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Study: Apple TV hardware turning low margins

updated 09:20 am EST, Tue January 29, 2008

Low margin on Apple TV

Apple is currently making little to no money on each Apple TV sold, a teardown analysis suggests. The research firm iSuppli has conducted a estimate of the manufacturing costs of the new 40 and 160GB set-tops, and found that after Apple's $70 price cut, the 40GB Apple TV has a margin of just 10 percent, while the 160GB version has a more reasonable 29 percent. Apple normally has product margins closer to 50 percent, and even this does not account for secondary costs such as marketing or distribution.

iSuppli admits that its figures may not be wholly accurate, as Apple is using a custom processor for which iSuppli cannot evaluate the true dollar figure. Analyst Andrew Rassweiler comments though that he "doubts it would be anymore expensive than what we've assumed."

It is suggested that this could mark a shift in Apple strategy, focusing on revenue from content such as music and video over hardware, at least outside of the Mac realm. The difficulty for Apple here may be that again, much of the revenue from its media sales must go towards expenses, specifically profit sharing with record labels, TV networks and movie studios.

iSuppli notes that when the Apple TV originally launched last year, some of the parts were more expensive, but margins were more favorable. Approximately 21 percent was earned on the 40GB set-top, while the later 160GB model generated 31 percent.

 
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Porno

01/29, 10:06am reply

Stop the porno and g** ads

Guest

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Ads

01/29, 10:29am reply

I'm not sure what ads you're seeing, I've never seen the like in my browser.

Roger@MacNN

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the ads are targeted

01/29, 10:41am reply

to your location, usually. Are you in SF, guest? LOL

climacs

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re: ads

01/29, 10:48am reply

guest got scarred for life when he saw his mother in one of them porno ads.

JohnnyFive

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ads

01/29, 11:11am reply

Ads? WTF browser are you using? Use Firefox and get AdBlocker Plus. Or Safari and PithHelmet.

When I'm stuck on someone else's machine and try to access MacNN from there, I can't believe how annoying the site is. Amazing anyone actually can stand coming here with the ads all over the place.

But, then again, he might be just complaining about all the Windows ads that appear.

testudo

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Where do they get #'s?

01/29, 11:25am reply

Seriously. I can get some of those components in low quantities at those prices. I'm pretty sure a company as large as Apple is getting them at a significant break in price.

Is Apple making a killing on each unit? Hardly. Are they making a profit? Most likely.

bjojade

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porno ad

01/29, 11:27am reply

Is he complaining about the one from ramjet?

chucker

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margins

01/29, 11:41am reply

hey, maybe this is why the stock price is tanking. All those low margins on the AppleTVs is causing the companies bottom line to sink like a stone.

Then again, since no one knows how many AppleTVs apple sells (since they're lumped into the 'ipod accessories' segment of the financials statement), you can't imagine they're that high.

BTW, do you remember a couple of week ago when everyone was wowed that Apple execs got bonuses (more so that they didn't get stock options as their bonus). Hmmm, bet they're happy they got cash now...

testudo

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ATV Update

01/29, 11:52am reply

Steve Jobs announced that the updated ATV software should by out in two weeks. Well, it's been two weeks, where is the update??

bloggerblog

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Re: ads

01/29, 11:57am reply

A good way to make MacNN a pay site is to block all the ads. How do you think they pay the bills?

The only ads that I find that step over the line are any ad with audio, and popups. While the occasional annoying audio ad appears on MacNN (the one that says "Hellooooo" - the rest really don't bother me. I've certainly never seen a p*** ad on MacNN.

hayesk

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