Where Apple Falls Short
Written by: Renata Krieger
Under the multi billion dollar company made of strategic business choices and exceptional products lies their largest sunk cost: Apple TV. After being on the market for several years, Apple TV has began to experience a decrease in demand for their product. When Apple TV was first created in the late 2000s, Steve Jobs had the vision of Apple TV becoming a success. However, since then other competitors have entered the market including Roku, Chromecast, and Netflix. According to Forbes.com, even though Apple is capable, the company is in no hurry to upgrade their system due to the sunk cost of their investment in Apple TV. Currently, if Apple were to invest more money into their TV portion of the company, this would be taking an extremely large risk due to the oligopoly market in which they compete in with Netflix, Roku, and Chromecast. For example, when looking at this from the perspective of the diseconomies of scale in the long run, this market for Apple TV would demonstrate decreasing returns to scale. As other firms in the market continue to increase their output, Apple will choose to be strategic by ignoring their sunk cost despite the amount of money they invested in previous years.
Next, with the billions of dollars in revenue each year from the iPhone alone, Apple has no incentive to upgrade their outdated interface within Apple TV. According to CBS News, as a whole, Apple doesn’t share the same passion for providing a TV service the same way Jobs did when he ran the corporation. With this disadvantage, other competitors are able to use the elasticity of demand within the market to their own advantage. As demonstrated within Chromecast, Google decides to keep their costs lower than Apple TV because this increases the demand for their product. Additionally, Google can afford this price decision more than Apple due to the success in the Chromecast revenue. With this, Apple TV is left with a higher price tag than their competitors due to the effects of their sunk cost.
Works Cited
Morris, Ian. “Apple TV Is A Huge Cash Cow, Which Is Why Apple Is In No Rush To Make It Better.” Forbes, Tech, 22 July 2014, www.forbes.com/sites/ianmorris/2014/07/22/apple-tv-is-a-huge-cash-cow-which-is-why-apple-is-in-no-rush-to-make-it-better/#102baf024d20.
Sherman, Erik. “Microsoft, Apple, Others Smack Themselves with Sunk Costs, Bad Decisions.” CBS News, CBS Interactive, 2 Nov. 2009, www.cbsnews.com/news/microsoft-apple-others-smack-themselves-with-sunk-costs-bad-decisions/.
Warren, Christina. “Welcome back, Apple TV. It's been a while.” Mashable, Mashable, 28 Oct. 2015, mashable.com/2015/10/28/apple-tv-review-2015/#qMjO1ksX_GqR.
I definitely agree with you, in regards to the fact that Apple TV is not as successful as it was intended to be. This is simply because it was launched around the same time that other large TV providers and companies were launching their new products, therefore, the demand for Apple stayed consistent for their mobile products, but the Apple TV product started low in the first place and declined from there. I think that if this product was launched a couple years ahead of its time, it may have given Apple an advantage in the television industry and a boost in revenue, however, this is not the case. If Apple wants to increase their television aspect of the company, they need to source their reasonings and passions back to Steve Jobs’ roots, in order to fully function towards their consumer’s needs.
ReplyDeleteI do find it rather surprising that Apple TV is not as popular as I would think it to be. With the popularity of the brand you would think that it would be in high demand from consumers. But due to the competitive market it is in, it hasn't been as successful as other Apple products. I know that I personally have Roku and Netflix but not Apple TV, and have not heard of many people who have Apple TV. I agree with Kate in how she thinks that if Apple would have launched their TV system earlier than the other, or if they were to pay more attention to the this product, maybe consumers would have been more drawn to the product.
ReplyDeleteI agree with you that Apple TV is not nearly as relevant as planned. Video streaming services have become an oligopoly market, with a select few large competitors reaching for the top spot. Apple is clearly a very successful company, but apparently their mobile devices excel much more that their other products. At this point, it seems like the cost is outweighing the benefit of Apple TV. Apple might need to re-think their advertising strategies and work towards a new, more in demand service.
ReplyDeleteI agree that it's surprising that Apple TV isn't nearly as popular as many would have thought. Apple is a very successful company, well known all over the world which would make you think that Apple TV would be more popular than it is. Since video streaming services have become an oligopoly market, Apple needs to have more demand to have their product be more successful.
ReplyDeleteSince apple products are in such high demand, it surprises me that Apple TV is not doing well among the other TV companies. It almost is an out liar of all the other Apple products on the market. I think is due to the fact of technology always advancing and the fact that Apple TV was brought to the market in the late 2000's, the program did not have as many abilities and functions in order to maintain a constant demand. As Netflix and other companies were introduced into the TV providers, a lot of customers fled towards that way because of the extra enhancements.
ReplyDeleteI thought that the apple tv was a really interesting topic to go with and I completely agree that it was interesting that apple just let their apple tv idea go like that. While the smart streaming devices are an oligopoly I think there was one major company missed, which was amazon. Personally I work at bestbuy and in my experience the amazon fire stick is actually the streaming device that is purchased the most. That being said I think apple does have the technology and money to compete with these other companies in streaming devices, but I think that they do not because of the amount of money they lost trying to already. Apple being a smart company decided to cut their losses and not focus as much with the apple tv and more with their laptops and iphones. This also ties into the law of supply because they make more money with their other products so they will produce those products more. Overall I really liked your topic and thought that it was creative.
ReplyDeleteThis is an excellent example of an oligopoly market in real life. I agree that it is probably in Apple's interest to not pour resources into the Apple TV because this market is ultra-competitive.It is also wise for them to walk away now because their company produces many other goods and they can make profit off those.
ReplyDeleteI think this is a great topic to write about because just like Andrew said, it gives a perfect example of a oligopoly market in real life. Apple is being very smart on not stretching themselves too thin in this situation. Along with that Apple as the brand recognition to still be able and make money off the apple TV without having to be a top notch program, which is very interesting.
ReplyDeleteThis is a great example of a oligopoly market in real life. Because apple already has great brand recognition it is easy for customers to trust the products. Therefore people will buy apple TV's because they trust the products will be good even if they aren't top notch.
ReplyDeleteI think your comparison between Google and Apple was very interesting. I did not know that it was such a race between the two however it seems that Apple is falling behind. Chromecast is a bigger network and I feel like more people are familiar with it rather than Apple TV. I also know that Apple TV can be difficult to work with in all different areas.
ReplyDeleteApple and other large successful tech companies are in a position where they are making such a large profit that they are able to take risks while investing back into themselves to grow at an exponential rate. Apple TV is an example of attempting to expand the products that Apple sells and thus increase their profits. Despite it being unsuccessful, Apple can afford to do this because other risks will pay off.
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