Apple TV killers not doing well: Revue returns outpace purchases

Op-chief Tim Cook recently in a conference call with Wall Street analysts re-iterrated Apple’s stance that the Apple TV box remains “a hobby” for the company. The comment jibes with Steve Jobs’s argument from the Wall Street Journal’s D8 conference last year when he said set-top box makers like Apple and Google faced a go-to market problem, calling the television market “balkanized” (full quote and video below the fold).

Is it surprising then to find out that Google TVs are not selling very well, just like Apple TVs? What we didn’t know is how bad the situation is for the search giant’s set-top box pet project. TIMN points at a prepared statement from Logitech, the maker of Google TV-powered Revue box, in which the company acknowledged “very modest sales” of the product in the June quarter:

Sales of Logitech Revue were slightly negative during the quarter, as returns of the product were higher than the very modest sales. We believe the significantly lower everyday price for Logitech Revue, reduced from $249 to $99, will generate improved sales.

Google on its part will update the Google TV project with Honeycomb code later this summer, adding the ability to download and run apps on your television. But despite the aggressive price cut which will cost Logitech $34 million in one-time charges and the fact that the Revue now price-matches the $99 Apple TV, ordinary consumers will still be avoiding set-top boxes in droves, regardless of a brand. Apple on its part could tackle the issue with a rumored full-blown television set with the Apple TV functionality built-in. Now, about that Steve Jobs argument…

Apple TV remains a “hobby business”, Steve Jobs told the Wall Street Journal tech columnist Walt Mossberg, because there’s no viable market and market incumbents are stifling innovation with free set-top boxes. Apple, Google and other companies that sell paid set-top boxes all face this problem, he underscored. Apple’s boss then launched into the following expose:

The problem with innovation in the TV industry is the go-to-market strategy. The TV industry has a subsidized model that gives everyone a set-top box for free, or for $10 per month That pretty much squashes any opportunity for innovation, because nobody’s willing to buy a set top box. Ask TiVo, ask Roku, ask us….ask Google in a few months. The only way that’s ever going to change is if you can really go back to square one, tear up the set top box, redesign it from scratch with a consistent UI across all these different functions, and get it to consumers in a way that they’re willing to pay for it. And right now there’s no way to do that. The TV is going to lose until there’s a better–until there’s a viable–go to market strategy. Otherwise you’re just making another Tivo. It’s not a problem with technology, not a problem with vision, it’s a fundamental go to market problem. And then it not like there’s a GSM standard where you build a phone for the US and it also works in all these other countries. No, every single country has different standards, different government approvals, it’s very… Tower of Bableish. No, balkanized. I’m sure smarter people than us will figure this out, but that’s why we say Apple TV a hobby; that’s why we use that phrase.

Cross-posted on 9to5Google.com
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