Apple TV Costs $63.95 to Build: iSuppli

By Nicholas Kolakowski  |  Posted 2010-10-05 Print this article Print

Apple TV costs $63.95 to build, estimates research firm iSuppli, suggesting that Apple's margins for the device has increased in its second generation.

The second-generation Apple TV costs $63.95 once materials and manufacturing are factored in, according to a new teardown study by research firm iSuppli.

The Apple TV's actual BOM (bill of materials) comes to $61.98. Samsung-produced components, including the device's A4 applications processor and DDR (double data rate) SDRAM, made up 26.7 percent of that cost, or $16.55. The device's memory section costs $14, enough to make it the second-most-expensive component, followed by the WiFi/Bluetooth module at $7.65.

The Apple TV's interface section-in iSuppli's example, represented by Analogix Semiconductor's ANX9836 HDMI transmitter and Digital Audio Interface device-costs $2.60. The power supply cost is $2.15.

"The first Apple TV was built like a net top computer. The architecture was basically a stripped down, small-form-factor desktop PC," Andrew Rassweiler, director, principal analyst and teardown services manager for iSuppli, wrote in an Oct. 5 statement. "The second-generation Apple TV is more like an iPad or iPod Touch with no display. The Apple TV's A4 processor core, Wi-Fi/Bluetooth chip and power management chip are the same building blocks used in the iPad, iPhone 4, and iPod Touch."

Outside components such as the remote control cost a total of $6.10, iSuppli estimated. Manufacturing costs add another $1.97 to the Apple TV's grand total.

"The remote appears to [be] machined from a solid piece of aluminum," Rassweiler added. "Because of this, the electronics of the device must be slid in through small holes on the side, similar to putting a ship in a bottle. It's a clever and detail-oriented piece of design that makes the remote very pricey and very unique to Apple."

With the second-generation Apple TV, the company has increased its margins over the first-generation product. Whereas the first-generation Apple TV was apparently a near-breakeven product, according to iSuppli, the second affords Apple a margin of 35 percent above its manufacturing costs and materials. "However," the firm wrote in an Oct. 5 research note, "even with this improvement, at a current retail price of $99, the second-generation Apple TV is at the bottom end of the hardware margin spectrum for Apple products."

Apple CEO Steve Jobs introduced the second-generation Apple TV Sept. 1 during a high-profile presentation in San Francisco. The device includes an HDMI connector, Ethernet and WiFi, and optical audio and USB plugs. Apple is offering streaming movie rentals for $4.99 and TV shows for 99 cents, as well as access to Netflix, YouTube, Flickr and MobileMe. It will compete against Google TV, which adds a layer of Web surfing and applications onto traditional channels. 

Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.

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