Apple TV generates $1BN in 2013

Michelle Clancy | 02-03-2014

Apple TV, that palm-sized set-top gadget that Steve Jobs famously called a “hobby,” is turning in decidedly non-hobby-like numbers.

According to Apple CEO Tim Cook, Apple generated more than $1 billion in revenue from the Apple TV units last year. Cook offered up that number at the annual Apple shareholder meeting, which roughly translated means that the giant from Cupertino sold about 10 million of the devices in 2013.

In contrast, it sold just over 5 million units sold in 2012, making Apple TV the company’s fastest growing hardware product category, with 80% year-over-year growth.

The growth clearly points to an increased uptake of over-the-top (OTT) content by consumers considering that the design itself is largely without a major refresh since 2012.

There are signs that this situation could change, however, given reports that there are references to the next-generation Apple TV inside the latest iOS 7 software builds.

According to one report from the 9 to 5 Mac tech blog, it found a clear reference inside of an Apple TV framework related to the device’s AirPlay functionality: “The mention of the next Apple TV is…‘AppleTV4,1.’ The current Apple TV is ‘AppleTV3,2’ while 3,1 is the 1080P model introduced in March 2012, and 2,1 is the first iOS model introduced in September 2010.”

The consistency in nomenclature, it said, indicates that the new Apple TV model referenced here is part of the existing Apple TV product family, instead of the fabled HDTV or multifunction set-top/home gateway that some have speculated that Apple would release. Also, the step-change from 3,2 to 4,1 “confirms that the device will see notable changes in terms of internal components,” the blog said.

Apple is reportedly mulling some different technology reboots for the device, which for now remains a standalone set-top box (STB) that streams iTunes content as well as content from other “iDevices” via the Airplay capability.

So far the palm-sized gadget has been a niche gadget that mainly sweetens the pot for Apple’s electronic sell-through (EST) business, by offering a way for users to watch TV shows and movies purchased from iTunes on the big screen. But Apple also offers access to OTT options like Netflix, Hulu Plus, HBO GO, YouTube and Vevo; and third parties have embraced it as well. Sling Media announced back in October that Apple TV owners could stream live TV content via the Slingbox app for iPhone and iPad.

Inside sources told 9 to 5 Mac that Apple is considering the integration of AirPort Express into Apple TV, including its own 802.11ac wireless router. It would be unnecessary for households that already have a Wi-Fi router attached to their ISP modem, but for those that don’t, the combo could be an attractive one.

9 to 5 Mac speculated that the onboard router could be used as a gatekeeper, delivering peak video performance for the Apple TV streams and “de-prioritising other wireless traffic as necessary.”

The blog also reported that Apple has been testing an Apple version that has a built-in TV tuner component—presumably, for receiving over-the-air (OTA) signals from local broadcast stations along with cable QAM channels. This would make it into an all-in-one cord-cutting kit of course—setting it up to take on pay-TV providers head-on.

Apple itself has not confirmed any launch event dates for 2014.