Usually, teardown analyses of Apple’s products yield the rather surprising information that the suggested retail price greatly exceeds the cost of raw materials that go into building Apple’s latest iPod. Apple’s making a profit? Shock!
So we were intrigued to see the latest destructo-sheet from the iSuppli folks, detailing the materials in the Apple TV once again. For one thing, we saw a teardown of the product last year when it was released. Obviously, the components have gotten cheaper int he meantime, and Apple has also dropped the price by $70. So what does that mean?
Well, according to iSuppli’s examination, the price of Apple TV’s materials is a paltry 10% under the selling price. That’s a pretty narrow margin, and what with R&D costs and the like, we think Apple’s probably just about breaking even. So, what’s their game here? Historically, Apple’s operated the iTunes Store at just above break even in order to drive iPod sales. If the Apple TV is also being sold at break even, it can’t really be to drive iTunes sales—at least, not for profit.
No, it seems likely that Apple’s plan here is to cut cost from the Apple TV in order to sell more, and thus boost the market share of the iTunes Store’s video rentals. We don’t know what, if anything, they’re getting out of that—Computerworld’s Seth Weintraub speculates that Apple’s taking a cut off the top to the tune of $1-$2. I’m not sure it’s that high—seems like a lot for an industry which has been notoriously squirrelly about doing business with Apple—but of course it seems obvious that Apple is getting something out of the deal. Personally, I think Apple is just taking an aggressive stance to getting the Apple TV out of the hobby realm and into people’s living rooms.
Where is the new AppleTV software update? I thought Jobs said it would come out two weeks after the address, which is today if my calculations are correct. What gives??
Two weeks is, indeed, today. But there's always a bit of margin on those things. Expect to see it by the end of the week, though.
I wish apple would translate the US price to the UK price. It's still £199 for the 40 Gig version- way too expensive. Come on Apple do something on the pricing for us Mac fans across the pond.
Steve said "in about two weeks..." Hopefully, it should come sometime this week! Looking forward to it!
Yeah, two weeks. I've been hittin' that sofware update button several times a day since. I've worn a hole in my HDTV from all the pushin'. Just in case, you know? You never know, the button might be broken.
Yes, I'm the guy in the elevator who pushes the 3rd floor button, even though someone else has pushed it, and the button is illuminated indicating it will indeed stop at the 3rd floor. But you never know...
I've also been known to push the Walk button several times at a busy intersection.
;-)