When Apple Inc. (NASDAQ:AAPL) reported its Q1 financials in January, there was little said about Apple TV sales. The poor performance of AAPL’s Other Products division — despite record setting Apple Watch sales — said it all. However, it looks as though AAPL is turning its focus once again to its often neglected set-top streamer.
There’s no word of new Apple TV hardware, but the company has made a big move. News just broke that the company hired the former head of rival Amazon.com, Inc.’s (NASDAQ:AMZN) Fire TV to take over as marketing vice president for Apple TV.
New Apple TV Hire Sends Signals
Bloomberg reported last night that AAPL has hired Timothy D. Twerdahl as the new marketing VP for Apple TV. Any new hire for the position would be worth noting, but in this case the company’s choice is very interesting.
According to Bloomberg, Twerdahl came to Apple by way of Amazon, where he headed up the very successful Fire TV unit. Snagging one of your primary competitors is always a bit of a coup, but in this case, Apple’s hire has an even more compelling background. Prior to his work with the Fire TV, Twerdahl was an executive with Netflix, Inc. (NASDAQ:NFLX) and a vice president overseeing consumer devices at Roku.
In other words, the new Apple TV boss previously headed up the top two competing video streamers and had a senior position with the world’s number one video streaming service. That’s a pretty good hire and not one the company would make unless it’s serious about goosing those sliding Apple TV sales.
Bloomberg notes that the previous head of Apple TV marketing is being moved to a role helping to lead AAPL’s efforts in securing streaming content deals.
Apple TV Needs the Push
While AAPL’s set-top streamer got a sales push with the release of the new fourth-generation Apple TV in 2015, it wasn’t able to maintain that momentum. The Apple TV may have games and its own App Store, but unlike the competition, there’s no 4K video support and AAPL’s box carries a hefty price premium.
Even though AAPL doubled its Apple TV sales compared to the previous year when it introduced the new Apple TV in 2015, it still fell short of Roku, Amazon Fire TV and Alphabet Inc’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google Chromecast in market share.
AAPL lumps the Apple TV into its Other Products division and doesn’t spike out sales numbers. However, in the company’s Q1 earnings report, revenue for Other Products declined by 8% year-over-year. Considering that it had a record-setting quarter for Apple Watch sales — the other major product in that division — the numbers point toward poor holiday sales for the Apple TV.
No New Apple TV Hardware, Yet
Of course, even poaching the competition’s top guy and someone with the breadth of experience that APPL’s new hire appears to have can only go so far without revamping the product.
The current, nearly year and a half old, Apple TV carries a huge price premium. AAPL charges a minimum of $149 for its box — double the going rate for competing hardware from Amazon, Google and Roku — and despite the big dollars the Apple TV lacks 4K video support.
AAPL was able to shrug that off in 2015 when 4K video was more bleeding edge, but consumers now expect the feature. New content to populate that TV app hub Apple has been showing off won’t hurt, but job one for Twerdahl will be dealing with the hardware gap.
There’s no word on new Apple TV hardware, yet. But with a new VP in place, his predecessor focusing on acquiring additional content and sales continuing to slide, the pressure is on for AAPL to either cut prices or introduce a new, fifth-generation box. Or both.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.