Each AppleTV costs $237 to make

Each AppleTV costs $237 to make

Summary: According to research carried out by iSuppli, each AppleTV device costs Apple $237 to manufacture, leaving a gross pre-marketing profit of $62.


According to research carried out by iSuppli, each AppleTV device costs Apple $237 to manufacture, leaving a gross pre-marketing profit of $62.

AppleTVThis is an unusual move for Apple which usually sees a gross profit of products somewhere around the 50% mark.  But there's a subtle differences between the iPod and iPhone markets and the AppleTV market.  The main difference is that the iPod and the iPhone both have/had an established market that they were entering into.  With the AppleTV, it's different.  While it can't be said that AppleTV is a totally unique concept, the market is far more embryonic and Apple feels the need to nurture growth.  The low price helps accomplish this.

There are also signs that Apple cut some corners with the AppleTV.  For example, the low-cost (which costs Apple $15) GeForce Go 7300 GPU is capable of delivering high-definition video, but the 40GB Fujitsu hard drive (which it is estimated costs Apple $37) won't stretch very far.  This is probably why Apple announced a 160GB "built-to-order" AppleTV last week - which is also more profitable for Apple, since the drive sets then back a mere $73 yet the 160GB model costs an extra $100.

Topic: Apple

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  • I hate these analyses

    As they always fail to account for things like R&D and marketing (not to mention sales and distribution).
    tic swayback
    • If you notice tic...

      It's pre-marketing. :)
      • Which is why it's meaningless

        If the company spends 25 cents to manufacture all the boxes, then spends $10 billion on buying Super Bowl ads, that 25 cent figure doesn't really tell you much about margins or profitability.
        tic swayback
  • Costs are interesting to know...

    The estimated costs are interesting to know but one point I don't think we should forget is that the Apple TV isn't selling in the same quantities as the iPods. That scale alone would net Apple greater profit margins.

    The selling price is set by looking at the market and evaluating the price at which most consumers are likely to purchase. There's a bell curve model that is played with to figure out what price yields the best combination of market share and profit. Price a product or service low to capture market share (without destroying the perceived value) or price it higher to maximize profit without being seem as a super premium item and losing market share.

    Basically, price it at what the market will bear given your overall intentions for the item and the category.

    Stan Timek

  • The Apple TV is a gamble. . .

    That requires a lower price tag. This device is competing against better
    established items like the xBox 360, but leverages the iTunes brand, so it has a
    decent chance. If it can get into the casual gamer market (something microsoft is
    doing really well at the moment), which seems to be in process, that would help a
    lot, but right now, it's a hard case to sell against HD and BlueRay devices or video
    game systems, so they offer it as low-cost as they can.

    Now, if Apple would license their iTunes software to Sony, that would be just too
    awesome. A PS3 that had access to my iTunes library would be just about my
    perfect video appliance, but alas, it will never happen.