El Segundo, Calif. – Apple TV has been losing share among streaming-audio/video devices, and Apple’s price cut to $69 from $99 likely reflects plans by Apple to clear out inventory of the three-year-old device to make room for a more competitive model, IHS Technology said.
The selection of streaming-video devices at $99 and less has grown increasingly crowded, slowing Apple TV’s growth rate, said senior analyst Paul Erickson.
To compete better, Apple will have to expand Apple TV’s overall capabilities, continue expanding the selection of marquee content partners, release updated hardware, or executive a combination of these options, he said.
Also hobbling Apple TV is its ability to use only iOS mobile devices as controllers and stream audio and video only from Apple devices, IHS said. Google’s $25 Chromecast HDMI stick, on the other hand, offers multi-platform compatibility as well as a much lower price point, IHS said.
As a result, for the near future, Google Chromecast shipments will continue to exceed those of Apple TV by a close margin, said IHS. The company estimates that 8.7 million Chromecasts shipped in 2014, outselling Apple TV’s 8.3 million units.
Only a few years ago, Apple TV was number one in a market in which only Roku was a true competitor, the company said. Today, the market is filled with competing devices, including Chromecast at $25, sub-$50 full-featured HDMI sticks from Amazon and Roku, and a range of more powerful streaming boxes at $50 to $99 from Roku, Google, Amazon, and several niche competitors, IHS said.
Growing support among app developers for Google Cast for both iOS and Android apps “has the potential to open the market up even more strongly in favor of Chromecast,” IHS added. Built-in Google Cast support in Android-based smart TVs arriving this year from Sony, Sharp, and Philips “will also chip away at the need to purchase Apple TV within iOS households purchasing new smart TVs from these brands,” IHS continued.
To beat back the Google threat, Apple also needs more powerful hardware, IHS said. Apple TV’s dual-core ARM-based A5 processor, PowerVR GPU, and 802.11n wireless capability “have thus far been sufficient to handle the 1080p video streaming and AirPlay duties that the device is primarily used for,” the company said. But the device “is due for a likely hardware revision this year given age, increasing iOS complexity, and evolving market needs.”