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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.




by MacNN Staff

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  1. Guest

    Joined: Dec 1969

    0

    Porno

    Stop the porno and g** ads

  1. Roger@MacNN

    Joined: Dec 1969

    0

    Ads

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

  1. climacs

    Joined: Dec 1969

    0

    the ads are targeted

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

  1. JohnnyFive

    Joined: Dec 1969

    0

    re: ads

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

  1. testudo

    Joined: Dec 1969

    0

    ads

    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.

  1. bjojade

    Joined: Dec 1969

    0

    Where do they get #'s?

    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.

  1. chucker

    Joined: Dec 1969

    0

    porno ad

    Is he complaining about the one from ramjet?

  1. testudo

    Joined: Dec 1969

    0

    margins

    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...

  1. bloggerblog

    Joined: Dec 1969

    0

    ATV Update

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

  1. hayesk

    Joined: Dec 1969

    0

    Re: ads

    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.

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