iSuppli sizes up the Apple TV

Apple is known for the high profit margins on its consumer electronics, but according iSuppli Apple is only making $62 (or about 20%) on each Apple TV. As you'd guess the most expensive component is a slimmed down version of Intel's Pentium M processor at about $40, and the cheapest is the $0.75 RealTek audio chip. The new 160GB version's margin is much nicer at more than 30%, but only because Apple charges a $100 premium for an option that only costs an extra $36 to make. Hobby indeed. Of course the obvious reason is that Apple plans to make up the cash selling content, and maybe even more importantly: to get into your living room. While this seems like a great plan and all, we can't help but get stuck on the fact there still isn't any HD content from Apple for a device that supposedly requires a HDTV.

[James Dehnert Sr @ Jun 6th 2007 5:18PM]

This box still could be a great addition to the Apple portfolio. At least Apple is letting people hack the damned thing. Once I can burn my own DVD's and HD (whatever format) movies, AND see them nice and clean on my 50 inch tv, I'm all over it. Perhaps a DVD/HDDVD/BlueRay burner/player of the same size format that sits right underneath, connected with fire wire to the main unit.

I can live without You Tube.

[Mark @ Jun 6th 2007 5:33PM]

what I don't get is why any1 would want this when you can do the same thing except better with an HDMI cable.

[Mark @ Jun 6th 2007 5:35PM]

Actually let me explain my last comment: Plug DVI-HDMI cable into computer with the DVI end and into the tv with the HDMI end and bam, you can watch all your media stuff from your computer on your tv. Also, an xbox 360 with a portable harddrive attatched can do this MUCH better.

[Phred @ Jun 6th 2007 5:46PM]

Re: the 360 doing it better. I take it better means with more unwanted noise.

Mind you, I'm all for people buying the 360 because each sale costs MS who are still making a loss on each unit sold. Sort of puts a 20% profit in focus...

[Nick @ Jun 7th 2007 9:18AM]

that works if your computer is in the same room as your tv... but the point of the AppleTV is so that you dont need to have the computer sitting right next to your tv.

[mike @ Jun 6th 2007 5:40PM]

Look Engadget, considering you one drop 299 once, and can buy a lifetime of future content on iTS, YES, content will make this model work.

You're somewhere between wanting it to be a cool device, and calling it shit because it's not very profitable.

The bottom line is all of Apple's multimedia devices promote EACH OTHER because they all promote the Online Store... (and vice versa)

Oh yeah, and iSuppli has foolishly come out and declared that Apple is charging WAY TO MUCH, when they cannot possibly take into account all the overhead that goes into.. you know... R&D?

You know.. the Innovation thing....?

[Jesse S @ Jun 6th 2007 7:52PM]

I don't really see how this is that innovative.

"OHHH, LET'S MAKE A CHEAP HTPC, BUT INSTEAD OF IT BEING AN HTPC, IT CONNECTS TO ITUNES!"

[eas @ Jun 6th 2007 6:12PM]

Why is apple dabbling with a relatively low margin product? There seem to be a couple possibilities, none of them mutually exclusive.

1. Apple expects margins to rise as component prices drop. The performance parameters of the Apple TV are basically set, so Apple can ride Moore's law to lower costs. How much will that Pentium M + chipset (hard drive, etc) cost in 6 months, 12 months, etc. How much will it cost to produce an AppleTV if they can redesign around a system on a chip?

2. Apple's take of the cost of video downloads is better than the paltry bit they get out of music downloads, so they have a different business model with the Apple TV vs the iPod.

[Pete @ Jun 6th 2007 6:13PM]

Not a 20% profit, how many times does this have to be explained?

You have to consider one-off costs of design, development, etc. It's a lower percentage than things like iPods probably because of needing less in the way of development (it's just a slimmer, cut-down mac mini as I understand it).

[jollyllama @ Jun 6th 2007 6:53PM]

Who was the genius that decided that (retail price) -
(component cost) = (profit)? Come on, you're embarrassing yourself.

[Danny @ Jun 6th 2007 9:47PM]

actually, i believe jobs said that they would sell a million this year, and 10 million by the end of '08. Correct me if I'm wrong.

[J @ Jun 6th 2007 10:09PM]

I have to say, I went to an Apple store today specifically to play with this device. As someone who has an HDTV in my house, I'm completely offended at this offering. I watched on a ~36" TV at the Apple store and the quality was disastrous. The only place the picture was acceptable was the Apple menus. As soon as I clicked on the Office, I could very visibly see the pixels and the jagged edges even during nearly static scenes. They really need to get this thing up to HD and fast.

[J @ Jun 6th 2007 10:16PM]

One more comment. I see the Apple TV as following the iPod model much more than the iPhone.

Late 90s: a few MP3 players, some of them good, most of them crappy. No mass adoption, no market except among geeks. iPod comes out -- changes everything. Slick device, easy to use, set-up. Consumers go crazy -- after they get it to play nice with Windows.

2007: a lot of UPnP devices, all vying for home dominance. No real players in the market. The best two devices (Xbox and PS3) market themselves as different devices (game consoles) not media servers. the market is fragmented. Apple TV comes out -- learns to play nice with Windows, HD -- consumers go crazy.

Compare that to the iPhone which has to win converts from Blackberry, Treo and other business users that are locked in to their corporate servers -- and to me it's a no brainer. When Apple finds an underdeveloped market, it easily dominates. When they try to attack established markets - Mac Mini, Macbook, Airport, Mighty Mouse - they create nice products, but no one goes gaga over them because there are trade-offs to going with Apple.

[Nick @ Jun 7th 2007 10:07AM]

"As soon as I clicked on the Office, I could very visibly see the pixels and the jagged edges even during nearly static scenes. They really need to get this thing up to HD and fast."

It sounded like you were saying that the AppleTV needed to get up to HD and fast. I could be wrong but my understanding was that the AppleTV was up to HD its just none of the iTunes Store content, which you viewed, is up at an HD resolution yet. Its all 640 x 480 being upscaled. My guess is that they are stilly trying to figure out a model for the HD content download. Maybe 3 price plans ipod quality, hd quality, hd + ipod quality??

[Colin @ Jun 7th 2007 3:32AM]

1. Does it require a HDTV? Or does it require a 16:9 TV? There's a few cheap 16:9 SDTVs floating around. Judging by the linked article, if I hook an Apple TV up to a 16:9 screen, I'm all set.

2. It's been said MANY times before, but I'll say it again: XBMC≠Apple TV. Completely different markets. Even I can figure that out. Personally, I have no use for an Apple TV; I have a full-fleged, Windows-based PVR. That doesn't mean Apple TV sucks. It means I'm not the target market. What's interesting though, is what my PVR can't do: It can't understand my iTunes library and playlists. I use iTunes solely for music. If I used iTunes for videos, which is what I'm assuming Apple's next big "conquest" is, then I'd be more inclined to want an Apple TV. See how this works?

[Galley @ Jun 7th 2007 10:52AM]

Apple TV has an old school 480i mode, so it will work with any TV that has a component input.

[JonP @ Jun 7th 2007 12:37PM]

Engadget: Why are you linking to this? As others have pointed out, the analysis of component cost apparently ignores Apple's research, development and engineering costs. It's a completely bogus number and only serves to get more ink for iSuppli. Does Apple just pick random components and put them together in a slick-looking box?

[kadajawi @ Jun 7th 2007 1:15PM]

Oh great, so they use a crappy cheapo Realtek audio chip? That means the DAC? For something that is intended for the living room, for people who have a HDTV and quite possible a decent set of speakers as well? Great choice, Apple. I love the $16 DAC on my Audiotrak soundcard.

[Ben @ Jun 7th 2007 1:16PM]

Most people who care about audio won't use the analog outputs so they won't ever realize how bad the Realtek chip is.

[kadajawi @ Jun 7th 2007 1:24PM]

Probably, yes, but I for example am using an old NAD amp, pretty good, nice sound, more than enough power (though it officially only has 2x35W). And looks very cool with all the wood etc. Obviously back in the 70s there were no digital inputs. I guess there are some of us who still have something "old" but decent, who don't want to spend lots of cash just because of the inputs.

[Shutter @ Jun 8th 2007 2:41PM]

If you really want content from your computer on your HDTV, get the ORIGINAL XBOX and a mod chip for it. No I'm not talking about pirating games and other illegal activities, but you can change out dashboard and set it up to store video files, or alternately stream them over a network from your computer(pc or mac). The modding only costs like 50 bucks if you know some one (craigslist). so if you get a cheep used xbox from ebay ($75 including shipping) and the mod chip installed with dashboard changed out($50) you can have a device that does everything that a apple tv does and then some (well maybe some issues with h.264) for only $125. Apple has issues, but still love my ipod.

[sbrown @ Jul 7th 2007 4:57PM]

Wow ONLY a 20% profit margin, how terrible for Apple...

[Argot @ Jun 6th 2007 5:35PM]

Well, no need to go below that figure if the idiots keep buying their crap.