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Xbox and Apple TV – TV Boxes at Retail


One of the big focal points in early 2007 has been the new media extender category. From Sony to Sling to Netgear to Linksys, everyone’s got some new retail device to network TV in the home. Without being able to focus on every gadget in a single post, I thought I’d check in specifically on how the Apple TV and Microsoft’s Xbox-cum-IP-set-top are faring. Do set-tops at retail work? How does retail compare to the operator channel?

Apple TV

I’ve kept an eye out for information on sales of Apple TVs, but the available data is limited. Ars Technica reports there have been Apple TV sightings at a few Target stores and even a Costco outlet, so clearly retail placement is not an issue. However, what are sales like? Are people buying Apple TVs?

A Business 2.0 blog points out that Apple COO Tim Cook refused to answer questions on Apple TV sales during the latest earnings call. Meanwhile the AppleInsider site quoted a Best Buy source as saying they weren’t selling well at his store, but went on to qualify that data point by saying the adoption rate at Best Buy is unlikely to represent overall demand.

So far, there is not enough information to make a judgment on Apple TV. But the lack of data certainly doesn’t dissuade me from thinking that Apple TV may work best as a niche product rather than a mass-market device.

Xbox 360

The Xbox 360 is interesting because of the Xbox Live Marketplace. There have been various debates about whether or not the game console is Microsoft’s Trojan Horse for the digital living room, and certainly the video download options should make it a contender. However, the Xbox is first and foremost a gaming machine, and at least in that aspect it’s not doing very well.

Not only were revenues for Microsoft’s Entertainment and Devices Division low in Q1, but actual unit shipments of the Xbox 360 are not where they should be. According to Seeking Alpha’s Carl Howe, Microsoft sold only 500,000 Xbox units last quarter compared to projections of one million or more. (Image above is also credit to Carl Howe’s blog entry)

If people aren’t buying the 360 for gaming, they’re certainly not going to buy it solely as a media extender device. And I don’t think that will change when Microsoft starts offering IPTV over the Xbox during the holiday season later this year.

The Operator Channel

Meanwhile the operator channel for TV entertainment devices and applications is booming. And for a number of reasons, operators will continue to maintain a huge amount of control over the television market. We’re just starting to scratch the surface with “media extenders”, but it’s clear that it’s going to take a while to develop a successful retail strategy to compete with the operator channel.

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