Apple seeing slim profit on Apple TV

The Apple TV costs the company $237 to produce, BusinessWeek reports. Research firm iSuppli took the set-top box apart, and estimated the cost of components such as the Intel Pentium M variant ($40), accompanying Intel chipset ($28), 40GB hard drive ($37), and GeForce Go graphics chip ($15). The total of all the components ($237) leaves Apple a gross profit of $62, or around 20%, before marketing costs — a rarity for the company, which is known for its large gross margins.

“This is certainly a departure for Apple, or at least it’s approaching a departure,” says Andrew Rassweiler, analyst with iSuppli. “We made some very aggressive assumptions with this device, and by that I mean we assumed low prices on the components.” According to iSuppli, the 160GB model now being offered for $399, a $100 premium over the 40GB version, boosts the profit margin to more than 30%, due to the comparatively small $36 difference between Apple’s cost on the drives.

Latest News