand, that makes perfect sense. Apple’s current TV-focused hardware, aptly named Apple TV 4K (not to be confused with the Apple TV app, which we’ll get to in a moment, or the Apple TV+ streaming service, which we also get into) is a great tool, as they say in the biz. It’s overpowered for what it does, meaning it streams shows and movies and the like very well, without any lag or hesitation. It has just about all the specs you could wish for. It serves as a HomeKit hub. It plays music and displays photos and allows you to seamlessly mirror your iPhone or iPad or Mac to your TV. The only problem is that it is several times more expensive than what most people buy these days, towards $200.

So yes. People may be right in wanting Apple to have something much cheaper.

It definitely shouldn’t make such a device. And chances are it isn’t. Because it still isn’t necessary.

Apple TV, Roku, Amazon Fire TV and Chromecast with Google TV.
Phil Nickinson/Digital Trends

The truth is that Apple not need a less expensive piece of hardware connected to a TV. Not to make money anyway. Such devices are almost certainly not generating any kind of profit, at least not by selling the hardware itself. Google has the $50 Chromecast with Google TV† Amazon Fire TV Stick 4K (that is the Fire TV Stick we recommend for most people) is the same price. Neither company gives us much insight into how much they’re selling, or what the profit margin might be.

Roku, however, is a different story. Roku “Players” — that is, the hardware except Roku TVs – range from $30 to $100, and that’s before any kind of retail pricing. And in the past, most of what it sells is said to be in the under $50 range. What does that mean for the bottom line? To put it this way, hardware hasn’t made a profit since the first quarter of 2021, when it brought in $14.8 million on revenue of $107.7. From that moment on, it has seen gross profit losses of $6.7 million, $14.6 million, $45.9 million and $15.1 million in the next four quarters. (Don’t feel bad for Roku – those same four quarters saw more than $1.5 billion grossing on the “Platform” side, which basically means everything but hardware.)

Apple already has cheap hardware. It’s called Roku and Fire TV and Chromecast.

So we have a pretty good idea that cheap hardware isn’t a money maker — and Apple is very much into making money.

It helps a bit when you think of hardware in terms of the larger platform. Google doesn’t make hardware for the sake of hardware, but so that it can expand its search ecosystem much more. The same goes for Amazon, although in that case e-commerce takes the lead, with a secondary dose of searching for good measure. Roku has always been a little different. The simplistic operating system is (mostly) cross-platform, meaning it was made to run all apps from all services. It has turned away from worries about the money it makes from hardware and more than makes up for it with ad revenue.

Let’s get things back to Apple then. It doesn’t rely on its nearly $200 Apple TV (hardware) to do much of anything, really, because the Apple TV app — and the Apple TV+ streaming service — is available on just about any other piece of hardware. You can check it out on Roku. You can watch it on Amazon Fire TV and Google TV and Android TV and in a web browser.

In other words, Apple already has cheap hardware that is negative for revenue. It’s just that someone else makes it, and someone else probably takes the loss on the balance sheet. And that someone is Roku and Amazon and Google and everyone else that allows the Apple TV app on its platform.

That won’t be entirely satisfying for those hoping for a $50 Apple TV experience. Is it possible that Apple chooses to make something? Secure. Apple certainly has the money to burn. But it shouldn’t. And while this is not a new idea – we thought about it in 2018 and came to the same result, just with different math.

You can get Apple TV (the app) and Apple TV+ (the service) in 4K and in Dolby Vision on someone else’s $50 dongle. The overall experience isn’t as good as what you get on Apple TV (the hardware), which is why we still consider it the best streaming hardware money can buy. But it’s good enough for Ted Lassoand that’s why it’s good enough for Apple.

Editor’s Recommendations

Leave a Comment

Your email address will not be published. Required fields are marked *