Why the Apple TV Price Cut Is Bad for Amazon and Roku

By Markets Fool.com

Apple's Apple TV set-top-box has moved more than 25 million units, according to CEO Tim Cook at the company's "Spring Forward" event earlier this month. That makes it the top-selling premium digital streaming player, and now a price cut announced during the same press conference makes it the cheapest.

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Now listed at $69, Apple TV costs significantly less than Amazon's top-of-the-line $99 Fire TV, and is a little cheaper than the $79.99 Roku 3. It's still not the cheapest option for people looking to stream to their TVs. That honor goes to Google's $35 Chromecast, which is followed closely by Amazon's Fire TV Stick at $39, but it's an Apple device for less than half the price of the cheapest iPod Nano.

In the streaming world, devices with a box profile are perceived as higher value than the stick products, and Apple now has the best price on a top-tier streaming box. Add that to the overall cache of the Apple brand, which gives its products a certain clout for consumers, and you have something the more attainable Amazon and Roku brands can't equal.

Who has the best box?
Apple probably has the best-selling, top-of-the-line streaming box, with Roku coming in with 10 million across its variety of devices as of September, 2014, according to The Verge. Amazon does not report its sales numbers, and Fire TV has anecdotally sold well, but it's unlikely the company has moved 25 million units.

Sales success however does not mean Apple has the best product. In fact, having tested all three units extensively, I would argue that both Fire TV and Roku 3 are dramatically better streaming players than Apple TV. All the devices are easy to use, but Apple's has a fixed ecosystem where you only have access to the apps the company installs.

Both Amazon and Roku offer the ability to download apps. That may not be important if you only want to use the major players -- like Netflix, Hulu, and Pandora, which are carried by all three. But, if you want a broad selection of both free and paid apps, Roku 3 and Fire TV give you something Apple does not offer.

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In addition, both Fire TV and Roku 3 offer the ability to play games, with Amazon's box doing an exceptional job of it and essentially serving as a low-end game console. Fire TV and Roku 3 can also both access Amazon's Prime Instant Video service for Prime members.

Why did Apple cut the price?
Apple has not released new Apple TV hardware since 2012. Many expected the company would do that as part of its Spring Forward event. It didn't, but the price cut and a three-month exclusive on HBO's new stand-alone streaming were announced.

Those moves feel like a stall tactic, but it's a plan that's likely to work. Just being an Apple product gives Apple TV a certain level of credibility, and the price cut likely overcomes many consumers' confusion as to which device to buy.

Being the cheapest Apple consumer electronics device and having a sleek look should help keep Apple TV on top for a while longer, even though the player offers less than its competitors.

Apple TV has the distinctive look of an Apple product. Source: Apple.

Apple has to do more than this
While the price cut is a smart short-term move, it's a stop-gap measure that ultimately does not absolve Apple of the need to release a hardware upgrade.

Roku, no matter what Apple does, is in a tough spot because it lacks the clout and reach of its two competitors. Roku 3 could be leaps and bounds ahead of its competitors (it's not), and the company would likely struggle to retain its existing market share.

Amazon has a better shot at capitalizing on Apple's failure to upgrade its hardware. The company can obviously market its device on Amazon.com, and it has the added hook of pushing the player to Prime members as an easy way to bring Instant Video to their TVs.

Still, in the short term, this price cut is bad news for both Amazon and Roku, as it will bring a new flood of on-the-fence customers into the Apple camp.

The article Why the Apple TV Price Cut Is Bad for Amazon and Roku originally appeared on Fool.com.

Daniel Kline owns shares of Apple. His streaming device of choice is Fire TV. The Motley Fool recommends Amazon.com, Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Amazon.com, Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.