Apple TV + games: redux

20 Mar
60451607
Hey Tim, watch me pull a rabbit out of my hat!
Eddy, that trick never works!

Exciting rumors about an update to Apple TV with Apps coming this summer/fall!

In January of 2014 I wrote at length about updating Apple TV with stronger graphics, more RAM and storage, App Store support, and adding a bluetooth controller to create a super-competitive micro-console. In retrospect, given the barrage of new and updated products coming out of Apple this last year and troubles negotiating content deals, I’m not surprised they passed on updating Apple TV last year. Exciting for me is what another year of Moore’s Law and Apple’s insane miniaturization and supply-chain management could bring to Apple TV at $99 and higher price-points.

I suggested last year that they’d keep the older model Apple TVs at $99 for people who only want streaming, and introduce higher price points ($149, $249) based on storage. They’ve already dropped the current A5-based model to $69, so I suspect they’ll keep this price-point for a low-end model and probably update its hardware. I think there will be two higher price points based on storage, probably $149 for 32GB and $249 for 64GB rather than the 16GB/32GB I predicted which was cost-effective last year.

Updating the processor to something similar to the iPad Air 2’s A8x (2GB RAM, runs at 1.5GHz, 1080p/HD-capable GPU) is a huge step up for games and apps – if you haven’t seen the CPU and GPU specs, it’s worth looking at AnandTech’s awesome comparison chart here.

The 2GB of RAM that was a stretch last year (but needed for gaming) is now baseline in the A8x. Given the state of HD and 4K televisions and 4K content and the fact that HDMI 1.4 support is more stable and broadly available in hardware, I suspect that they will introduce some kind of A8x+ or maybe even an A9x with 4-6GB of RAM so that it can drive 4K resolutions. Higher resolutions and deals with content partners to deliver 4K shows through their iTunes CDN would be a very Apple approach to TV. My suspicion is that they will also speed up this device quite a bit – plugged into a wall and with a much larger body for heat dissipation, it could clock to 1.6-1.8GHz, which would be a big benefit for games.

If the rumors are true, it will have an App Store, and so we know there will be games. Will they build a great bluetooth controller to sell alongside Apple TV for $79 like I predicted last year? Yes, I’m sticking with that prediction; I’m betting on that. But I bet you’ll be able to bring your own DualShock 3 or 4 controller from your Playstation to it as well.

I’m looking forward to WWDC this summer – really hopeful that Eddy Cue will pull the rabbit out of the hat this time.

UPDATE #1: 3/23/2015 – a few people have asked me about pricing and margins. For a rough guess at the build cost of an updated Apple TV, consider the estimated fully-loaded BOM for an iPad Air 2 via IHS. Now strip out the screen, touch-screen, sensors, battery, and many complex sensors, reduce the body build costs and pad a bit. You’ll probably find yourself at about $90-100 for a 32GB version and $110-120 for a 64GB version – healthy 35-50% margins at $149-$249.

UPDATE #2: 3/23/2015 – if you want to compare Apple products and consoles based on GPU performance (great article) that it’s also worth thinking about price.  The CPU ($100) and RAM ($85-110) in Sony’s Playstation 4 and Microsoft’s XBox One are a $190-$210 contributor to the cost of building those consoles, with an additional $20 for a high-wattage power-supply to drive them and a supporting $30-40 HDD for storage. Contrast this with Apple’s $22 CPU+GPU, $8-16 for 2-4GB of RAM, and $20-$40 for SSD storage (albeit much less storage). It’s pretty great to utterly own your IP and supply-chain.

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