Apple TV No Longer a 'Hobby,' 20M Devices Sold

NEW YORK (TheStreet) - Apple (AAPL) TV is no longer a "hobby" for CEO Tim Cook, who noted to analysts and investors on last night's earnings call that revenue from its streaming device was more than $1 billion in 2013. Apple has sold roughly 20 million of the set-top box since it launched, Cook said.

"The reason that I stripped off the hobby label is that when you look at the sales of the Apple TV box itself, and you look at a content that was bought directly off of Apple TV for 2013, that number was over $1 billion. And so, it didn't feel right to me to refer to something that's over $1 billion as a hobby," Cook said in response to an analyst's question. The chief executive had apparently made a similar comment at its February shareholder meeting. "Also from an investment point of view, we continue to make the product better and better. And so it doesn't feel right from that point of view either," he added.

Still sales of Apple TV are small when compared to iPhones and iPads. Yet as more consumers get comfortable with the notion of Internet TV, the more opportunity there is for Apple as well as its formidable competitors like Google (GOOG), Amazon (AMZN), Roku and others.

Earlier this month, Amazon launched Fire TV, its own version of a streaming media device. Amazon is selling the device for $99. Google has said that it has sold "millions" of Google Chromecast, its $35 dongle that allows users to stream content via their smartphone and tablets on their HD TV. Roku sells both a set-top box, starting at $49.99 up to $99.99, depending on the version, and recently launched a dongle to compete with Chromecast, that sells for $49.99. In January, Roku also launched its Roku TV, which will be available this fall in sizes 32-55 inches. Roku has sold approximately 8 million units in the U.S., according to a spokeswoman. 

Apple sells the Apple TV device for $99. The device allows consumers to either tap into channels such as a Beatles channel, World Wide Entertainment's (WWE) WWE Network, Netflix (NFLX), The Weather Channel, HBO GO, WatchESPN, Hulu, among others, as well as play music from their iTunes account. Apple is rumored to be launching an updated version of the Apple TV device in time for the holiday season.

Amazon's announcement on Wednesday that it inked a deal with Time Warner's (TWX) HBO to exclusively host older shows like The Sopranos, True Blood and tons of others through Amazon Prime Instant Video was a big coup for the e-retailer. Consumers will no longer have to be a subscriber of HBO to get older content. Of course HBO is not giving away the entire farm to Amazon. There was no mention its hit series, Game of Thrones, in the content deal and Prime subscribers will also have to wait for episodes of current series like Girls.)

Cook was asked how that deal would affect Apple in terms of whether other big content owners would be willing to work with streaming media outlets.

"We had HBO GO already on Apple TV and you have to authenticate in order to use it, but you have to do that with Amazon service as well from my brief read of their announcement," Cook said on the call.

"I haven't had a chance to evaluate exactly what it is and don't have a personal point of view on that yet. But if I look broadly at the content on Apple TV, I think it compares extremely favorable to the content that is on the Amazon box. We've sold now ... about 20 million of the Apple TV, and so we've got a pretty large installed base there. And I'm feeling quite good about that business and where it can go," he said.

Oppenheimer analyst Ittai Kidron wrote in a note following Apple's earnings that given the company's shareholder friendly moves last night of upping its dividend and announcement of an upcoming stock split, he's "incrementally positive on these moves and see good support for the shares until June's WWDC." But Kidron cautioned that "the onus is still on successful TAM expansion into new product areas (TV, wearables) to extend investor enthusiasm." He rates Apple at "perform."

--Written by Laurie Kulikowski in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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