June 6th, 2007
Each AppleTV costs $237 to make
According to research carried out by iSuppli, each AppleTV device costs Apple $237 to manufacture, leaving a gross pre-marketing profit of $62.
This is an unusual move for Apple which usually sees a gross profit of products somewhere around the 50% mark. But there’s a subtle differences between the iPod and iPhone markets and the AppleTV market. The main difference is that the iPod and the iPhone both have/had an established market that they were entering into. With the AppleTV, it’s different. While it can’t be said that AppleTV is a totally unique concept, the market is far more embryonic and Apple feels the need to nurture growth. The low price helps accomplish this.
There are also signs that Apple cut some corners with the AppleTV. For example, the low-cost (which costs Apple $15) GeForce Go 7300 GPU is capable of delivering high-definition video, but the 40GB Fujitsu hard drive (which it is estimated costs Apple $37) won’t stretch very far. This is probably why Apple announced a 160GB “built-to-order” AppleTV last week - which is also more profitable for Apple, since the drive sets then back a mere $73 yet the 160GB model costs an extra $100.
Adrian is a technology journalist and author who has devoted over a decade to helping users get the most from technology. He also runs a popular blog called The PC Doctor. See his full profile and disclosure of his industry affiliations
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