At that price, Apple TV has a 20.7% gross margin compared with 40%-50% for the company’s iPod portable media players, iSuppli said. Moreover, that estimate doesn’t account for other costs, such as packaging and marketing, so Apple TV’s actual margin is even smaller.
Qué pasa? To iSuppli senior analyst Andrew Rassweiler, Apple’s real agenda may be to use the set-top to sell more movies and TV shows through the iTunes online store.
The bill-of-materials cost “suggests that Apple is taking a market-penetration strategy for the Apple TV, rather than the simple profit-per-unit approach it has always used in the past,” Rassweiler noted. The research firm estimated that Apple TV shipments will hit about 1 million units in 2007, rising to 1.4 million in 2008.
To keep costs down, Apple used older Intel 1-gigahertz Pentium M microprocessors in the device, leading Rassweiler to suggest a different name for the Apple TV: “LobotoMac.”