Apple TV manufacturing costs investigated

Posted on Sunday, Jun 10 2007 @ 16:35 CEST by Thomas De Maesschalck
iSuppli took a look under the hood of the Apple TV to investigate how much this device costs Apple:
Having taken it apart, iSuppli estimates that the components and materials used to make Apple TV cost $237. Since Apple sells it for $299, that would leave a gross profit of $62, or about 20%, before marketing costs.

That would be a big change from Apple's penchant for gross margins in excess of 50% outside its computer lineup. That's been the usual case with the iPod music player family (see BusinessWeek.com, 9/20/06, "The Skinny on Apple's New Nanos") and appears to be the case with the iPhone, the release of which is now less than four weeks away (see BusinessWeek.com, 1/18/07, "What the iPhone Will Cost to Make").

Apple TV's slimmer-than-usual gross margin is also interesting when set against the fact that Apple plans to book the associated costs and revenue over a two-year period. So for every Apple TV sold, the company will split the revenue into chunks reported over eight quarters, at a rate of $37.375 for each period. Dividing iSuppli's cost calculation similarly, $7.75 of that total will be profit.


About the Author

Thomas De Maesschalck

Thomas has been messing with computer since early childhood and firmly believes the Internet is the best thing since sliced bread. Enjoys playing with new tech, is fascinated by science, and passionate about financial markets. When not behind a computer, he can be found with running shoes on or lifting heavy weights in the weight room.



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