Still, there's little guarantee that Apple TV will succeed. The company won't say how many units it has sold, only that the number is in the hundreds of thousands.
Apple TV is what McGuire refers to as an electronic "beachhead," a first-generation product that accomplishes basic goals. As did the iPod, it will evolve as Apple learns what digital consumers want. Just last week, Jobs announced that Apple TV soon would play YouTube videos.
Indeed, Apple has sacrificed margins on Apple TV to gain market share, according to researcher ISuppli Corp. of El Segundo, which estimates hardware costs based on the price of components. The firm calculates that Apple collects a 20.7% profit margin on the $299 Apple TV, meager compared to the 40% to 50% margins on iPods. As movie downloads accelerate and prices drop, ISuppli predicts, Apple could succeed where others failed and sell 1 million Apple TVs by the end of the year, then 1.4 million in 2008.
Other industry analysts suspect Apple TV will follow the path of TiVo Inc., which pioneered the digital video recorder but has struggled to compete with generic versions from cable and satellite TV providers.
"Apple TV is not a mass-market pleaser -- it's a 1-million-person pleaser," said Forrester Research analyst James McQuivey. "Beyond that 1 million, where do you go from there?"
dawn.chmielewski@ latimes.com
michelle.quinn@latimes.com
