Apple TV's biggest competitor is Roku, a small set top box that similarly streams content from various providers. The company is taking its concept to the next level with Roku TV, television sets that actually integrate Roku technology inside. TV makers TCL and Hisense are the first two manufacturers with models to show at this week's Consumer Electronics Show (CES) in Las Vegas.
Roku is offering the Roku TV license to other manufacturers; they provide a reference design platform and a software stack to enable TV makers to integrate Roku's technology directly into the set. Roku TV provides an unified home screen on the TV that enables users to watch content including movies and TV shows, or listen to music. What's more, the interface can be controlled either using a standard remote or with a downloadable app for iOS and Android.
In principle, Roku TV works the same way as the streaming player - televisions equipped with the technology will have access to the "Roku Channel Store," which sports north of 1,200 channels - movies, TV shows, live sports, music, kids programming, news, foreign language content and more. Roku TVs will be able to be updated with new content as it comes online, as well.
While Apple has the lion's share of the streaming box market in the United States, Roku has continued to plug away with new models of its own devices year in and year out, reaching segments of the market Apple doesn't, such as older analog TV sets. And as you can tell from the number of channels, Roku's established a huge number of content deals that Apple hasn't matched with the Apple TV...yet. Despite that, the Apple TV remains the dominant streaming player in the United States - analysts attribute this to the Apple TV's synergy with other Apple products like the iPad, iPhone and Mac.
Roku's move will undoubtedly get analysts' chins wagging again about Apple's future plans for the television market. While Apple CEO Tim Cook has called TV an "area of intense interest," Apple has only iteratively updated the Apple TV since its last major release in March of 2012. The company has brought online a handful of new channels, but the Apple TV remains a low-cost streaming box that works with a television via an HDMI connection, rather than a full-blown television set as some analysts like Gene Munster have long predicted.
TCL and Hisense are both unknown brands in the North American market, but Roku says they have aggressive expansion plans for 2014, so I wouldn't be surprised to see these sets in stores soon. "Smart TVs" with integration for Netflix, Amazon Video on Demand and other services are nothing new - Samsung and other companies have produced them for years, but so far consumer response to them has been pretty tepid. Most consumers are content to just use their TVs as dumb terminals for their cable boxes, game consoles and Apple TVs. It remains to be seen if Roku and its manufacturing partners will really be able to articulate and execute an effective marketing strategy to help build awareness of Roku TV with American consumers.
Roku's licensing model is an interesting way to embed itself into the TV market without having to offer its own branded product. As the TV market has become more and more price driven, that's put the balance of power in favor of large manufacturers who can manage economy of scale more effectively than a niche player. Having said that, licensing core technology for use in other manufacturer's devices isn't really in Apple's DNA, so I'd be very surprised to see Apple do anything similar.
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