Apple TV: It’s Cheaper Than You Think
- June 6th, 2007
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iSuppli’s dissection of the device revealed the $237 manufacturing price which would create a per-sale profit of $64 before marketing costs. Unusual? Absolutely, considering that products like the Nano exceeded 50% in profits. Based on these numbers, analysts seem to think the Apple TV will make little to no impact on revenue.
Apple’s surprising financial plan for the Apple TV leaves room for speculation as to where the lost profit will come from. Movie purchases? Meh? Maybe?
What Apple TV Costs to Make [BusinessWeek]
At the Allthings Digital conference here in Carlsbad last week, Steve Jobs told Walt Mossberg and the crowd that TV is a hobby for Apple. So it’s no big surprise that the profit margin is slim. Once again, it’s simply a tool to extend the iPod’s functionality.
Steve Jobs also predicted that the TV would hit its stride in about 18 months. He didn’t hold out any hope for it making much of a dent in Apple’s business until at least then.
So what’s with the big surprise?
Indeed, given that the Apple TV seems to be running OS X inside, you could see them making money off selling “living room” software applications that work with Apple TV. We’ll see, it’s all speculation right now.
Consumer devices that link to the Internet are the future of entertainment. The Apple TV and iPhone are looking to that future, whereas Sony’s Blueray and Toshiba’s HD DVD are aimed at the past. I make that point at my post analyzing the future of the DVD player, which you can find here:
http://www.mathoda.com/archives/168