Roku CEO: Why Tim Cook Is Wrong To Call Apple TV A “Hobby” Product

Though the device sold a record 1.4 million units last quarter, Cook has said: “We still classify this as a hobby.” Roku’s Anthony Wood, who considers Apple his main competitor, most definitely does not.

Roku CEO: Why Tim Cook Is Wrong To Call Apple TV A “Hobby” Product


In January, Apple CEO Tim Cook praised Apple TV during a company earnings call, hailing the set-top box as a product he “couldn’t live without.” At the same time, even though the device sold a record 1.4 million units in the quarter–in addition to the 3 million it sold in 2011–Cook downplayed the space’s potential and Apple TV’s future revenue in the category. “We still classify this as a hobby,” he said.

But for Roku chief exec Anthony Wood, who considers Apple his main competitor, Cook’s comments couldn’t be further from the truth. The Saratoga, California-based company did $100 million in sales in 2011, double what it did the year before. “A hobby for Apple is a huge business for many other companies,” Wood says. “Yeah, $100 million is nothing for Apple–it’s like a rounding error. They probably spend more money than that on their cafeteria. But for a new company [like us] in a new category, it’s a fast ramp that will turn into $1 billion in sales in the not-too-distant future.”

Roku has sold 2.5 million set-top boxes, compared with Apple, which has sold roughly 4.4 million. “But that’s worldwide,” Wood says, referring to Apple’s global sales figure. “We actually outsell Apple in the U.S.” And the company is expanding internationally, launching in Ireland and Britain at the beginning of this year, and seeking to raise up to $50 million to fuel growth.

Ironically, Roku believes its sales are being assisted by one unlikely player: Apple. In the same way that Dropbox and Box saw a boost from Apple’s entry into the cloud space with iCloud, Roku has seen a market boom from Apple’s entry into television. “We made the decision not to try to educate the consumer because it’s hard and expensive,” Wood says. “When the $99 Apple TV launched, our sales actually doubled because it brought more awareness to the category.”

So why does Cook still refer to Apple TV as a “hobby”? “Personally, I think they call it a hobby not cause they’re not trying–they’re putting a lot of effort into Apple TV–but because they haven’t been that successful compared to the iPhone and iPad,” Wood says. “So it’s a way for them to keep working on it but not look bad because they haven’t sold that many for the Apple world.”

Wood’s comments do jibe with Cook’s explanation for it being a “hobby” product. At a recent meeting with investors at a Goldman Sachs technology conference, Cook acknowledged that the Apple TV was “clearly ramping.” However, “the reason we call it a hobby is because we don’t want to send a message to you or our shareholders that we think that the market for it is the size of our other businesses–the size of the phone business, the size of the Mac business, the size of the iPad business or the iPod business,” Cook said. “We don’t want to send a message that the leg of that stool is of equal length as those others.”


“With Apple TV, despite the barriers,” he continued, “we’ve always thought there was something there, and that if we kept following our intuition, and kept pulling the string, that we might find something that was larger.”

Wood speculates that that “larger” business is the only reason Apple remains in the space. “My guess is their current Apple TV product is sort of a beta version for their TV–using it to improve their UI and get it ready,” he says. “The numbers on Apple TV in dollars for them are like meaningless. A real TV is quite a bit more expensive, and would actually generate revenue that would be interesting for them.”

But, he adds again, “I’m just speculating.”

[Image: Flickr user Ariel Dovas]

About the author

Austin Carr writes about design and technology for Fast Company magazine.