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New Apple TV's Component Cost Pegged at $64

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Businessweek reports on new data from research firm iSuppli estimating the component costs for the new Apple TV at under $64, representing a 35% margin on the new device before accounting for such expenses as research and development, software, patent royalties, marketing, and distribution.

According to the report, the most expensive component in the new Apple TV is the A4 system-on-a-chip that powers the device, clocking in at $16.55. Close behind is the 8 GB NAND flash memory chip from Toshiba at $14.00.

While the new Apple TV's 35% margin is significantly lower than the 50% or greater margin Apple frequently sees on its other iOS-based devices, it is much higher than than the 20% margin seen on the original Apple TV at its launch, although the difference in price points between the two devices ($99 new vs. $299 old) means that Apple's margin was greater on a dollar basis with the older model.

Following a price cut on the original Apple TV to $229, Apple saw its margins cut even further to an estimated 10% on the cheaper model.

Article Link: New Apple TV's Component Cost Pegged at $64
 
Article Link
https://www.macrumors.com/2010/10/05/new-apple-tvs-component-cost-pegged-at-64/
840quadra

840quadra

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It is nice that it is priced as low as it is. Kudos to Apple on keeping the cost down, and hopefully will see a high adoption rate with the device. Really hoping to have iOS applications on this in the future (supported that is).
 
Agent OrangeZ

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840quadra said:
It is nice that it is priced as low as it is. Kudos to Apple on keeping the cost down, and hopefully will see a high adoption rate with the device. Really hoping to have iOS applications on this in the future (supported that is).
Click to expand...

Simple plan... make little to no money on the device. Make money on apps and content.
 
Caliber26

Caliber26

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I freakin' LOOOOOOOOOOOOOOOOOOOOOOOOVE my new AppleTV. Love my MBP, my iPhone, all 500 of my iPods....but :apple:TV hits that special spot for me. Call me crazy, go ahead. :p
 
0098386

0098386

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So how come it costs 2.5 times that in England? $99 is not £99, Apple.

(and to counter any arguments from people who haven't compared stores - this is a lot more than the "EU tax". iPods for example aren't £=$)
 
WiiDSmoker

WiiDSmoker

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Not bad. I'm very happy and impressed with my Apple TV and at $99 it is a complete bargin. Sure it doesn't do everything, but I'm okay with that at $99.
 
I

izimzis

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Aug 2, 2010
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So they could have had an even greater profit margin if they used a 2gb nand flash chip, which is perfectly fine for the current needs of the ATV concept. But still they used a 8gb chip.

It''s a great product, but still I won't buy it mostly because i dont own a TV, but if I had one it sucks that it's only 720p and rent only.
 
Xavier

Xavier

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App's on an TV would make me buy this. Right now, I just use my iPod to watch movies on my TV. It is simple and easy. I would much rather stream them to an TV but I need more from the device to justify it.
 
C

commander.data

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Nov 10, 2006
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With the development cost of moving from Mac OS X to iOS and the continued investment needed to face increased competition from devices like Google's offering, Apple may well be just breaking even in order to maintain a presence in this market. It'll definitely be interesting to see where they go from here. Apple may still consider it a hobby, but I'm sure there will soon be investor pressure to actually make money off it.
 
Hellhammer

Hellhammer

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Wow, Apple is cutting down their profits :eek: Is Apple turning into a charity organization or what :confused: :p

Of course Apple makes the money by selling content in iTunes ;)
 
E

Eddyisgreat

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Oct 24, 2007
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1080p said:
Simple plan... make little to no money on the device. Make money on apps and content.
Click to expand...

Yup.

There must not be very much money in manufacturing these days (without volume). Looks like the cash is in content and it's delivery ("owning 'teh' pipes").
 
saving107

saving107

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Caliber26 said:
I freakin' LOOOOOOOOOOOOOOOOOOOOOOOOVE my new AppleTV. Love my MBP, my iPhone, all 500 of my iPods....but :apple:TV hits that special spot for me. Call me crazy, go ahead. :p
Click to expand...

Your crazy, but I also like the new Apple TV (just like the original iPhone, I am hopeful of what it will become)
 
OllyW

OllyW

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Dagless said:
So how come it costs 2.5 times that in England? $99 is not £99, Apple.

(and to counter any arguments from people who haven't compared stores - this is a lot more than the "EU tax". iPods for example aren't £=$)
Click to expand...

We are kindly subsidising the low price for the American market. :D
 
K

knightfolk

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Oct 5, 2010
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Dagless said:
So how come it costs 2.5 times that in England? $99 is not £99, Apple.

(and to counter any arguments from people who haven't compared stores - this is a lot more than the "EU tax". iPods for example aren't £=$)
Click to expand...

It's to pay back all the money he has given the Beatles over the years. :)
 
nwcs

nwcs

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Dagless said:
So how come it costs 2.5 times that in England? $99 is not £99, Apple.
Click to expand...
No way to know for sure but I imagine other things come into play such as the cost of consumer protection laws. In the US some of the cost is basically insurance against returns and warranty repairs. I imagine that's true elsewhere. The conditions/terms, though, are likely to be different. Probably some of it is just simply demand. Do they expect to sell enough to justify building distribution channels in a particular market? And I know from other countries that government "taxes" play a role -- whether import tariffs or bribes the govt requires to play ball.

Then again, it could just be that they look at each market and try to price it to maximum profit.
 
panoz7

panoz7

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Nov 21, 2005
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Dagless said:
So how come it costs 2.5 times that in England? $99 is not £99, Apple.
Click to expand...

You mean 1.5, right? Not that 1.5 times doesn't suck but at least it isn't more than twice as expensive.

EDIT: Once you subtract out VAT it costs $134, so really it's closer to 1.3 times more.
 
M

MadCow42

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Jan 16, 2008
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How responsive is the new AppleTV?

I have two of the original type AppleTV's, and the thing I hate the most is how unresponsive the UI can be at times. It can take 30 seconds to respond to a click on the remote. I'm not sure if that's because I'm syncing to my iTunes and I have a HUGE media library there, or if it's just overtaxing the processor (I'm hooked up on GigE, not wireless, so that shouldn't be the issue).

I'd replace them just for a better UI... and Netflix is a nice bonus.

Reviews or comparisons anyone?
 
Mike Oxard

Mike Oxard

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Oct 22, 2009
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panoz7 said:
You mean 1.5, right? Not that 1.5 times doesn't suck but at least it isn't more than twice as expensive.
Click to expand...

Yeah, it's been set to a price point, not a direct conversion. We don't pay the same for other apple products, but then they are in different market areas I suppose.

The silly thing is that it's us early adopters that'll rave about it and get everyone else to buy them, we should get a huge discount, then they should put the price up in six months ;)
 
Small White Car

Small White Car

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Aug 29, 2006
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Ok, so does anyone know for sure that it plays any video you have in iTunes?

The Apple website, obviously, isn't going to brag about the fact that you can stream ripped-DVDs to it. My old Apple TV does that, does the new one? I'd assumed so, but I just realized I haven't seen that confirmed anywhere. (The Apple site only mentions movies you buy from iTunes, of course.)
 
OllyW

OllyW

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nwcs said:
No way to know for sure but I imagine other things come into play such as the cost of consumer protection laws. In the US some of the cost is basically insurance against returns and warranty repairs. I imagine that's true elsewhere. The conditions/terms, though, are likely to be different. Probably some of it is just simply demand. Do they expect to sell enough to justify building distribution channels in a particular market? And I know from other countries that government "taxes" play a role -- whether import tariffs or bribes the govt requires to play ball.

Then again, it could just be that they look at each market and try to price it to maximum profit.
Click to expand...

Apple UK have stated that the UK price includes approximately £23 VAT, duty, and levies. This puts the pre-tax price at £76 which is $120 at today's exchange rate.

This chart shows how high the mark-up is compared to other Apple products in the UK.

I think your maximum profit guess is the closest. :D

apple-pricing-comparison2.png


http://www.tuaw.com/2010/09/01/why-is-the-apple-tv-so-expensive-in-europe/
 
iSee

iSee

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Oct 25, 2004
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That's a really low margin on a new device.
As if it wasn't already obvious, Apple is pricing this very aggressively.
It makes me more conviced than ever that Apple will be rolling out an App store for this sooner rather than later: the way they're going to make money on this is through apps.

I'm starting to think Apple will have a channel stores for the ATV: a store where you subscribe -- for a monthly fee usually -- to a content channel. Fits the TV. I'm kind of guessing that it will be a pretty closed store where you have to do a revenue sharing deal with apple to even get listed. (That's the only way I see the money side of this making sense for Apple.)

Hopefully, if they do this, it is in addition to, not instead of, a "traditional" app store. Obviously a regular app store would make a lot more sense for things like games.

You never know with Apple, though. If they want to be real bastards, thay'll make it so a content provider has to make a revenue sharing deal with Apple to connect to the interent at all (even if you don't charge users but make money off of ads).
 
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