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Costliest of Apple TV's $62 in components is $17 A4 processor

post #1 of 27
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The new, low-priced Apple TV has an estimated component cost of $61.98, and manufacturing reportedly adds about two more dollars to the total expenses.

iSuppli on Tuesday published the results of its Apple TV teardown, which found a total preliminary estimated production cost of $63.95. That price includes the cost of additional item boxes with the product, the research firm said.

The most expensive component was estimated to be the custom-built A4 processor, which sports 256MB of RAM. The Samsung-manufactured chip has an estimated cost of $16.55.

The Toshiba-supplied 8GB of internal memory is the second costliest component of the set top box, with an estimated cost of $14. And the Wi-Fi module, which includes a deactivated Bluetooth chip, is another $7.65.

"The first Apple TV was built like a net top computer. The architecture was basically a stripped down, small-form-factor desktop PC," said Andrew Rassweiler, director, principal analyst and teardown services manager, for iSuppli. "The second generation Apple TV is more like an iPad or iPod Touch with no display. The Apple TVs A4 processor core, Wi-Fi/Bluetooth chip and power management chip are the same building blocks used in the, iPad, iPhone 4 and iPod Touch."

Though the device sells for a low $99 price point, iSuppli's findings suggest that Apple has about a 35 percent margin on each device it sells. The company also highlighted the remote control included in the package as the "Cadillac of remotes."

"The Apple TV's remote control represents more incredible mechanical engineering from Apple," Rassweiler said. "The remote appears to machined from a solid piece of aluminum. Because of this, the electronics of the device must be slid in through small holes on the side, similar to putting a ship in a bottle. Its a clever and a detail-oriented piece of design that makes the remote very pricey and very unique to Apple."



The remote and other items boxed with the new Apple TV are said to cost a total of $6.10, or 9.8 percent of the build of materials cost.

iSuppli also said that it believes about 6GB of the onboard storage is available for caching streaming media. The remaining 2GB is believed to be reserved for the operating system.
post #2 of 27
Can't accuse Apple of over pricing it then. I still wonder why Apple don't adopt an optional HULU type model for TV at least. I don't mind a few ads in a TV show.
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post #3 of 27
Quote:
Originally Posted by AppleInsider View Post

the Wi-Fi module, which includes a deactivated Bluetooth chip, is another $7.65.

Deactivated? I wonder if it can be activated through firmware. Anybody know?
post #4 of 27
Them's good eatin'!

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post #5 of 27
Quote:
Originally Posted by quinney View Post

Deactivated? I wonder if it can be activated through firmware. Anybody know?

i'd like to think so.
post #6 of 27
All they do is guess prices then accuse Apple of overcharging... its called profit!!!
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post #7 of 27
Quote:
Originally Posted by digitalclips View Post

Can't accuse Apple of over pricing it then. I still wonder why Apple don't adopt an optional HULU type model for TV at least. I don't mind a few ads in a TV show.

Hulu had to get licenses from the other networks, and being an NBC arm that was then sticking it to Apple by removing their content from the iTS (which may have all been part of their tactic to get full network support) its possible that Apple tried to get Hulu for the device and they said no.


Some things to consider from Hulus PoV:

For starters, when for the other iOS devices you have to use Hulu Plus at $10 per month and still with commercials to use the service. Sure, there are some benefits over the web-based service and its still a lot cheaper than paying for cable/sat if that works for your needs, but its still a charge for an ad supported service.

Secondly, when the Nexus One got Android 2.2 Froyo and Flash 10.1 Beta, Hulu wasnt happy about the ability to watch those shows on a handheld device, even though the ads were intact. Maybe this has to do with licensing, trying to prevent their affiliates from a potential lawsuit or that they wont get paid if the ads arent watched in a particular way. Maybe they really dont want the service to grow to handheld devices unless they can get a per month fee because they see it as a cash cow. I dont know, but they surely have a reason for limiting the service so its possible Apple tried and failed.
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post #8 of 27
Quote:
Originally Posted by Caboose View Post

All they do is guess prices then accuse Apple of overcharging... its called profit!!!

Where did they accuse Apple of overcharging? Was it in the original story? I didn't see any thing in the AI story like that. In fact, ISTM that the cost of goods for this product, as a percentage of MSRP, is higher than Apple's average.

Who is accusing Apple of overcharging?
post #9 of 27
Quote:
Originally Posted by Caboose View Post

All they do is guess prices then accuse Apple of overcharging... its called profit!!!

Thats ⅔ in component cost estimates, with engineering, assembly, packaging, testing, etc. Its hard to see how Apple can make more money on this device than it did with the previous model when it was new unless it sells a lot more volume.
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post #10 of 27
Quote:
Originally Posted by solipsism View Post

Hulu had to get licenses from the other networks, and being an NBC arm that was then sticking it to Apple by removing their content from the iTS (which may have all been part of their tactic to get full network support) it’s possible that Apple tried to get Hulu for the device and they said no.


Some things to consider from Hulu’s PoV:

For starters, when for the other iOS devices you have to use Hulu Plus at $10 per month and still with commercials to use the service. Sure, there are some benefits over the web-based service and it’s still a lot cheaper than paying for cable/sat if that works for your needs, but it’s still a charge for an ad supported service.

Secondly, when the Nexus One got Android 2.2 “Froyo” and Flash 10.1 Beta, Hulu wasn’t happy about the ability to watch those shows on a handheld device, even though the ads were intact. Maybe this has to do with licensing, trying to prevent their affiliates from a potential lawsuit or that they won’t get paid if the ads aren’t watched in a particular way. Maybe they really don’t want the service to grow to handheld devices unless they can get a per month fee because they see it as a cash cow. I don’t know, but they surely have a reason for limiting the service so it’s possible Apple tried and failed.

Thanks for the info. I asked as I just Boxee'd my original ATV since there will be no more updates for it from Apple and I must say it's pretty good. My HD TV is a bit too large for it to look all that good but hey ... it is free. It is excellent on my 15" MBP though.

I am moving soon and considering just having FiOS internet, no TV and no land line .. transferring number to buddy iPhone. So I am going to test the theory we don't need cable/ or FiOS TV!
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post #11 of 27
Quote:
Originally Posted by appl View Post

Where did they accuse Apple of overcharging? Was it in the original story? I didn't see any thing in the AI story like that. In fact, ISTM that the cost of goods for this product, as a percentage of MSRP, is higher than Apple's average.

Who is accusing Apple of overcharging?

Lordy... keep hanging around, son.

So, the A4 costs a fraction of the intel in the previous model and is much more powerful? Win!!!

Smart move by the boys in Cupertino.
post #12 of 27
Quote:
Originally Posted by digitalclips View Post

Thanks for the info. I asked as I just Boxee'd my original ATV since there will be no more updates for it from Apple and I must say it's pretty good. My HD TV is a bit too large for it to look all that good but hey ... it is free. It is excellent on my 15" MBP though.

I am moving soon and considering just having FiOS internet, no TV and no land line .. transferring number to buddy iPhone. So I am going to test the theory we don't need cable/ or FiOS TV!

Oh yeah, Boxee added Hulu support too and Hulu changed their backend to keep it from working. Im not if they were able to beat Hulu or not, but its moot point with the new AppleTV as it did its job by installing Flash on the old one, which is just Mac OS X Tiger with anew UI, as you know.


Quote:
Originally Posted by Postulant View Post

Lordy... keep hanging around, son.

So, the A4 costs a fraction of the intel in the previous model and is much more powerful? Win!!!

Smart move by the boys in Cupertino.

For two years on this site Ive been told I was crazy to think the next AppleTV hardware would be ARM-based and run iOS, then iPhone OS and before that OS X iPhone. Not by everyone but enough people that I had to rethink my position on it more than once because so many disagreed with what I thought was mostly likely.

Now, I didnt expect it to be $99. I figured $150, but I was also thinking of a more Apple-like profit margin and the Imagination 1080p HiP H.264 decoder chip.
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post #13 of 27
Quote:
Originally Posted by solipsism View Post




For two years on this site I’ve been told I was crazy to think the next AppleTV hardware would be ARM-based and run iOS, then iPhone OS and before that OS X iPhone. Not by everyone but enough people that I had to rethink my position on it more than once because so many disagreed with what I thought was mostly likely.

Now, I didn’t expect it to be $99. I figured $150, but I was also thinking of a more Apple-like profit margin and the Imagination 1080p HiP H.264 decoder chip.

Yeah, you were spot on...

Did you realize that the Intel chip alone cost more than it cost to build the entire new ATV? It's easy to see why Apple designs its own chips. Not to mention the A4 runs circles around the Intel chip.
post #14 of 27
Quote:
Originally Posted by solipsism View Post

That’s ⅔ in component cost estimates, with engineering, assembly, packaging, testing, etc. It’s hard to see how Apple can make more money on this device than it did with the previous model when it was new unless it sells a lot more volume.

That's the first thing I thought also. iSupply is typically off by about 20-30% on their estimates in that they take generic prices, and don't include labour, assembly costs etc. For the difference between iSupply's BoG and the retail to be only 30% means that the real margin is much smaller and Apple is taking a hit on this product and possibly is even selling it at what amounts to cost.
post #15 of 27
I think the most impressive part is that Apple decides to ship it with a 100~240 power supply.
post #16 of 27
Quote:
Originally Posted by Postulant View Post

Yeah, you were spot on...

Did you realize that the Intel chip alone cost more than it cost to build the entire new ATV? It's easy to see why Apple designs its own chips. Not to mention the A4 runs circles around the Intel chip.

I know it was a unique chip that was woefully out of date but I didnt know the estimated cost of the chip.

For running iOS the A4 I would expect the system to be more responsive, which is probably why they couldnt upgrade the OS past Tiger. I test the UI on the new AppleTV in the store and certainly seems faster, but I think there are HW aspects of the A4 that are still slower than the Pentium M used in the old AppleTV. But thats a non-issue, as its the end result that matters and this is a win for the consumer.

My only issues with the new AppleTV are the inability to buy content on the device itself. Having to buy a TV show or movie on a PC running iTunes and then stream it to the AppleTV seems un-Apple to me. The lack of TV show rentals sucks, too, but that is the networks decision, not Apples
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post #17 of 27
Quote:
Originally Posted by solipsism View Post

Thats ⅔ in component cost estimates, with engineering, assembly, packaging, testing, etc. Its hard to see how Apple can make more money on this device than it did with the previous model when it was new unless it sells a lot more volume.

Forget "more money", think "any money". I don't think Apple has EVER sold any product with such a small profit margin. Even if they sell a bundle, it likely won't even make a bump in earnings. It really is a hobby after all...

That, or they are really trying to preempt Google's ambitions.
post #18 of 27
Quote:
Originally Posted by Prof. Peabody View Post

That's the first thing I thought also. iSupply is typically off by about 20-30% on their estimates in that they take generic prices, and don't include labour, assembly costs etc. For the difference between iSupply's BoG and the retail to be only 30% means that the real margin is much smaller and Apple is taking a hit on this product and possibly is even selling it at what amounts to cost.

iSuppli may be figuring too much right now with the cost of most of the components. Apple uses the A4 PoP/SoC for the iPod Touch, iPad, and iPhone. I think the iPhones is the only one of those with 512MB RAM. Still, its possible that economy of scale could lower those component costs quite a bit.

From a HW engineering perspective it doesnt seem as cramped as, well, every other device they make, but it really doesnt need to be. This would help keep costs down by lowering micro-engineering. From a SW engineering they are using iOS 4.0 or later (as noted by the Darwin kernel build, and since this runs on that HW already there really isnt much to alter outside the UI, which may be a pretty easy post since BackRow was built in Cocoa for the other branch of OS X. It may have needed a complete rewrite, but looking at the way it looks and the fact it was on such a slow Pentitum before it looks more like a direct port to me. (all speculation, please correct or add where necessary).
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post #19 of 27
Quote:
Originally Posted by foobar View Post

Forget "more money", think "any money". I don't think Apple has EVER sold any product with such a small profit margin. Even if they sell a bundle, it likely won't even make a bump in earnings. It really is a hobby after all...

That, or they are really trying to preempt Google's ambitions.

Two things I know in my heart:

1) Apple couldnt let the living room go even if they didnt have a solid product for it.

2) Apple will not sell a loss leader.

I hope that App Store and SDK gets demoed in January, thought that seems doubtful to me.


PS: Apple will put all iDevices running iOS back on the same release schedule come November. Do you think they will do the same for the new iOS-based AppleTV, or keep is separate since its not using CocoaTouch and therefore not an issue?
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post #20 of 27
Quote:
Originally Posted by solipsism View Post


My only issues with the new AppleTV are the inability to buy content on the device itself. Having to buy a TV show or movie on a PC running iTunes and then stream it to the AppleTV seems un-Apple to me. The lack of TV show rentals sucks, too, but that is the networks decision, not Apples

So far it hasn't been an issue, but in my mind I'm just worried about tying up bandwidth - I have 30 mb, so it's an unnecessary concern of mine.

As far as the networks, right now there are only 9 networks excluding Netfix and what's available through AirPlay. Airplay really makes it a non-issue, though. With Hulu Plus and Netfix, I have more content than I can handle.
post #21 of 27
Quote:
Originally Posted by Prof. Peabody View Post

That's the first thing I thought also. iSupply is typically off by about 20-30% on their estimates in that they take generic prices, and don't include labour, assembly costs etc. For the difference between iSupply's BoG and the retail to be only 30% means that the real margin is much smaller and Apple is taking a hit on this product and possibly is even selling it at what amounts to cost.

Actually, iSuppli assigns a separate assembly/manufacturing cost.
post #22 of 27
How are the prices estimated? If the A-4 "costs" $17, are the analysts sure that Apple has to pay that much for it? Wouldn't a contract of such volume be likely to mean a lower price than is typical for these parts?
post #23 of 27
Quote:
Originally Posted by cvaldes1831 View Post

Actually, iSuppli assigns a separate assembly/manufacturing cost.

Besides being an estimate that could be woefully off base, it’s still not close to all the costs areas associated with a physical product.


Quote:
Originally Posted by iedsri View Post

How are the prices estimated? If the A-4 "costs" $17, are the analysts sure that Apple has to pay that much for it? Wouldn't a contract of such volume be likely to mean a lower price than is typical for these parts?

As a general rule the increased usage of this PoP/SoC will help lower the overall costs in al areas of this chip, from engineering, testing, purchase orders, etc., but remember,that the A4 is Apple’s own ‘tweaked’ version of the Samsung’s “Hummingbird” S5PC110A01 SoC so it’s hard to say how much Apple has invested into eking out slightly better performance and power efficiency from this chip for their package and OS over the standard build cost.


PS: Also note that not all chips are the same — even if they have the exact same design and model numbers — and it’s been rumoured before that Apple buys chips, that have slightly better performance to power rating within the designed variance. If true, this would mean that Apple would pay more for these chips than if they went with the less optimal one.
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post #24 of 27
It may have been said previously..but I think Apple is positioning the ATV for some major software enhancements. Apps/SDK, games, etc.

The fact that the new ATV is solely reliant on streaming makes me think Apple has major expansion plans!

ATV's photo slideshow with background music when viewed on a large Flat Screen TV is worth the price of admission.

Coupled now with NetFlix...instant viewing, it is a definite winner. Does it replace your cable box?
No, mainly because of the absence of sports.

Does it replace BlockBuster? Yep!

Does it replace RedBox? Renting from Apple at $5.00 a pop is convenient, but too expensive. I have had a lot of DVD's from RedBox skip b/c of scratches. Really annoying.


But, again, NetFlix is a winner for $10/mo.

Best!
post #25 of 27
Quote:
Originally Posted by solipsism View Post

Besides being an estimate that could be woefully off base, it’s still not close to all the costs areas associated with a physical product.

Of course not. No one but Apple will know the exact costs for their devices. That said, assuming iSuppli consistently uses the same "flawed" methodology, the numbers should be pertinent relative to other iSuppli BOM estimates. iSuppli has never claimed that they were predicting COGS. They only say that it's an estimated parts cost + manufacturing.

iSuppli usually states that their estimates do not cover a number of costs (licensing, packaging, distribution, etc.).

Regarding assembly costs, they do a full teardown of these devices. If they are credible supply analysts, they should be able to extrapolate the estimated manufacturing cost, maybe not to the penny, but certainly within a reasonable figure.

If you want to refute the credibility of their entire organization and every BOM analysis they've ever done, well, that's a separate topic beyond the scope of this discussion.

Personally, I'm fine looking at their numbers and taking them with a large grain of salt (whose size is proportional to the BOM figure).

post #26 of 27
A 1/3 markup is unusually low, especially factoring it doesn't account for R&D. AAPL clearly intends sell it to the masses. I bought ATV 2 and love it! Already cut $18 mo from my TW cable bill including my new $9 Netflix account.

Jobs got this right and Google got it ass backwards! I don't wan't to turn my 46" Samsung into yet another ubiquitous computer device. I saw the Google TV promo and laughed my ass off! Very Ballmer-esque!
post #27 of 27
Quote:
Originally Posted by solipsism View Post

For two years on this site I’ve been told I was crazy to think the next AppleTV hardware would be ARM-based and run iOS, then iPhone OS and before that OS X iPhone. Not by everyone but enough people that I had to rethink my position on it more than once because so many disagreed with what I thought was mostly likely.

Now, I didn’t expect it to be $99. I figured $150, but I was also thinking of a more Apple-like profit margin and the Imagination 1080p HiP H.264 decoder chip.

I said this exact thing on Gizmodo about 18 months ago, and on Arstechnica even longer ago - in fact I think the reason Apple are insisting on CUDA capable GPUs in every portable Mac is because they will start to move consumer Macs towards iOS.

Do not overrate what you have received, nor envy others.
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Do not overrate what you have received, nor envy others.
15" Matte MacBook Pro: 2.66Ghz i7, 8GB RAM, GT330m 512MB, 512GB SSD

iPhone 5 Black 32GB

iPad 3rd Generation, 32GB

Mac Mini Core2Duo 2.26ghz,...

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