The $99 Apple TV is Made of $64 Worth of Parts

[JMcEntegart]

Teardowns are a lot of fun for those of us who just love to stare at the resulting gadget porn. However, they're also pretty useful when it comes to putting a number on the cost of a device's parts.

The $99 Apple TV is Made of $64 Worth of Parts : Read more

 

[sliem]

I was expecting it to be $20.

 

[Darkerson]

Same here. Thats about what I guessed the other day in the article they did on the teardown. Guess they wont be making quite as much off them as I thought, but they wont be hurting either.

 

[thillntn]

Doesn't matter what the thing cost apple to make..many are willing to pay too much for it as always.

 

[lauxenburg]

It makes sense though. Because you can only buy directly off the Apple TV through Apple, the user will in turn keep paying Apple every time they purchase a movie or show, and thus they can charge a low(ish) price for the actual device because you are forced to pay them in the end.

 

[Pyroflea]

Generally from the teardowns I see, they price it at how much it would cost the average consumer to purchase the parts. When you think that Apple is buying these parts in the thousands and ten-thousands, the price drops significantly. I suspect that to be the case here.

 

[footsoldier]

I don't think they plan to profit from the hardware, only from streaming movies or music or rentals.

 

[Compulsive1]

This is based on published prices for parts in large quantities. I bet the price of Apple TV that Apple doesn't pay even close to the published wholesale price. More likely they beat out the suppliers for every last penny worth of discounts resulting in additional 20%, 30% or more savings depending on which part we are talking about. Capacitors and resistors are priced as low as possible because they are commodity items. But all Integrated Circuits have a wider margin of profit and thus more room for negotiation.

 

[darkwingz24]

Don't forget about the R&D costs. The final price factors those in as well so profit isn't just the discrepancy between parts cost and MSRP.

 

[eddieroolz]

I was expecting the profit margin to be in excess of 50%. Kindly surprised.

 

[orionantares]

It's worth a lot less since it's practically the same components used in 2 other production devices lines and close to the same as a 3rd.

Mass production discount ftw

 

[iamtheking123]

[citation][nom]darkwingz24[/nom]Don't forget about the R&D costs. The final price factors those in as well so profit isn't just the discrepancy between parts cost and MSRP.[/citation]

Bingo. I've worked on projects that have maybe a few hundred dollars worth of parts. But when you add in how much labor I spent meshing them and programming them: that's where tons more cost went.

 

[Darkv1]

Costs of R&D aside I am surprised to see MSRP and part cost this close to together on an Apple product. Also before anyone flames me into oblivion on charges of being anti-apple, I am typing this comment on my MBP.

 

[ares1214]

Dont worry, the cost comes later. Steve wouldnt let people pricing their products fairly slide, he'll get to the bottom of it. The cost comes with Apple TV. Its like buying a panasonic and paying panasonic everytime you change the chanel. In a way...

 

[Lunarion]

This isn't adding labor.

 

[chick0n]

This is just another rip off from Apple.

Even if the box cost 60 bux to make, that 39 bux profit is enough to cover all the shipping/rent/labor/R&D already.

anything AFTER is the money maker, cuz a lot of morons will just pay for their *cough*overpriced,outdated garbage shows*cough*. They think they're cool oooooMG its magical I can stream shows off the internet OH MY GOD !!!

 

[loomis86]

Apple should be selling that thing for a loss!

 

[shin0bi272]

oh no evil profits! how dare they?!


how to create a job by Linda Mcmahon:

"An entrepreneur takes a risk and starts a business that creates a product or service that fills a need. Then sells that good or service for more than it takes to provide it."

 

[Ragnar-Kon]

Heh... back when it first came out... I said that I MIGHT think about buying it if it cost $65. Looks like I was closer than I thought.

But why the hell does Apple need to make it so expensive? I mean, granted this still doesn't take into account things like labor costs and shipping... but even if they were, I doubt it would be $100. More like $80.

To be honest (and to my dismay), no device like this is really in position to boost this area of entertainment. Therefore, there is practically no competition for this, and Apple could place itself as a front runner when this type of device takes off. So why not attract more people by selling the device at no profit and just rely on iTunes rentals and whatnot to generate revenue?
That way when this type of device takes off in the market, Apple will already have a huge foothold.

BUT, then again, I'm no business analysis, so maybe they see something I don't.

 

[mrmez]

Yeah that pretty damn good value actually.

Parts and assembly are only a small portion as everyone knows.

R&D, distribution and advertising are also massive costs. Its kinda why a 20c hands free kit costs $20 in the shops. I wouldn't be surprised if Apple is losing money on these.

 

[kinney]

I'm a big fan of these. Best

 

[TemjinGold]

So... according to that first sentence, Jane loves staring at porn?

 

[dEAne]

It always vary. . .

 

[rantoc]

Smell like the companys console counterpart... dont cost "that much" to purchase but once you want content from its closed market you get raped!

No Thx!

 

[saturnus]

Wholesale list prices even for large quantities mean very little in this business. As a buyer from a large manufacturer like Apple could easily get between 40% and 90% on all of those parts.

Similarly to consoles though these are sold at a lower profit margin than usual because most of the profits will be on usage fees.