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.

This according to iSuppli’s tear-down analysis of the device, which estimates its bill of materials to be $187.51 (click on chart below to enlarge). That’s a bit more that the iPhone 3GS, which had a BOM of $178.96, but then, Apple’s newest iPhone model boasts a number of enhancements, among them the Retina Display and A4 processor, which iSuppli figures cost $28.50 and $10.75, respectively.

No word on what carriers pay Apple for the device. But right now a 16GB iPhone 4 on AT&T (T) without contract or subsidy costs $599.

[Image credit: iSuppli]

The estimated bill of materials for the G1: $144. The estimated bill of material for Apple’s 8GB iPhone 3G: $160.

Now, iSuppli’s estimated bill of materials for the G1 is based on component and materials costs alone. It doesn’t account for other expenses like research and development, software, shipping and distribution. It does, however, account for “wow factor,” of which the G1 apparently has a paucity. Though Tina Teng, iSuppli senior analyst of wireless communications, described the G1′s interface as better than average, she said it “still has a gap to close with Apple’s interface” and “lacks the wow factor of some of its slicker competitors.”