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

By - Source: Tom's Hardware US | B 38 comments

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.

iFixit usually has our back when it comes to pictures of gadgets in their birthday suits and instructions on how to tear things apart. However, iSupply uses its teardown for something else: estimating the total cost of manufacturing the device. On the chopping block is the new Apple TV, which the company has wasted no time in disassembling and pricing.

The market research team estimates the total cost of an Apple TV box to be $61.98, or $63.95 when additional manufacturing costs are added in. The most expensive part of the device is the A4 processor, which rings in at $16.55. In second is the 8GB of flash storage, which costs exactly $14, and in third place is the WiFi and Bluetooth module at $7.65.

Though the cost of manufacturing the original Apple TV is unknown, the cost of the second generation Apple TV is said to leave more room for profit. Andrew Rassweiler, an iSuppli analyst, told Business Week the cost of materials for the original device were closer to the retail price.

Read more on about the teardown on iSupply.

Source: iSupply via Business Week

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  • 16 Hide
    footsoldier , October 6, 2010 11:10 PM
    I don't think they plan to profit from the hardware, only from streaming movies or music or rentals.
  • 12 Hide
    sliem , October 6, 2010 10:41 PM
    I was expecting it to be $20.
  • 11 Hide
    lauxenburg , October 6, 2010 10:57 PM
    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.
Other Comments
  • 12 Hide
    sliem , October 6, 2010 10:41 PM
    I was expecting it to be $20.
  • 8 Hide
    Darkerson , October 6, 2010 10:45 PM
    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.
  • 0 Hide
    thillntn , October 6, 2010 10:47 PM
    Doesn't matter what the thing cost apple to make..many are willing to pay too much for it as always.
  • 11 Hide
    lauxenburg , October 6, 2010 10:57 PM
    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.
  • 3 Hide
    Pyroflea , October 6, 2010 11:10 PM
    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.
  • 16 Hide
    footsoldier , October 6, 2010 11:10 PM
    I don't think they plan to profit from the hardware, only from streaming movies or music or rentals.
  • -1 Hide
    Compulsive1 , October 6, 2010 11:17 PM
    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.
  • 5 Hide
    darkwingz24 , October 6, 2010 11:39 PM
    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.
  • -2 Hide
    eddieroolz , October 6, 2010 11:41 PM
    I was expecting the profit margin to be in excess of 50%. Kindly surprised.
  • 1 Hide
    orionantares , October 6, 2010 11:57 PM
    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
  • 3 Hide
    iamtheking123 , October 7, 2010 12:01 AM
    darkwingz24Don'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.


    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.
  • 2 Hide
    Darkv1 , October 7, 2010 12:09 AM
    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.
  • -1 Hide
    ares1214 , October 7, 2010 12:09 AM
    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...
  • 0 Hide
    Lunarion , October 7, 2010 12:11 AM
    This isn't adding labor.
  • -6 Hide
    chick0n , October 7, 2010 12:20 AM
    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 !!!
  • -3 Hide
    loomis86 , October 7, 2010 1:08 AM
    Apple should be selling that thing for a loss!
  • 4 Hide
    shin0bi272 , October 7, 2010 1:13 AM
    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."
  • -5 Hide
    Ragnar-Kon , October 7, 2010 1:28 AM
    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.
  • 3 Hide
    mrmez , October 7, 2010 2:39 AM
    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.
  • 0 Hide
    kinney , October 7, 2010 2:59 AM
    I'm a big fan of these. Best
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