Before the Sept. 9 Introduction of the company's new set-top streaming box, Apple hadn't introduced a new television-connected box since 2012.
That's an absurd amount of time in the technology world, where new models tend to come on a yearly basis if not more often. Apple, for example, releases new iPhone models every year with a major overhaul every two. The company did give the previous Apple TV hardware a major software update in 2012, but even that's a veritable lifetime ago for a tech product.
The new Apple TV. Source: Apple.
Still, despite the delay, people bought Apple TV. At first that was because it was arguably a superior product to Roku's devices, which were the early industry leaders. More recently it sold because Apple cut the price to $69 -- making it cheaper than the other comparable products on the market. Of course, it also helped that it was an Apple device, and there's a certain audience that wants the cachet of that brand even if it's on an outdated piece of equipment.
However you look at it, when CEO Tim Cook showed off the new hardware at the Sept. 9 event, it was long overdue. For the most part, the new Apple TV didn't disappoint, but in one key area the company made a huge misstep.
The new box may deliver all of the features fans were hoping for -- integrated voice search powered by Siri, an elegant new remote, and a new open environment with an app store -- but it's simply priced too high.
Why won't people pay?Apple has long been able to charge premium prices for its products, partly because for many years iPhones, iPads, and MacBook laptops were superior in both design and function to their rivals. In recent years that gap has closed considerably.
There are Android phones and tablets as well as Windows-based laptops that match the Apple product line when it comes to mixing sleek design and high-end functionality. Those top-tier non-Apple phones, tablets, and laptops tend to be priced in line with iPads, iPhones, and MacBooks, making the Apple items a better deal because of brand reputation.
Waiting five years to release new hardware cost Apple part of its reputation in the space. It also allowed consumers to sample rival products and learn that they wouldn't be sacrificing anything by opting for a Roku box or Amazon.com's Fire TV -- both of which offer their top-tier products for $99 (or less during sales).
That puts Apple, which has priced its new streaming box at $149, at a huge disadvantage.
Just being Apple isn't enoughWhile the new Apple TV looks like a major leap forward compared with its predecessor, its biggest innovations aren't all that new. Amazon and Roku already have voice search and t he new Fire TV even has Alexa -- the online retailer's answer to Siri.
The new Fire TV. Source: Amazon.com.
And while it's big news that Apple will be opening up an app store for its TV hardware store its two rivals already had that as well. Certainly the iPhone maker might be able to lure in more developers and attract some premium apps, but Roku and Amazon both have a vast selection that's unlikely to leave anyone disappointed.
It comes down to moneyIf you look at full retail pricing for the top-of-the-line Fire TV and the Roku 3, both boxes offer a similar experience to Apple for $50 less. You could even argue that Amazon's ability to offer Prime members access to its array of movies, television shows, and original content on their television screens makes it that much better of a deal. Users could even opt for the $49.99 Fire TV Stick with Voice Remote to get a package very similar to Apple TV for $100 less.
Apple made a mistake here because its TV box just isn't special enough to be priced so much higher than its nearest rivals. Had the company announced its in-the-works-but-may-not-happen TV service, then it would have had a unique package to offer customers that might justify the price tag.
Without that feature, the company has instead delivered a product that isn't enough better (or maybe even better at all) than its cheaper rivals. People might accept that with a phone or a tablet, because owning an Apple product comes with a little bit of status, but that won't be the case for a streaming box.
Apple TV needs to be market priced, or its going to be a flop -- maybe not at release because the fanboys will buy it, but in the long run.
The article 1 Big Reason the New Apple TV Will Be a Flop originally appeared on Fool.com.
Daniel Kline owns shares of Apple. He has pretty much every streaming box and stick. The Motley Fool owns and recommends Amazon.com and Apple. 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.
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