Apple TV Costs $63.95 to Build: iSuppli

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.