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

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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

Topics
Apple
iPhone
38 Comments Comment from the forums
  • sliem 07 October 2010 05:41
    I was expecting it to be $20.
    Reply
  • Darkerson 07 October 2010 05:45
    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.
    Reply
  • thillntn 07 October 2010 05:47
    Doesn't matter what the thing cost apple to make..many are willing to pay too much for it as always.
    Reply
  • lauxenburg 07 October 2010 05:57
    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.
    Reply
  • Pyroflea 07 October 2010 06:10
    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.
    Reply
  • footsoldier 07 October 2010 06:10
    I don't think they plan to profit from the hardware, only from streaming movies or music or rentals.
    Reply
  • Compulsive1 07 October 2010 06:17
    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.
    Reply
  • darkwingz24 07 October 2010 06:39
    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.
    Reply
  • eddieroolz 07 October 2010 06:41
    I was expecting the profit margin to be in excess of 50%. Kindly surprised.
    Reply
  • orionantares 07 October 2010 06:57
    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
    Reply