Less Than 10% of iPad Users Have Bought An Apple TV, Total Sales of 5.5M Are Meaningless

Yesterday at the D10 conference Apple's CEO said that so far this year, Apple has sold 2.8M Apple TV units. If you combine that with the 2.7M units Apple sold from September 2010 to December 2011, Apple has now sold a total of 5.5M second (720p) and third (1080p) generation Apple TV's. It originally took Apple 16 months to sell 2.7M units and now they are selling that same volume in 1/3 the time. While it's good to see the growth, the problem is that Apple still has no real presence in the living room and selling 5.5M Apple TV units in 21 months time really isn't that spectacular.

While Apple won't call their Apple TV device a failure since they always thought of it as a "hobby" to begin with, the fact is, they have yet to even get 10% of users who buy an iPad to also purchase an Apple TV. Between the fiscal Q1 of 2011 up until Apple's Q1 of 2012, the company has now sold almost 60M iPads and even more if you count those sold before 2011. So even for those users who have selected Apple's ecosystem, less than 10% of them have purchased the Apple TV. And if you factor in users like myself who have multiple Apple TV units, the percentage of unique users Apple is reaching in the living room is well under 5M.

Naturally, you don't expect Apple to sell many Apple TV units to consumers not using the Apple ecosystem and the content available via the Apple TV doesn't even come close to the variety of content offered from Roku, for the same $99 price. But Apple can't even crack the 10% mark with iPad users and if you combine all of the iPhones sold with the iPad, the Apple TV isn't even reaching 2% of the total iOS market.

Of course these numbers aren't going to stop all of the crazy analysts and media people who are already declaring Apple as the winner in being able to disrupt the traditional TV and broadcast market with a product that does not yet exist (an Apple TV with a screen) and has been speculated about for more than three years with nothing yet in the market. These are many of the same analysts who said that when the first generation Apple TV came out in 2007 it would kill off DVDs. Deutsche Bank went so far as to say that the new Apple TV would, "cannibalize a good chunk of the U.S. DVD player market in the next several years".

Five years has passed since that statement and the Apple TV hasn't cannibalized or disrupted anything in the market. At the same time, when Apple TV hit the 1M sales mark, other analysts were quoted as saying, "one million is a real benchmark". Really? We're now judging the success of a device based on selling only 1M units? Clearly, most of the analysts and media really don't understand these streaming devices or their real impact on the over-the-top video market. They don't get how they really work or have any idea what you can or can't do with them. All I keep hearing about is how good AirPlay is, yet about half the content apps I have on my iPad don't even have AirPlay functionality built in. For instance, TNT's iPad app is AirPlay enabled, yet TNT's iPhone app isn't. And you still can't get something as basic as Hulu on the Apple TV.

To think of it another way, the Apple TV is nothing more than a $99 adapter that lets you mirror what is on your iPad/iPhone on your TV, if the app supports it. That's all it is. And for all of the raving by the media and analysts about how "disruptive" the Apple TV was suppose to be, Apple has yet to even sell it to 10% of their installed iPad base. These are same analysts who are saying the new iTV or whatever it's going to be called, if/when it is released, is going change and disrupt the TV and broadcast markets, which in truth, is as far from reality as you can get.

Note: Here is an interesting analysis on how much revenue Apple might be generating from their Apple TV product.

Comments

[James]

Dan,

Excellent article as I thought all of your observations were spot on! As someone that owns multiple Xboxes, PS3s, Rokus and an AppleTV, the latter is the one that gets used the least. Not only is it not the premiere streaming device, it isn't even the best product in its price range. For my money, the Xbox is the most complete (quantity of apps, quality [e.g. Netflix, Vudu, HBO Go, ESPN, and Epix], UI, search integration, etc.) device currently available. Combine the very good search integration of Bing with the pretty solid voice/gesture control of Kinect along with the stellar content they have been adding, and the Xbox is the device poised to disrupt traditional TV services.

[Glenn]

Well said.

Depends what you compare it to of course. Its selling more units than the Roku by a good margin, but of course the unit sales pale in comparison to the XBox 360 at over 66 Million lifetime, and has a much more well developed set of streaming services.

Is that a big number? Well about 40 Million are actual XBox Live members, so about half are broken or abandoned or just not connected to the internet. Then of course only about half of those paid for Gold back in 2010 when Gold was $10 cheaper. So maybe 20 Million? And then only some percentage I can't locate right now actually uses streaming services. Maybe 10 Million? Maybe a few more?

So XBox 360 that may be the most successful streamer of the bunch has maybe double the number of users that Apple TV has that actually use it as a streamer?

The market is still pretty nascent and fragmented I'd say. Its not just Apple.

[James]

Glenn,

Agreed that the market is still pretty fragmented. However, as someone that has used nearly every video service (Netfllix, Hulu Plus, Vudu, iTunes, Zune Movies, ESPN, Crackle, YouTube, Playstation Store, Amazon, etc.) often on many different devices - when available - and experienced different interfaces and search options (or lack thereof in most cases), my take is the Xbox is the most "magical" by far. There is a pretty good article at Slate --http://www.slate.com/articles/technology/technology/2012/03/xbox_live_tv_why_microsoft_not_apple_will_dominate_television_streaming_.html -- that basically notes that short of somehow getting the access rights to all manner of video (highly unlikely) and delivering it all through a single service/interface, the best Apple can do with a new TV is do what Microsoft is already doing with the Xbox...delivering multiple video services through a polished/common interface and providing the ability to search (Bing) via remote, voice or gestures (Kinect) those various services.

James