Apple TV to Sell 1 Million Units in 2007

By Richard Menta 6/6/07

In a press release sent out today technology intelligence service iSuppli predicts that Apple will sell 1 million Apple TV boxes by the end of 2007 and that they will sell an additional 1.4 million units for 2008. Said iSuppli senior analyst Chris Crotty “Considering Apple’s successful track record with the iPod and iTunes, the acceleration of movie download efforts in general and the potential for future price decline and/or additional features in future products, this forecast seems attainable.”

For a burgeoning market these figures are quite strong. “There’s a slew of these Digital Media Adapter devices on the market today that offer similar capabilities to the Apple TV, added VP Mark Kirstein. "“Yet, nobody has found the secret sauce to get more than a few hundred thousand units shipped."

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This market does have considerable challenges in the short run that can affect sales volume. For the Apple TV to function consumers will also need broadband Internet access, home wireless networking, a DTV and an iTunes account to obtain purchased content. But as homeowners flock to upgrade their tube TVs to flat panel sets a good number already have most of these other devices and services in place. Indeed, Apple TV can be considered another checklist option to pick up along with the new widescreen HD as people step-up their home entertainment system.

iSuppli cited other issues that could limit growth, though some were addressed with Apple's Apple TV upgrade announcement that just preceeded the reports release. For example, iSuppli criticized the Apple TV's 40GB hard drive as insufficient, but a new 160GB version just hit stores. The new Apple TV box will also tap into YouTube's vast library of video, which partially addresses what iSuppli calls the Apple TV's "biggest challenge", which is to line up compelling content. This includes extending content that was contracted to supply a portable device to a device that delivers content to a television. “Already Starz Entertainment has sued Disney", said Kirstein, because it has exclusive television distribution rights for certain Disney properties. This wasn't an issue when Disney licensed to iTunes for personal media players, but becomes one for TV-based distribution.”

iSuppli did point out that Apple is sacrificing profits to push volume. In its teardown analysis iSuppi found that Apple is only generating a 20.7 percent gross margin on Apple TV, far less than the 40 percent to 50 percent margins the company pulls in on each iPod.

Other MP3 stories:
iPod Killers for Summer 2007
- 38 new portable players
iPod Killer Graveyard: Failures Equal NIB Bargains


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