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New Apple TV Costs $64 to Manufacture

October 5th, 2010 10:14 admin Leave a comment Go to comments

Apple TV

Every time a new gadget is launched, folks over at iSuppli are the first to calculate the actual cost incurred by the manufacturer to source and assemble the entire hardware.

Continuing its usual tradition, they have done the same thing to Apple's newest kid on the block, the Apple TV – and the results are a wee bit surprising, should we say?

Unlike the older generation of Apple TV whose production cost was horrendously high at $237, the cost to manufacture the latest version has been bought down drastically. From $237 to $64. How does that sound?

iSuppli has detailed the prices of the core components of Apple TV. It lists the Apple A4 chip as the most expensive component inside the latest version of Apple TV. Apple's own SoC costs $16.55 and is followed by the 8 GB NAND flash memory chip that Apple has source from Toshiba. It costs a princely $14 each. This is still  way lower than the cost of the Pentium processor and the chip that were used on the previous generation Apple TV, which cost around $45 and $28 each.

iSuppli also adds that the major reason behind Apple managing to achieve such drastic cost savings was because of the inherent design of the new Apple TV. Unlike the old Apple TV, which was more of a net top computer with  an architecture similar to a small PC, the new version is more or less based on Apple's own handheld devices like the iPhone and the iPad.  In fact, you can almost call Apple TV an iPod or an iPhone 4 sans a screen. This has not only resulted in considerable cost savings, but has actually made Apple TV a ar more affordable gadget to the consumer.

Apart from these, Apple has also managed to increase the profit margins on the Apple TV, which traditionally had a lower profit margin compared to mainstream devices like the iPhone and the iPod Touch.

It is important to note here that iSuppli's Bills of Materials (BOM) estimates do not include costs arising from labor, shipping, advertising, software development or patent licensing and so the overall costs are expected to be much higher. Nevertheless, the teardown analysis provides an interesting perspective on the estimated profit margins that Apple stands to make from the sale of the new Apple TV. What are your thoughts?

[iSuppli via MacRumors

Source: New Apple TV Costs $64 to Manufacture

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