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iSuppli: Apple TV 2G materials cost under $64?

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By Charles Starrett

Contributing Editor
Published: Tuesday, October 5, 2010
News Categories: Apple TV

According to market research firm iSuppli, the second-generation Apple TV may have a materials cost of less than $64. Citing iSuppli’s teardown of the device, Bloomberg BusinessWeek reports that the Apple TV’s Samsung-made A4 processor is its most expensive part at $16.55, followed by the Toshiba 8GB flash memory chip, which is estimated to cost $14. The Broadcom-sourced Wi-Fi and Bluetooth chip costs $7.65, according to iSuppli’s estimate, and a Texas Instruments $0.93 microcontroller chip also contributes to the overall cost. Overall, iSuppli found that the use of components similar to those found in the company’s other iOS devices helped to bring the materials cost down to a lower percentage of the retail price than was seen in the first-generation model. “As soon as we saw the first A4 chip in the iPad, it was pretty clear to us that Apple’s plan was to use it across several devices,” said Andrew Rassweiler, the iSuppli analyst who performed the teardown. “It makes sense to control costs across the supply chain.”

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Comments

1

I’m shocked that the material cost alone is nearly 2/3 of the retail price.  When you factor in labor and other expenses, ATV is hardly a profitable product for Apple.

Either this truly is a “hobby” product for them, or perhaps they expect to generate a lot more revenue through rentals, or maybe its as simple as Apple wanting to help foster the trend towards on-demand video, with more developments yet to come if this trend takes off.

Posted by rockmyplimsoul on October 5, 2010 at 9:28 AM (PDT)

2

@rockmyplimsoul:

I figure the very non-Apple profit margin is because this is a do or die change for the “hobby”. If Apple can’t get the Apple TV into enough hands they lose their leverage with the studios that are fighting them. In the chicken and egg catch-22, without compelling content deals, they’ve got hard time convincing people to put an ATV2 in their homes.

This isn’t a “must have” device at any price, at least not now. On the other hand, with 802.11n wi-fi capability and no out and out on device storage, it’s pretty much good for the foreseeable future at doing what it does. So although it may not make much profit directly now, it is still profitable and it will do nothing but get cheaper over time, particularly if they can start to sell enough of them.

Heck, at $99, I’m sorely tempted to get one just to have a more convenient way of feeing music to speakers throughout my house. Instead of running wires, or building a PC just for music (which is then taking up space next to the stereo), or having to plug an iPod into everything, I just stick an AppleTV there and use my touch as the remote.

At any other price point Apple would actually have to be convincing us there was a real use for this thing.

Posted by Code Monkey in Midstate New York on October 5, 2010 at 1:59 PM (PDT)

3

“I’m sorely tempted to get one just to have a more convenient way of feeing music to speakers throughout my house…”

The downside to that approach is the Apple TV needs a TV connected to actually configure it, although I suppose once you’ve done that you can simply use it as an AirPlay device, and it only supports optical audio and HDMI outputs.  The Airport Express would be a more practical option for simply streaming audio throughout the house since it provides analog output and can be configured remotely.

Also, oddly the Airport Express is cheaper than the Apple TV up here in Canada—it sells for the same $99 price as in the U.S., while the Apple TV is priced at $119.

Posted by Jesse Hollington in Toronto on October 6, 2010 at 9:43 AM (PDT)

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