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Monday, December 10, 2007, 01:00 pm PT (04:00 pm ET)

First year Apple TV sales fall below expectations

Introduced last year as the DVD player of the future, Apple Inc.'s $299 Apple TV set-top-box has thus far been anything but a hit with consumers, says one market research firm, which estimates that first year sales have fallen well short of initial expectations.

Cambridge, Mass.-based Forrester Research predicted back in May that Apple loyalists would help fuel sales of 1 million of the devices by the end the year. However, the firm is now pointing to a failed iTunes video revolution as doing its part to help stifle adoption amongst consumers.

“In addition to the 400,000 Apple TV units we estimate Apple has sold thus far, the company will be lucky to sell another 400,000 in the year-end holiday rush, short of our one million estimate,” said analyst James McQuivey. "Unfortunately, the same lack of interest in iTunes video will mean the iPhone and the iPod touch have less video momentum to ride.”

According to Forrester, nearly half of all adults with access to the Internet say they have heard of the Apple TV. However, only about 5 percent of those people familiar with the product say they've read up on it via Apple's website or took one for a spin at the company's retail stores.

In fact, Forrester claims that just 3 percent of online adults intend to purchase an Apple TV in the future — essentially the same percentage of iLife users who eventually purchase one of Apple's standalone Jam Packs for GarageBand.

In a report last week, McQuivey warned executives of the Cupertino-based company that it was in their best interest to "win NBC back" as an iTunes partner if they had any hopes of replicating their success in music with digital video.

"Don't let the Macgeeks posting angry blogs against NBC fool you," McQuivey wrote in a report last Monday following the television network's pull-out from iTunes. "The loser here is Apple, which relies on NBC Universal to deliver 30 (percent) of video download sales. Any supposed backlash against NBC will not materialize because NBC has made its content available, for free, on NBC.com and six other major portals sites."