roku-3-with-headphones

CNET is reporting that Roku CEO Anthony Wood described Apple TV as an ‘iPad accessory’ at Re/code’s Code/Media conference. Until recently, even Apple characterised the product as a ‘hobby’. The Apple TV box has not changed much since its major revamp in 2010. More controversially, Wood followed up by claiming that the Apple TV actually loses money for Apple – which would immediately seem strange since Rokus have similar hardware and cost less.

“Apple TV is essentially an accessory for the iPad. They lose money, which is unusual for Apple,” he said Thursday, speaking at the Recode conference here. “If you’re losing money, why would you want to sell more?”

Although Wood admits that his comments are ‘speculative’, it would indeed be extremely ‘unusual’ for Apple if this was the case. Apple does not have a reputation of conducting money-losing businesses. Even the iTunes Store, which Apple originally started a ‘break-even’ enterprise, now accrues profits in the hundreds of millions every quarter.

Notably, last month Tim Cook said that Apple TV (through hardware and content sales) generated $1 billion in revenue across 2013. It seems unlikely that Cook would boast these numbers if the business was actually making losses.

In addition, Roku’s CEO also seemed unfazed by the upcoming (albeit rumored) competition in the set-top box space by both Apple and Amazon. In Re/code’s own reporting of its interview, Wood is quoted as saying that they have been fighting Apple for six years with sustained success.

“Every year about this time, the Amazon box comes up that they’re about to launch. And the new Apple TV is about to launch … We’ve been competing with Apple TV for six years now, and every year, we’ve grown,” Wood told Kafka. ”We’re in the TV platform business. Our goal is to be the operating system for TV.”

Interestingly, Wood says that when Apple dropped the price of the Apple TV to $99 in 2010, Roku sales actually doubled, even though analysts predicted Roku would be pushed out of the market.

Just a few years ago, industry analysts predicted the end of Roku with the introduction of the Apple TV. But Wood told the Code/Media audience that when Apple dropped the price of its Web TV set-top to $99 from $249, Roku sales doubled.

Whether Roku can continue in the industry as competition heats up from the larger players is yet to be determined. Amazon will announce its streaming TV box at an event next week. 9to5Mac has previously reported that Apple is preparing a revamped Apple TV, with significant changes to both software and hardware. Apple’s renewed focus on the product also lines up with Cook’s recent remark: ‘It’s a little hard to call it a hobby anymore.’.

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40 Responses to “Roku CEO says Apple TV ‘loses money’, calls it an iPad accessory”

  1. iMacheads says:

    Reblogged this on iMacheads and commented:
    This is Apple’s hobby.

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  2. rahhbriley says:

    Lol

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  3. PMZanetti says:

    Lol interesting comment from a similar product that’s cheaper….

    Not to mention Roku isn’t getting 30% from everyone that signs up for Netflix, Hulu, or HBO from the AppleTV.

    Not to mention Apple has their own popular store for buying Movies, TV Shows, and Music….

    Somehow I think that was about the dumbest comment the guy could make.

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    • The 30% ticket clip is exactly what I came here to say. This CEO needs to do his homework.

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    • The AppleTV has way less features that people who aren’t locked into the Apple ecosystem. I have an iPhone, an iPad and a Macbook and the AppleTV does absolutely nothing that the Roku can’t do and doesn’t do a whole lot that the Roku can. The AppleTV is barely adequate when it comes to living room streaming entertainment, and does nothing noteworthy while the Roku can handle just about anything you throw at it. The iTunes store is great, but I’d bet very, very, VERY little of those sales are directly related to the AppleTV. It /can/ play content bought from the iTunes store, but I’d bet very little is actually bought to be viewed specifically on the AppleTV. Until Apple allows it to have more things done with it other than hook up to the iTunes store I’ll never buy one. The Roku is a better device in every category and it’s cheaper.

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  4. Did he just wake up from a 10 year coma? I think they need a new CEO because this one doesn’t know his competition.

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    • The AppleTV isn’t competition to anyone that isn’t an Apple faithful person. It does nothing extraordinary that you can’t get on the Roku, and it can’t do half the things that the Roku can. It’s cheaper, has access to far more streaming outlets, has far more channels or apps that can be installed on it and it a better product. People are acting like the iTunes store is used specifically to buy content to be viewed on the aTV. Bad news for you, it’s not. It’s a fringe product that is too feature and capability deficient and it costs way too much. The aTV isn’t competition to the Roku. Not even close.

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  5. Yes, this guy at Roku is none too smart. Apple gladly loses a little money on the hardware, if it means they sell more movies and TV shows. That’s where the real money is. Many companies use this same business model.

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    • rahhbriley says:

      Sounds like you believed nothing he said except the part about the hardware of Apple TV loosing money. Though I understand you are pointing out that some companies do that with products (a better example would be Amazon) and are successful, I HIGHLY doubt Apple is doing that with the aTV. Just curious why you even gave that part of his statement any credence.

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  6. Steve Bolton says:

    Maybe people buy Apple TV because it seems to be the only media player that can reliably play movies without getting sound out of sync – even if you fast forward or backward. I have tried many media players which fail this simple test. Only VLC and Apple play movies reliably.

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    • frankman91 says:

      We ditched cable at our house in favor of netflix and a home media server. On our big TV in the living room we stuck a full desktop and on every other tv we us Roku 3’s, and they are fantastic. Not perfect and once every month or two they need a reset, but it only takes a few seconds to boot and then they are perfect.

      They are quick and they are cheap. Did the same setup for my moms place and she has been very happy with it.

      That said, I would have agreed that most media streaming boxes I had tried before that have been awful.

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      • Why hook up a full desktop when you could just hook up an Apple TV?

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      • frankman91 says:

        To be honest Steve L., I am not really an Apple fan. I see why people like it, but it’s just too locked down for my taste. I am willing to put up with the risk and frustrations of errors, crashes, and picky configurations to enjoy the freedom of the Windows world. I don’t have much choice in the matter anyhow because I am a product engineer and a Mac will not run a single CAD or mathematics program that I need.

        I like having the full desktop on the big living room tv because it’s my entertainment room. While it is a little bit more work to use when compared to a streaming box, I can do anything on it from surfing the web, open whatever files. Like sometimes I watch a bad Netflix show for background noise while I surf the web.

        I like the ease of controls and simplicity of the remote for the other tv’s so I stuck with the Roku’s. I don’t want to bumble around with a keyboard and mouse when I am trying to throw some Futurama on in the bedroom.

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    • I’ve never met anyone with Roku in the UK. I think apple has a bigger global presence. Also, screen mirroring from iOS devices makes the aTV a really compelling device for me – just another string to it’s bow.

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  7. I love everyone’s comments and how they are so quick to protect apple and cannot even remotely think this may be true. Until such time as ATV can use 3rd party plugins such as plex then it is just a hobby. The roku is the best solution out there…period.

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    • rahhbriley says:

      I don’t think the issue is so much that people are coming to Apple’s defense of the aTV being better than Roku (which is how I read you comment, discussing features such as 3rd party plugins). Though people here are more inclined to like the aTV over Roku. I think the issue most posters here have, is how someone without true knowledge of the cost of the Apple TV (he admits such), and who makes a similar device at half the cost, can say that they aTV is loosing money. That’s what I think the posters are defending. I like the Roku box, it’s a fine device, I prefer my aTV but that is based on my need and preference set. I just can’t see where this guy gets off saying its a loss leader.

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      • mechanic50 says:

        But the problem is that He really does not know what he is talking about. IHS iSupply gives a total BOM cost including manufacturing for the Apple TV of $63.95. This guy is a loon and really just comes off sounding of sour grapes because he is being beaten to death by the ATV and its ecosystem.

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      • rahhbriley says:

        Exactly

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    • There is really no need to “protect Apple” here. The comment made by Wood is simply untrue. Apple has already made it’s money back from me strictly from their percentages of my Hulu and Netflix subscriptions over the past year. Not to mention, I purchase a couple movies per month on it (I have a pretty nice iTunes movie collection growing =D ). I have probably spent almost $300 on movies since I purchased the Apple TV! =) I don’t think they lost any money… Lol

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    • Robert Nixon says:

      I love how you’re so quick to defend Roku, when the quality of Roku’s product isn’t even germane to the discussion.

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    • Plex is a horrible user experience that puts the burden of sorting files, making sure they’re correctly named and that Plex picks up the correct movie name and description etc etc, it’s a full-time job trying to keep a Plex library in shape.

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      • Mitch says:

        Hey Steve L., when was the last time you used Plex? I was a user on Windows for a year or 2 and have since used it during my switch to Mac a few months ago. With movies and TV shows, I’ve had zero issues…just point the media server to the right folder and it downloads the info. I then use it to stream to my PS3, my iPhone, my iPad, and using the Chrome app on my laptop on occasion when I’ve left on business trips. I’ve personally never had to correct it.
        That said, I’m pretty fastidious about my folder organization with my movies and TV shows as well, and I’ve never bothered to try music because I use Rdio, so other people might not have the same experience.

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      • A burden? It couldn’t be simpler, you just can’t be bothered to spend literal seconds to name a file. Dealing with my iTunes library screwing things up on a weekly basis, and it ruining the syncing of songs to my iPhone, has been a far more involved process than changing the name on my media files to work on Plex. Plex is dead simple.

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    • I run XBMC on my jailbroken second gen aTV, works great.

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  8. Robert Nixon says:

    This guy is bluffing and he knows it. I’d love to see Apple drop one of their scathing one-line retorts to this claim.

    There is no way Apple is losing money on the Apple TV. It’s an extremely cost-optimized platform, leveraging parts from other higher-volume iOS devices to bring the bill-of-materials down as low as possible.

    The latest revision, released last year, was done solely for the purpose of dropping that cost down even further. If the second-gen ATV’s BOM was $64 at its release, the current ATV’s is probably closer to the $40 mark by now. That’s not including R&D, licensing, etc., but given the fairly simplistic nature of the platform, these are likely minimal compared to other Apple devices.

    Like

  9. b9bot says:

    Woodward forgot to mention that Apple not Roku is the market leader and Apple not Roku is only now going to push it farther than just a hobby. Woodward is just another CEO that has just commented on his own companies downfall by under estimating Apple like so many before him have. Makes it much easier for Apple though. Apple has been building momentum with content for the past 6 months that seems to be building.
    If there is a new box coming and that comes with more content or the Jobs break through. Woodward is going to be wetting his pants soon. And I seriously doubt Apple makes the Apple TV at any loss as was commented above, 1 billion in sales is hardly a loss.

    Like

  10. Fil Aperture says:

    He’s just looking for a bid.

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  11. Roku CEO is just as dumb as their product. I wanted a breath of fresh air from Apple and decided to see what Roku 3 was like. Used it once after the tedious setup and ended up selling it for $75 on Craigslist.

    The laggy and unintuitive UI is one thing, but it was just so ugly as well. I like their cute startup screen and screensaver but that was it. I didn’t buy it as an over-glorified TV screensaver.

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    • No, you didn’t. Either you never owned one and made this up, or you went into using it knowing you wouldn’t like it and made it a self fulfilled outcome. If you don’t like the Roku and think it’s no good, you didn’t actually use one. And you sold it one craigslist for a $25 loss you seriously can’t sell anything, or you’re still just lying.

      Like

  12. Brad Burke says:

    Anyone who makes a statement like this is scared. Apple may not come out with all the cool new features first, but they do it right.

    Like

  13. hmurchison says:

    The Roku suck. Cheap design, lesser performance and an ugly wall wart PS. Pass. I doubt Apple is losing money because they lose more money in the couch cushions than Roku is worth. They use economies of scale.

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  14. .. talk about sour grapes! lol

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  15. I din’t understand how something that costs $64 to make and sells for $99 can be loss making, i was never good at maths, but that makes no sense to me…!!!

    “The redesigned Apple TV cost $64 to make and its internal design and key components are almost exactly the same as Apple’s iPad, iPhone 4, and iPod Touch, a teardown analysis showed.”

    And when you look at the breakdown of components, then the cost actually makes sense… Hardly loss making though is it…!!!

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  16. Obviously they have never heard of a little company called Sony… which also takes a loss on its “set-top boxes” (PS3/PS4)… they are both in the market of selling content not hardware when it comes to entertainment such as movies and games. Apple makes tons of money off of iTunes store purchases as well as, I’m sure, their deals with Netflix and other third-party distributors on the Apple TV. In fact, its probably a deal similar to 70/30 split they have on iTunes/App Store content.

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  17. I have used both the Apple TV and Roku. While, Roku does offer more options as far as channels, the device it’s self is terrible. I take real issue with the article saying that they are similar hardware but the Roku costs less. The Roku hardware is nowhere near the hardware of the apple TV, and you can pick up an AppleTV for the same price as a Roku at any store.
    I use Plex for almost everything. Apple TV does not naively support Plex, so I am forced to use Plex Connect to get it to work. This is a far better experience than using the native Roku Plex app. I was really hoping fora better Roku 3, but it ended up being a Roku 2 with an incremented number. same buggieness, same poor experience.

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  18. Edward Stern says:

    sounds like another exec is scared of what Apple will do next.

    Like

  19. Rob Smithson says:

    The AirPlay feature alone is worth having an AppleTV, and the HBOGo interface is way better than others I have tried. The ability for friends to come over and easily Airplay music or a video from their phone is cool too.

    Most of the people that bitch about the AppleTV steal movies and music, so screw them anyway.

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  20. Tallest Skil says:

    Roku will be bankrupt in three years. It’s just that simple.

    Like

  21. greenbelt2csp says:

    How to tell when your about to become irrelevant…Bash your competition in a way that shows that you have no true appreciation for what your competitor’s product’s strength is.

    Like