Apple Inc. (NASDAQ:AAPL) just axed the third generation Apple TV. The move could be about simplification — or simply eliminating an outdated 2012-era product — but it seems more likely to be setting the stage for the introduction of a new, 4K Apple TV.
Source: Apple
The Third-Generation Apple TV Is Discontinued
Apple released the third-generation Apple TV in 2012. Later, with the introduction of its long-awaited fourth-generation streamer in 2015, AAPL kept the old model in its lineup.
The fourth-generation Apple TV was much more capable. It ran the new tvOS operating system, had its own App Store and could even play games. However, at a starting price of $149, it was more expensive than the model it replaced and was priced higher than competing streamers like Amazon’s Fire TV.
So keeping the $69 third-generation Apple TV made sense, even though it was purely a streamer and unable to run apps.
However, Mac Rumors reported in early September that AAPL had begun pulling the older Apple TV from its stores. Something was up … Now, 9to5 Mac has obtained a copy of an e-mail from AAPL to its employees confirming that the third-generation Apple TV has officially been axed. The e-mail reads:
“Effective immediately, Apple TV (3rd generation), MD/199LL/A, has reached end of life and is now discontinued. The Apple Supply team is going to fulfill all shippable backlog.”
Why the Move Could Signal an Imminent 4K Apple TV
When the fourth-generation Apple TV was released in 2015, there were two primary complaints about the new streamer. It was expensive and it could not do 4K video.
With prices ranging from $149 to $199, the new Apple TV was going up against competition like the $99 Amazon.com, Inc. (NASDAQ:AMZN) Fire TV that also featured voice control, but offered up 4K video support. Meanwhile, the top-selling streamer was Alphabet Inc’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google Chromecast, which sold for just $39.
AAPL was able to dance around the issues by arguing that 4K televisions were still relatively rare and content was hard to find. The extra cost for the Apple TV reflected the advanced hardware with its own App Store and gaming capability.
Fast forward a year and those arguments are tougher than ever to pull off.
4K TVs have gone mainstream, with sales in North America increasing by 70%. Google just announced a $69 Chromecast Ultra that supports 4K video, and game console makers have all released new versions that support 4K video. If AAPL takes the existing Apple TV into the holiday shopping season, it’s going to have a very rough time of things.
However, officially discontinuing the third-generation Apple TV seems to be the first move in AAPL’s response.
Here’s how I see it playing out. With the old box out of the way, Apple needs something less expensive than $149 to have any hope of competing. So the fourth generation Apple TV gets a price cut … maybe not as low as $69, but probably $99. Then AAPL holds a special event, likely later in October, where it announces a fifth-generation Apple TV with 4K video. This new Apple TV slots into the $149 spot.
That gives Apple a streaming line-up of devices that are all relatively current hardware and all able to take advantage of the App Store. It also gives it a 4K Apple TV, able to take on the competition in the battle for consumer dollars during the crucial holiday shopping season.
All we know for certain is that the $69 third-generation Apple TV is no more. However, I would look for an Apple special event by the end of this month.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
