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Apple to conquer connected TVs? Steady on, lad

Report of telly kit success misses the mark

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Analysis A very inward-looking report by Strategy Analytics, published last month, seems to ignore the entire Over the Top video market - and makes Apple an out-and-out winner with its $99 Apple TV device by taking 32 per cent of the Connected Home Device market in 2011.

Let's just look at that. So Apple will win 32 per cent of the device market which amounts to 12 million devices, purely in the US, as long as you don't count the following list: Blu-Ray devices, Connected TVs themselves, browser-based TV Everywhere efforts, and broadcast catch-up services, whether they are on the Apple App store or come directly from websites. So this is just for separate boxes, which don't also do another job such as deliver Netflix and the like.

In other words for Apple to ONLY get 32 per cent of a device market, which is a fraction of the Over The Top market in its own right, where the biggest rival is startup Roku, should NOT be seen as a victory for Apple and we're sure that it will not be seen that way in Cupertino. These figures were based on a US-only survey of 2,000 people which concluded that right now only 8 per cent of people (in the US) own a Connected TV Player.

We know Apple shipped 2 million by Q2 2011 and in a 12 million device market 32 per cent is more like 3.8 million – and a number like that is not even going to make the headlines in the Apple quarterly statement given that it will account for just $380 million retail dollars, and far less on the Apple finances. The report says that 8 per cent of US households have such a device now and 7 per cent of European homes, but given the mass of OTT activity in both regions, it's tough to predict the sector with any confidence when viewed on its own.

Strategy Analytics also concluded that Apple TV users are spending more money on movies and TV shows and that 30 per cent of Apple TV owners rented movies or TV shows, compared to 20 per cent of users of other devices. That's hardly surprising since Apple has its own service on top of services like Netflix, which neither rents or purchases, but subscribes.

"Apple is leading this nascent market, which it still considers a 'hobby'," says Jia Wu, the senior analyst responsible for the report. "As Apple prepares for its expected launch of smart TVs in 2012, rival platforms must accelerate their development plans to keep Apple from running away with the connected TV business, as it has done in smartphones and digital music."

Nice point there, except that the reason that Apple is considering launching into the connected TV space is that so far what it has done must be considered a flop.

Copyright © 2011, Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here.

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