El Segundo (CA) – There have been rumors about Apple TV not selling too well and now there is indication that the device also has a profit margin that is unusually low for Apple.

According to a teardown analysis from iSuppli, Apple has to spend about $237 to get a 40 GB Apple TV, which retails for $299, out the door. If the market research firm is right than Apple takes a profit of just over $60 for each sold Apple TV device – which translates into a margin of just over 20%. Add in marketing cost of typically 7% as well as another portion for shipping expenses - both factors are not included in the iSuppli teardown - and you have a product that may make about $30 profit per unit.

In comparison to other Apple products, this margin is surprisingly low. Especially in comparison to the 4 GB iPhone, which is expected to have a similar bill of materials of about $246, but a suggested retail price of $499 (49.3% margin), Apple isn’t exactly collecting piles of cash with the TV device. The popular iPod Nano is estimated to have a profit margin of close to 40% as a 2 GB model.  

iSuppli believes that the integrated 90 nm Pentium M Dothan processor (1 GHz) is the item with the highest cost ($40) among all hardware parts. Other pricey components are the 945G chipset for $28, the 40 GB hard drive for $37, the 802.11n card for $19 as well as the Nvidia GeForce Go 7300 graphics processor for $15.

Apple recently began offering a 160 GB hard drive upgrade for $100, which should overall boost the profitability of the device.

iSuppli estimates that Apple will be shipping about 1 million Apple TVs in 2007 and about 1.4 million units in 2008.

What a waste

Jun 07, 2007 14:40     

seems like apple, with all their marketing might, may have dropped the ball with the Apple TV. The market for TV applicances is surprisingly full. Apple simply was a few years too late with this device. Nothing innovative or special about it to seperate it from the rest of the competitors ( unlike the IPhone and Ipod, both of which have some prety revolutionary features for their respective release dates ). If Apple was smart, theyd pull the Apple TV before they have to call it a " failure ".

Mike report abuse vote down vote up Votes: +0

What about reseller commision

Jun 07, 2007 15:14     

You can't simply subtract the retail cost from the production cost to get the amount of margin that Apple makes. That math doesn't consider reseller margin, which is normally in the 10% area. This means Apple would be selling the product to resellers for about $270. Apple is just breaking even at a price of $270 considering production, marketing, and shipping.
Dan report abuse vote down vote up Votes: +0

Not Surprising

Jun 07, 2007 15:25     

Most media hub-type devices don't sell terribly well. Considering that the company has referred to this device as a "hobby", I doubt this product is a make or break venture, financially. The idea is to get content from iTMS & iPhoto onto an HD-TV in a simple, elegant way and the ATV does just that. I think there is a good amount of pent-up demand for that which will keep the sales at a good level for some time to come. Nothing compared to iPod or even their Mac sales, but enough to justify keeping the product line alive.

Cromag report abuse vote down vote up Votes: +0

There are already 100's of iTV like products

Jun 07, 2007 15:35     

and most are far better then Apple TV / iTV. Take Tivo and Amazon for instance or even the xbox 360 and pick your video store (amazon, cinemanow, movielink, etc...). Apple dropped the ball on this one. Late to market with a less superior product. Not the formula they used for iPod and iPhone. And while iPod and iPhone were not the first to market for iPod/iPhone type devices they were both superior to the other iPod/iPhone type devices.

James Jones report abuse vote down vote up Votes: +0

This is a market I would love to see mature

Jun 07, 2007 15:44     

I'm running a home-built HTPC, but since most of my capture and storage are done on a different box, and as I have other AV locations, I'd love a good streaming media server. So far all, including Apple's have glating issue. One is that $299 is still too much to pay for a box that serves HD content, and the $199 wanted for most audio-only devices is silly. Apple is also locked into iTunes pretty heavily, and I've got a lot in WMA/WMV. Give me a $200 wired/wireless HDMI-outputting 1080p box that fits well in my AV rack and runs most anything I can stream out to it and I'll but it now.

JerryL report abuse vote down vote up Votes: +0

JerryL

Jun 07, 2007 18:01     

If the XBox360 didn't cost so much it works very will with Tversity for streaming media. I haven't tried it with some of the other media extenders but Tversity will allow the extender to play just about any format! You should check it out. It really is a good little program for streaming media of all types.
Action Jackson report abuse vote down vote up Votes: +0

Apple TV fails, so Apple calls it a "hobby"

Jun 07, 2007 18:04     

D was the first time I've heard the Apple TV being called a "hobby". Sure once you realize that it was a crappy product and was failing, you then call it a hobby...
nick report abuse vote down vote up Votes: +0

Must be really bad

Jun 07, 2007 21:27     

It is so bad that not even a Apple fan-boy wrote hear to defend the apple tv on this thread...
Garry Bash report abuse vote down vote up Votes: +0

$300 for an AppleTV or...

Jun 07, 2007 22:46     

$300 for an XBox 360. Hmm.. that's a tough decision... Maybe if Apple sold these at a loss they could gain some market share, but the 360 is hard to beat for HD streaming, seeing as it also serves as a game machine, upscaling dvd player, and for ~$200 extra, an HD-DVD player.
nvalhalla report abuse vote down vote up Votes: +0

Hey, Apple TV is great!

Jun 08, 2007 07:05     

I disagree... I remember seeing some dude who managed to install MacOS X into the Apple TV, turning it into a real computer. It's probably the best deal Steve Jobs has ever came up with. I may consider buying the Apple TV for $299 and mod it to an absolute mini PC. TV? No way....PC....Hell Yeah!!! :-p
DeadManInc report abuse vote down vote up Votes: +0

don't really believe those numbers.

Jun 08, 2007 10:42     

considering how limited apple tv's abilities are, it's mind boggling to me that isuppli came to that conclusion.... i mean honestly... the unit is large, thus the hard drive in it is probably cheap.... what exactly is the expensive component in the system? i can't think of anything. you could buy a 360 and get the exact same, and often better, as it streams any media off the pc, not just itunes media, and get a gaming machine for 400$ how the hell could the apple tv be that much to produce? it couldn't, this article is bulls##t =)

harrison report abuse vote down vote up Votes: +0