Apple TV Review: AAPL Set-Top Box Is Due for Refresh

Third-generation Apple TV tops in user experience, but price premium getting tough to justify

Apple TV Review: AAPL Set-Top Box Is Due for Refresh

Although it has seen much more explosive success selling iPhones and iPads, Apple (AAPL) was an early pioneer in the video streaming set-top box market, releasing the first Apple TV in 2007. In an early Apple TV review from that period, AAPL’s new streamer was praised for its design, but ultimately summed up as being “likely to be relegated only to novelty set-top box and weekend hack project” for most potential buyers.

Apple TV review Intro Apple TV Review: AAPL Set Top Box Is Due for RefreshWhile Apple TV was off to a slow start, Apple has built the business steadily from “hobby” status to the point today where it’s a billion-dollar-per-year business.

The competition has taken notice, and the Apple TV set-top box is now under siege from smaller and less expensive streaming devices like the Google (GOOG) Chromecast and Roku Streaming Stick. Dark clouds are on the horizon in the form of a rumored Amazon (AMZN) device — which might be a set-top box, might be a plug-in stick and might play Android games — but is most definitely intended to challenge Apple TV in the living room.

Apple itself is rumored to be working on a new Apple TV. There have been signs, like the game controller API that could support iOS games on Apple TV, the recent AAPL sale on Apple TVs and Apple TV finally gaining its own category on Apple’s online store. The latest rumor has Comcast (CMCSA) working with Apple on the next generation of the device.

Rumors aside, the current Apple TV is still being sold by APPL, and it’s still a compelling set-top box. Our Apple TV review follows for those who are considering making the jump to Apple’s $1 billion living room video streaming platform.

Apple TV Review: AAPL’s Set-Top Box a Polished Experience

AppleTV AirPlay Apple TV Review: AAPL Set Top Box Is Due for RefreshThe first Apple TV was considered a marvel of engineering. In its Apple TV review, the New York Times called it “a gorgeous, one-inch-tall, round-cornered square slab.”

The current Apple TV (now in its third generation) is a fraction of the size of the original, just 3.9 inches square (the original was 7.8 inches) and weighing 0.6 lb (compared to 2.4 lbs). It’s also black instead of the original silver, so it blends in better with audio/video components.

Hookup is a single HDMI cable, and there’s no power adapter.

The Apple TV runs a modified version of iOS, relies on 8MB of Flash RAM for caching and streams video, audio or photos. The interface is reminiscent of an iPhone’s, with app-like presentation of services, including Netflix (NFLX).

Naturally, integration with Apple’s iTunes store is tight, making it easy to buy, rent or stream already purchased content. Users can also stream content from the iTunes library of a local computer, or mirror content from a supported Apple device onto their TV screen using AirPlay.

As noted in this Anandtech Apple TV review, the primary changes from the second- to third-generation AppleTV were the ability to support 1080p content, and a second antenna for improved streaming.

I can verify the reception improvement, after seeing a significant improvement in streaming speed and signal strength for the new Apple TV compared to the older model it replace in my family room.

See Apple’s product page for a complete list of supported formats and services.

Apple TV Review: AAPL Faces Smaller, Cheaper Competitors Like Chromecast and Roku

Chromecast Apple TV Review: AAPL Set Top Box Is Due for RefreshApple TV typically receives critical praise for its user interface, constantly growing library of services and integration with AAPL devices. Its price tag — now $99 after starting out at $299 — has also been a big part of growing sales.

But the competition is undercutting Apple TV in a big way.

There’s a push to get smaller and cheaper. It started with Google’s Chromecast, a video streamer packed into an HDMI dongle the size of thumb drive which sells for $35. Roku, a long-time maker of set-top boxes followed suit with the $50 Streaming Stick.

Suddenly the praise about user interface and seamless integration found in the typical Apple TV review is being weighed against substantial price differences and a form factor that seems almost antiquated.

Apple TV may offer a more polished user experience (and still retains advantages for iOS device owners), but AAPL is under pressure. Earlier attempts at streaming set-top boxes seemed half-hearted but the Apple TV now seems expensive, over-sized and its lack of support for common video formats like AVI and WMV are tougher to explain away.

Apple TV Review: Specs

  • Apple TV Specs Apple TV Review: AAPL Set Top Box Is Due for RefreshWi-Fi 802.11a/b/g/n
  • 0.9 x 3.9 x 3.9 inches, 0.6 lb
  • Single-core Apple A 5 chip
  • Supports H.264, MPEG-4 and Motion JPEG video
  • HDMI port
  • Ethernet port
  • Optical audio port (optional)
  • Built-in IR receiver
  • Micro-USB port (for service only)
  • Bluetooth
  • Built-in 6-watt power supply
  • MSRP $99
  • Includes Apple Remote, power cord

Note: Unit used in this Apple TV review was refurbished by Apple, and sells for $75.

Apple TV Review: Conclusion

AppleTV Remote Apple TV Review: AAPL Set Top Box Is Due for RefreshI’ve owned Apple TVs since the first generation model was released in 2007. During the course of this Apple TV review, I quickly appreciated the improvements in the latest generation of the AAPL set-top box. Full HD (1080p) support was long overdue, and a hidden change — improved reception — makes a noticeable different in performance in a house like mine, where the wireless router and Apple TV are not in close proximity.

I still wouldn’t hesitate to recommend this third-generation Apple TV to anyone, although I would suggest they save a few dollars and go for that refurbished version on Apple’s online store.

However, for anyone not currently invested in the AAPL ecosystem — no iPad, no library of iTunes purchases — that smaller, cheaper competition in the form  of Chromecast and Roku Streaming Stick is tough to pass up. The Chromecast is closer in size to Apple TV’s remote than its is to the black set-top box! And when Amazon finally releases its living room device, that’s going to be another tough competitor.

In short, the third generation Apple TV remains at the top of the heap in terms of quality of experience and is a no-brainer for Apple fans. But for everyone else, the price premium and size are getting tougher to justify. It looks like Apple TV is due for a refresh.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/2014/03/apple-tv-review-aapl/.

©2014 InvestorPlace Media, LLC

Comments are currently unavailable. Please check back soon.