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Roku CEO speculates Apple loses money on $99 Apple TV, analyst says it's break-even - Page 2

post #41 of 111
Quote:
Originally Posted by SolipsismX View Post

I don't think the margins are as high as other Apple products but I would be surprised if Apple isn't making a nice profit on each sale.

If I'm not mistaken it's using a dual-core SoC that has one of the cores disabled, which is likely the result of the dual-core chip not being good enough for t's primary usage in an iDevice. This means those Apple TV chips are essentially free for Apple since they would have otherwise been junk.

You're mistaken. The 2013 AppleTV has special single core CPU, single GPU version of the A5 SoC. It's the thrird SoC since the first black puck version came out.

It originally was an A4 SoC, then a 32 nm A5 with one of cores fused off or they cherry picked failed A5 SoCs that were going to go in the iPod touch or iPad mini 1st gen. The 2013 AppleTV has a special 32 nm A5 that is half the size of the prior 32 nm A5.

There's no way they do that without getting rid of CPU/GPU cores, and maybe even one of the memory busses.

15% margins are low margins for Apple. 1wink.gif
post #42 of 111
I like how everyone is trying so hard to make money on their set-top boxes, and Apple considers it a hobby.
post #43 of 111
Quote:
Originally Posted by iaeen View Post

So what does that say about Roku, whose prices are generally lower than the Apple TV?

That was my first thought too ... so the Roku is either a piece of cheap crap, or they lose more money than Apple ... which is it I wonder?
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Been using Apple since Apple ][ - Long on AAPL so biased
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post #44 of 111
Quote:
Originally Posted by THT View Post

You're mistaken. The 2013 AppleTV has special single core CPU, single GPU version of the A5 SoC. It's the thrird SoC since the first black puck version came out.

It originally was an A4 SoC, then a 32 nm A5 with one of cores fused off or they cherry picked failed A5 SoCs that were going to go in the iPod touch or iPad mini 1st gen. The 2013 AppleTV has a special 32 nm A5 that is half the size of the prior 32 nm A5.

There's no way they do that without getting rid of CPU/GPU cores, and maybe even one of the memory busses.

15% margins are low margins for Apple. 1wink.gif

I see, but AnandTech has stated the original revision of the 3rd gen Apple TV did have one A5 core fused off and the rev 2 model has it physically removed. They also state it has both cores for the GPU, not one. It sounds like this Apple TV's A5 starts with 2 cores and then disables one as needed as noted by the wording "removes unused core" as opposed to never having a second core at all.

Quote:
Originally Posted by Brian Klug 
We originally speculated that this might be a harvested die with an ARM core or SGX 543 core disabled, and until someone X-rays the package it's hard to know for sure. At this point we also don't know anything about what clocks the A5R2 inside Apple TV 3 is running.
Quote:
Originally Posted by Anand Shimpi 
The old A5 package measured roughly 14mm x 13mm, while the new package is approximately 12mm x 12mm. Chipworks removed and de-lidded the new chip, determining that it’s truly a new piece of silicon with a single core ARM Cortex A9 and a dual-core GPU. The previous part was a die harvested A5 with one CPU core fused off (S5L8942), but this new chip physically removes the unused core (S5L8947). The GPU seems to be untouched. There are other changes however, resulting in a 37.8mm^2 die down from 69mm^2 in the previous A5 design.

Thanks to Chipworks’ analysis we know that both of these chips are still made on Samsung’s 32nm process, meaning that Apple’s experimenting with a new silicon revision isn’t to act as a pipe cleaner for a new process (as it was with the previous gen Apple TV) but rather to reduce cost.

The move to a smaller die directly impacts cost, as does the move away from a PoP stack and to external DRAM. It could very well be that Apple is finally selling enough Apple TVs to warrant a custom A5 of its own rather than continue to ship die harvested A5s from iPhones/iPads. The problem with relying exclusively on die harvesting is that eventually, as yields improve, you end up selling fully functional (and unnecessarily expensive) silicon into a market that’s unwilling to pay for the added performance. If you’ve got the volumes to justify it, it usually makes sense to bring out custom silicon for major price points. This is why Intel ships multiple configurations in its processor families (e.g. there are distinct dual and quad-core Ivy Bridge die in Intel’s lineup, this avoids Intel having to sell a disabled $300 quad-core chip as a $100 dual-core chip).

Edited by SolipsismX - 3/28/14 at 8:29am

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post #45 of 111
Quote:
Originally Posted by Mazda 3s View Post

I agree that the iOS universe pretty much trumps everything else out there... but I don't agree that the Apple TV trumps everything out there -- it's too limiting in its scope. I mean, it doesn't even have access to Amazon Prime and I can't use things like Plex Media Server or even the Time Warner Cable app (we don't have a cable box in our bedroom, and running the straight cable to it only gives us the first 71 or so channels and only the local channels are in HD). With the TWC app, I can watch pretty much the full lineup; all in HD.

I understand what you are saying but think of how many people even know about Plex. It would be nice to have a Plex-like version of iTunes but that isn't going to happen anytime soon. My parents and inlaws get their Netflix. See pictures of the kids, and occasionally rent movies. They are satisfied customers.
Quote:
Originally Posted by Zoolook View Post

Apple TV is a very basic product, in a lovely package. The A5 inside is 2 years old, it only has about 8GB of storage and, what 512BM of RAM - it's very cheap to build, no battery, no display. Apple are not losing money on it.

Roku 3 is actually cheaper but might even cost more to make given Roku's lower sales and lower buying power. If Roku can make money, Apple certainly can.

The guy is clearly an idiot.

I don't think he's an idiot. That's being a little harsh. He's just trying to keep things going as long as he can. He sees the writing on the wall.
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post #46 of 111
What a douchebag CEO. Reminds me of the crap Ballmer or Blackberry would say.

I bought an ATV for my 74 y/o mom so she could stop filling her house with watched-once DVD's from Costco. She hesitated the first couple months as she is very tech-illiterate. Now, she loves renting iTunes movies and watching Netflix. Hasn't bought a DVD in ages, and the amount of gas saved driving around is great for her.

ATV is a gateway drug to the Apple ecosystem.
post #47 of 111

They make lots of money on the ATV outside of the USA, they charge an average of 25% premium everywhere else. So break even in the US and profit off the others.

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post #48 of 111
Quote:
Originally Posted by pmz View Post

Quote:
Originally Posted by iaeen View Post

So what does that say about Roku, whose prices are generally lower than the Apple TV?
I'm also pretty certain Roku isn't taking 30% on all the people that sign up for Netflix and Hulu, as Apple does from AppleTV....

Also pretty certain Roku doesn't have a comparable offering to the iTunes Store, which is a cash cow.

We don't know what Apple's cut is for in app purchases on the Apple TV. The App store rules do not apply.
post #49 of 111
Quote:

Originally Posted by AppleInsider View Post

Though he offered no evidence to prove it, the CEO of Roku said...

 

This is the interwebs, please leave facts and accountability for Fantasy Land.

(Most of these people think the truth only exists there anyway.)

 

Quote:

Originally Posted by AppleInsider View Post
 

Apple TV is essentially an accessory for the iPad. 

 

I had my AppleTV long before my iPad. I always wondered why I bought it at the time? It just sat next to the TV while I waited to find a use for it. Thank god Apple released the iPad when they did, I was about to throw the it out.

 
Quote:

Originally Posted by AppleInsider View Post
 

Google also entered the fray last year with its $35 Chromecast

 

My, my. People are so busy and preoccupied with pointing out Apple's "failings" they conveniently forget those of others. Apparently GoogleTV never really existed. (And if you take sales into account, it never really did.)

 

I know. I know. To be fair, this is Google's first hardware device.


Edited by mjtomlin - 3/28/14 at 9:15am
Disclaimer: The things I say are merely my own personal opinion and may or may not be based on facts. At certain points in any discussion, sarcasm may ensue.
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Disclaimer: The things I say are merely my own personal opinion and may or may not be based on facts. At certain points in any discussion, sarcasm may ensue.
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post #50 of 111
Let have a quick analysis:
When Apple sell 99$ an Apple Tv the do a benefit! this is for sure.
Know let have a quick look of the use of an Apple Tv:
-Streaming iPhone / iPad / iPod / Mac
-Buying Tv programs
-Buying on iTunes

So to resume it's an accessory which generate new revenues to Apple.

I don't know where this CEO did get his analysis, but I think he should change the person in charge of it!
post #51 of 111
Even if they "lose money" on the purchase price they make it up in sales & rental of content.
post #52 of 111
Sounds like he is looking for an excuse as to why Apple TV is winning.
post #53 of 111
When anyone makes a statement, they need to back it up with evidence. Is there any evidence either way regarding the profitability of the Apple TV? I have not seen any. The CEO of ROKU would know what their comparable costs are, especially for the Roku 3. Is he saying Roku is losing money on their device? That is likely. But Roku does not have the supply chain nor bargaining power of Apple.

Apple will likely introduce a new Apple TV this year with more functionality than the current device. Apple's pricing will be interesting to consider.
post #54 of 111

If Apple's competitors only see Apple TV as an iPad accessory they are badly informed about their competition.

 

The Apple TV's primary purpose for Apple is to serve as the family room portal into the vast iTunes and ICloud ecosystem. That's exactly what differentiates Apple's offering from everyone else's and that's exactly why Amazon is jumping on the bandwagon with a me-too product. The fact that the Apple TV does a bunch of other things like iOS and OSX display mirroring, streaming, and home entertainment system integration is gravy.  The Apple TV provides Apple customers with another way to consume (and purchase) content. I love having all of my iTunes music and my iCloud photo streams automatically appear on my Apple TVs.   This has an immense value in reinforcing my satisfaction with being in the Apple ecosystem and staying there. The device itself, the Apple TV unit is nearly invisible and basically just gets out of the way. The Apple TV is simply a facilitator and just another delightful way of connecting Apple to Apple Customers.  I wish more products were so adept at delivering value without exposing their guts to customers. (Think Windows BSOD if you want to see steaming entrails of a product thrown in a customer's face.)

 

In any case, even if Apple was losing more than 100% of the $100 unit price I don't see where a competitor would have any reason at all to bitch about it except to relish the sounds and sights of their own self pity. This is absolutely no different than the proverbial razor/razorblade model that's been in place for 100 years or more. Sell them the razor (handle) for a loss and then make all the profit on the replacement razorblades. This sales strategy exists absolutely everywhere, even your carrier subsidized iPhones and of course Kindles and Nooks.

 

If you're silly enough to try to compete in a razor/razorblade market when you don't have the razorblade side of the model nailed down - well I guess you didn't think about the big picture long enough before firing up your razor handle factory. If it wasn't so blatantly foolish I would have more compassion for these competitors, but this is such a basic concept that all I can say is Sorry Dude, you blew it.

post #55 of 111

I think Apple is going to surprise everyone with their next version of ATV by including their 64bit A7 chip and a SSD thereby instantly becoming the best and most affordable DVR available anywhere. 

 

My only beef with ATV is the lag when rewinding a Netflix or Airplay streamed video. I see no reason the ATV cannot become the PREMIER DVR in the market. Imagine being able to connect your choice of thumb drives or hard drives (or multiple drives) to the ATV while having a small internal SSD inside providing the "buffering" needed to have instant rewind and/or providing a limited (size wise) DVR capabilities (i.e. holding just a few movies) which can then be "time machined" to the back-up of your choice via a wired USB3 or Thunderbolt connection...or even via WiFi during off hours.

 

Seems like a no brainer to me....or am I missing something?

 

And while they're at it, why not release iMessage and/or FaceTime for all platforms thereby leaving FaceBook's WhatsApp purchase price look silly. 

post #56 of 111

Others

Quote:
Originally Posted by Mazda 3s View Post
 

 

I agree that the iOS universe pretty much trumps everything else out there... but I don't agree that the Apple TV trumps everything out there -- it's too limiting in its scope. I mean, it doesn't even have access to Amazon Prime and I can't use things like Plex Media Server or even the Time Warner Cable app (we don't have a cable box in our bedroom, and running the straight cable to it only gives us the first 71 or so channels and only the local channels are in HD). With the TWC app, I can watch pretty much the full lineup; all in HD.

You probably know this already but remember that AirPlay is your friend. Assuming you have an iOS device you can throw content from the Plex app and Amazon Prime app over to your Apple TV box. Some apps may not support AirPlay but many do. Concerning Plex you might be disappointed by the artifacts when playing on a big screen. I use Air Video HD with the same content and get a much nicer big screen picture. The metadata with Plex is much better but picture quality is more important.

post #57 of 111
"There's no chance that the iPhone is going to get any significant market share. No chance." -- Steve Ballmer, 2007

And this is one of the reasons why he's gone.

Who cares if Apple is breaking even? The AppleTV is to consume content, which is where Apple makes their money. If they wanted to, they could cut the price to $49 and get even more marketshare.

It fascinates me that CEO's have to say things like this. All it does is make them look stupid.
Edited by bdkennedy1 - 3/28/14 at 10:39am
post #58 of 111
What's the angle?

Even if it were true (it isn't)- all it proves is the Apple TV is a tremendous value.

So uhh... What's the angle?

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2012 27" iMac i7, 2010 27" iMac i7, 2011 Mac Mini i5
iPad Air, iPad Mini Retina, (2) iPhone 5S, iPod Touch 5
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post #59 of 111
Quote:
Originally Posted by AppleInsider View Post
"Apple TV is essentially an accessory for the iPad. They lose money, which is unusual for Apple," Roku's Anthony Wood said at the Re/code conference, according to Cnet. "If you're losing money, why would you want to sell more?"

 

This joker is the CEO of a company and he doesn't understand the basic business concept of a loss leader? Are you kidding me? This is just more evidence to support my claim that the majority of upper-management executives are dimwits and can easily be replaced by anyone with half a brain and some common sense. 

post #60 of 111
Quote:
Originally Posted by muaddib View Post

A breakdown of costs involved with the Apple TV 2 back in 2010 show it to cost apple approximately $64.00

An iSuppi summary of parts cost does not include R&D, manufacturing, shipping, packaging, marketing, customer support, software development, warranty costs, etc. The margin could be slim to none, but the parts cost certainly doesn't tell the whole story.

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post #61 of 111
Quote:
Originally Posted by pmz View Post

I'm also pretty certain Roku isn't taking 30% on all the people that sign up for Netflix and Hulu, as Apple does from AppleTV....

Also pretty certain Roku doesn't have a comparable offering to the iTunes Store, which is a cash cow.

I don't think Apple nor Roku get 30% from either Netflix, and Hulu. Apple does get a cut from TV show/movie rentals and purchases. Roku recently partnered with a company called MGo that offers rentals/purchases that I'm almost certain they get a cut from.
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post #62 of 111
Quote:
Originally Posted by roxsocks View Post

I like how everyone is trying so hard to make money on their set-top boxes, and Apple considers it a hobby.

It's all Roku does, and it's actually quite impressive that they are able to compete with a company like Apple. They're probably the biggest competitor Apple has.
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post #63 of 111
Quote:
Originally Posted by mstone View Post

An iSuppi summary of parts cost does not include R&D, manufacturing, shipping, packaging, marketing, customer support, software development, warranty costs, etc. The margin could be slim to none, but the parts cost certainly doesn't tell the whole story.
iSupply's estimates do supposedly include manufacturing costs. For instance they believe the FoxxConn charge was about $8 for each 5s. You're correct about those other assorted costs tho, but aren't most of those usually benefitting several different products rather than attributed to only one?
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post #64 of 111
Quote:
Originally Posted by SolipsismX View Post

I see, but AnandTech has stated the original revision of the 3rd gen Apple TV did have one A5 core fused off and the rev 2 model has it physically removed. They also state it has both cores for the GPU, not one. It sounds like this Apple TV's A5 starts with 2 cores and then disables one as needed as noted by the wording "removes unused core" as opposed to never having a second core at all.

In your two quotes from Anandtech, they don't state that the 3rd gen Apple TV, 3rd of the black puck version, has a dual core A5 with one of the cores fused off.

They are stating directly that it is a unique A5 with a single core CPU and a 543MP2.

The only version with the dual core CPU, but with one core fused off is the 2nd gen Apple TV, the 2nd gen black puck version.

It's not like I didn't read the exact same passages last year.
post #65 of 111
Quote:
Originally Posted by THT View Post

In your two quotes from Anandtech, they don't state that the 3rd gen Apple TV, 3rd of the black puck version, has a dual core A5 with one of the cores fused off.

They are stating directly that it is a unique A5 with a single core CPU and a 543MP2.

The only version with the dual core CPU, but with one core fused off is the 2nd gen Apple TV, the 2nd gen black puck version.

It's not like I didn't read the exact same passages last year.

1) That isn't how it reads to me, especially considering the 2nd gen Apple TV didn't have an A5 so any commentary about a fused or removed core on the A5 would only be referring to the 3rd gen Apple TVs.

2) Your last sentence sounds snippy. I, too, read those articles in March 2012 and March 2013, hence my reply to you with what I thought was well documented argument of my position.

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post #66 of 111
Quote:
Originally Posted by Gatorguy View Post

iSupply's estimates do supposedly include manufacturing costs. For instance they believe the FoxxConn charge was about $8 for each 5s. You're correct about those other assorted costs tho, but aren't most of those usually benefitting several different products rather than attributed to only one?

For Apple, it's all one big jumble of stuff as they have their own retail outlet. As best as I can tell, the cost of selling and supporting a device is about the same as the BOM, for iPhones at least.

If you are selling through retail, like Best Buy or Target, the retailer gets a cut. Replacement units have to be maintained, support staff have to be trained, sales staff have to be maintained, inventory has to be maintained.

If you see a BOM, it won't be that far off to double that cost for a good estimate on how much it really costs to build and sell the product.

It's not zero or free.
post #67 of 111
I'm sure Apple also makes $0 on TV and Movie rentals/purchases as a direct result of the Apple TV. Even if Apple lost a little on the device (or broke even), they make up for it in content revenue.

I also wonder if provider apps such as HBO, ESPN, MLB, MLS, etc pay apple some type of royalty to have their channel on the device or is that a freebie by Apple? Another revenue generator if yes.

I agree with @razorpit, sounds like Wood is a little nervous if he has to speculate about the profit of a competitor with zero facts on-hand.
post #68 of 111
I highly doubt that Apple is selling anything that they are losing money on. Breaking even as a tool to get more folks invested in the iTunes ecosystem, perhaps. But not flat out selling at a loss. They can afford to but I just don't see it happening.

Or if they are losing money it's not more than a few cents a unit.

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post #69 of 111
Quote:
Originally Posted by SolipsismX View Post

1) That isn't how it reads to me, especially considering the 2nd gen Apple TV didn't have an A5 so any commentary about a fused or removed core on the A5 would only be referring to the 3rd gen Apple.

Maybe we are just talking past each other.

I'm only talking about the black puck version. There are three versions of that model:

The first version has an A4. This version is branded at Apple TV version 2 or Take 2.

The 2nd version of the of the black puck model, has a dual core with the one core fused off. This is refered to as the third version of "Apple TV" if you include the Intel models with a HDD.

The 3rd version of the black puck model, has a single core only A5. This version is refered to as "Apple TV" version 3a if you include the Intel models with the HDD.

Clear enough?
post #70 of 111
Quote:
Originally Posted by THT View Post

Maybe we are just talking past each other.

I'm only talking about the black puck version. There are three versions of that model:

The first version has an A4. This version is branded at Apple TV version 2 or Take 2.

The 2nd version of the of the black puck model, has a dual core with the one core fused off. This is refered to as the third version of "Apple TV" if you include the Intel models with a HDD.

The 3rd version of the black puck model, has a single core only A5. This version is refered to as "Apple TV" version 3a if you include the Intel models with the HDD.

Clear enough?

Yes, that is what I'm referring. The 3rd gen Rev. A is the one with the fused off A5 core. That means it was not originally single core A5, but one that had one core fused off. The 3rd gen Apple TV Rev. B has Anand stating the core was removed. He did not state that the Rev. B model was designed with a single-core A5, but that it was removed thereby implying it had a second core that was removed. I'm under the impression these techniques are utilities to reduce costs as there will inevitably be dual-core chips that don't pass muster but will have one of two cores that are functional and therefore good enough for the A5 used in the Apple TV.
Edited by SolipsismX - 3/28/14 at 12:22pm

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post #71 of 111
Now that I has time to think, maybe it's Roku's ploy to get the DOJ involved. Only Amazon is allowed to undercut competitors.
post #72 of 111
Quote:
Originally Posted by Gatorguy View Post
iSupply's estimates do supposedly include manufacturing costs. 

You are right. I checked the iSuppi site. Please adjust the total cost by $1.97 per unit. But they bring up a good point that I forgot to include.

 

Software licensing and Royalties.

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post #73 of 111
Quote:
Originally Posted by SolipsismX View Post

The 3rd gen Apple TV Rev. B has Anand stating the core was removed. He did not state that the Rev. B model was designed with a single-core A5, but that it was removed thereby implying it had a second core that was removed. I'm under the impression these techniques are utilities to reduce costs as there will inevitably be dual-core chips that don't pass muster but will have one of two cores that are functional and therefore good enough for the A5 used in the Apple TV.

 

The 2012 Apple TV model has dual-core A5 with one of the cores fused off. I don't believe they harvested bad A5 chips that only had one working CPU core. They were all fully qualified dual-core chips with one core fused off. Going the harvesting the bad die route seems entirely too unreliable and they would have to resort to fusing off cores anyway if they didn't have enough bad dies.

 

The 2013 Apple TV model is a unique single core A5. It's not a dual-core with one core fused off. This is inevitably about reducing the cost per chip.

 

Anandtech says it directly:

 

Quote:
Chipworks removed and de-lidded the new chip, determining that it’s truly a new piece of silicon with a single core ARM Cortex A9 and a dual-core GPU.

 

Look at the die sizes: 

 

Quote:
The GPU seems to be untouched. There are other changes however, resulting in a 37.8mm^2 die down from 69mm^2 in the previous A5 design. … Thanks to Chipworks’ analysis we know that both of these chips are still made on Samsung’s 32nm process, ... but rather to reduce cost

 

The 2013 Apple TV has an SoC, likely the most expensive component in the Apple TV, that is 45% smaller. It almost doubles the number of chips per wafer and therefore likely drove the cost of the Apple TV SoC down by about half.

post #74 of 111
Apple's competitors fear Apple.

Not really news.
post #75 of 111
Has this Guy every heard of Media Content.
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Apple Just Buy Roku already!
post #76 of 111
The guy sounds a fool.

The whole chipset is unlikely to cost more than $10. I really cant see total cost heading past $20.
post #77 of 111

He's a liar.  Pure and simple.  IHS iSupply has a total BOM of $63.95.  Apple does not build things for free.  Unlike others in the industry they don't have to.  

Heres a link to the BOM list  https://technology.ihs.com/388826/isuppli-teardown-reveals-apple-tvs-inner-ipad

The only thing that has changed in the black puck models is the A processor so pretty much everything else has stayed the same.

 

Also here is a quote from the iSupply article

Quote:
Improved margins
Compared to the first-generation Apple TV, the new model offers a dramatically improved ratio of hardware cost to retail price. The initial version of the Apple TV appeared to be a near give-away or subsidized product for Apple, sold at prices that weren’t much more than the underlying hardware costs. With the second generation version of the hardware, the Apple TV’s price is about 35 percent above its BOM and manufacturing cost. 

So in reality the Price above BOM on the Apple TV 2 and most likely the 3 is about 35% and there BOM includes manufacturing.


Edited by Mechanic - 3/28/14 at 4:50pm
post #78 of 111
Quote:
Originally Posted by PhilBoogie View Post


Wow, another CEO with shit for brains.

Depending on the full context I might agree with you. Their engineers did make a neat device though.

post #79 of 111
Quote:
Originally Posted by hmm View Post

Quote:
Originally Posted by PhilBoogie View Post

Wow, another CEO with shit for brains.
Depending on the full context I might agree with you. Their engineers did make a neat device though.

I was only referring to these 3 statements, which I think are really dumb and doesn't require my explanation:

  1. "Apple TV is essentially an accessory for the iPad"
  2. "They lose money, which is unusual for Apple,"
  3. "If you're losing money, why would you want to sell more?"
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How to enter the Apple logo  on iOS:
/Settings/Keyboard/Shortcut and paste in  which you copied from an email draft or a note. Screendump
Reply
post #80 of 111
Quote:
Originally Posted by PhilBoogie View Post


I was only referring to these 3 statements, which I think are really dumb and doesn't require my explanation:
 
  1. "Apple TV is essentially an accessory for the iPad"
  2. "They lose money, which is unusual for Apple,"
  3. "If you're losing money, why would you want to sell more?"
  4.  

 

Oh I misinterpreted slightly. Those are dumb comments though, and as before I wish CEOs would talk about their own products. Otherwise it's insulting to the people who actually create them.

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