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Thursday, December 31, 2009, 06:55 am PT (09:55 am ET)

Apple TV 3.0 update not helping sales as AirPort routers lose share

Though it was given a software upgrade to version 3.0 in October, Apple TV sales have remained relatively flat over the past 12 months. Similarly, sales of AirPort base stations have struggled to gain momentum due to higher-than-average price points, resulting in minor share declines.

Apple TV

Sales of Apple's wireless streaming set-top-box are up less than 10 percent in 2009 on a unit-by-unit basis, Steven Baker, vice president of industry analysis at NPD Group, told AppleInsider. But without a definitive product to compare it against, its total market share presence is unknown.

"We have a category where we put a lot of these networked content products," Baker said. "It's a bit of a stretch to say somebody is buying one product instead of another in that category."

Released in October, Apple TV 3.0 gave users a redesigned software interface and allowed users to watch iTunes Extras and iTunes LPs in full-screen in their living room. It also granted access to Genius Mixes and Internet radio.

The free-of-charge software patch was made available for all Apple TV users, but was not accompanied by a hardware refresh. In September, Apple discounted the 160GB model to $229, and discontinued the 40GB Apple TV product.

Baker said he believes the minor gains by Apple TV over the prior year are likely because sales at the end of 2008 were slow in general. In fact, most of Apple's lesser-discussed hardware products have shown unremarkable performance through 2009, with the exception of the new multi-touch Magic Mouse.

"Most of them, in terms of their overall performance, have pretty much plateaued," Baker said. "We don't see huge kind of growth numbers there."

Since its inception three years ago, Apple TV has been seen by many industry experts as a possible game-changer with broad potential. Some have even gone as far as to predict it could turn into a multi-billion dollar business should Apple equip it with a TV tuner and DVR capabilities. However, poor economic conditions intertwined with content licensing complications have seen the Cupertino-based electronics maker maintain the product largely as a side interest.

When asked last year about the "digital living room opportunity and how it relates to Apple TV," Apple Chief Executive Steve Jobs said, "well again I think the whole category is still a hobby right now. I don't think anybody has succeeded at it. And actually the experimentation has slowed down. A lot of the early companies that were trying things have faded away."

"So I have to say that given the economic conditions, given the venture capital outlook and stuff, I continue to believe that it will be a hobby in 2009," he added.

Still, Apple as early as January said it would continue to pump money and resources in its set-top box business because it expects the product segment to break free of some existing barriers down the road.

"It is clear the movie rental business is working and there are more customers who want to try it," Apple Chief Operating Officer Tim Cook told investors during a conference call. "We will continue to invest there, because we believe there is something there for us in the future."

AirPort Base Stations

Meanwhile, it's a similar story for Airport and Airport Express, both of which have been unchanged in sales or market stature, Baker said. The Airport is fifth in the market, behind Linksys, Belkin, D-Link and Netgear.

"I think the Airport is probably a little expensive compared to some of the other wireless access points that are out there," he said. "It lost a little bit of share on the overall basis over the last year or so. We've also seen the Airport Express kind of start to slow down in terms of volume."

In addition, while the Time Machine consumer network attached storage device is a market leader, it exists in a very small niche.

"Consumer NAS is a minuscule marketplace compared to external hard drives for consumers," Baker said. "So it's the big fish in a very small pond."