John Paczkowski

Recent Posts by John Paczkowski

First-Gen Apple TV: $237 in Parts; Second-Gen Apple TV: $64 in Parts

Apple’s new Apple TV is about a quarter of the size of its predecessor.

And it costs about a quarter as much to make it.

According to iSuppli, the bill of materials for the latest iteration of Apple’s $99 “hobby” is $64, significantly less than the $237 it cost the company to build the 2007 model.* That’s quite a disparity, one evidently driven as much by an adjustment of product vision as build (dumping that costly hard drive obviously didn’t hurt either). Where the original Apple TV was built like a small desktop PC, its successor is built more like an iPad, with a few of the same components; the two devices have an A4 processor in common, as well as Wi-Fi/Bluetooth and power management chips.

That evolution has given consumers a much-improved device with a pitch-perfect design (though it does have some serious shortcomings in the content department), and it’s given Apple (AAPL) better margins.

“Compared to the first-generation Apple TV, the new model offers a dramatically improved ratio of hardware cost to retail price,” iSuppli noted in its teardown analysis. “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.”

*The standard iSuppli caveats apply here. The company’s estimate accounts for hardware and manufacturing costs ONLY–R&D, software, licensing costs, etc. are not considered.

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December 30, 2013 at 6:49 am PT

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December 29, 2013 at 2:12 pm PT

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December 29, 2013 at 5:58 am PT

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December 28, 2013 at 12:05 pm PT

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik