iSuppli: Apple TV estimated component cost is $61.98

Apple Online Store“The new, low-priced Apple TV has an estimated component cost of $61.98, and manufacturing reportedly adds about two more dollars to the total expenses,” Slash Lane reports for AppleInsider.

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“iSuppli on Tuesday published the results of its Apple TV teardown, which found a total preliminary estimated production cost of $63.95,” Lane reports. “That price includes the cost of additional item boxes with the product, the research firm said.”

Lane reports, “The most expensive component was estimated to be the custom-built A4 processor, which sports 256MB of RAM. The Samsung-manufactured chip has an estimated cost of $16.55… ‘The Apple TV’s remote control represents more incredible mechanical engineering from Apple,’ said Andrew Rassweiler, director, principal analyst and teardown services manager, for iSuppli. ‘The remote appears to machined from a solid piece of aluminum. Because of this, the electronics of the device must be slid in through small holes on the side, similar to putting a ship in a bottle. It’s a clever and a detail-oriented piece of design that makes the remote very pricey and very unique to Apple.'”

Read more in the full article here.

MacDailyNews Note: As always, these estimates exclude R&D, software, packaging, and marketing costs which all contribute to the final retail price.

[Thanks to MacDailyNews Reader “Lava_Head_UK” for the heads up.]

48 Comments

  1. This is precisely why most people do not understand the true meaning of the word ‘Value’.
    They never take into account the effort required to design these devices in the first place and only see the total cost of materials. They almost no concept of anything beyond that.
    I think it’s also the reason why other companies fail to compete with Apple. They seem to have a completely hap-hazard approach to design – especially interface design.

  2. This is precisely why most people do not understand the true meaning of the word ‘Value’.
    They never take into account the effort required to design these devices in the first place and only see the total cost of materials. They almost no concept of anything beyond that.
    I think it’s also the reason why other companies fail to compete with Apple. They seem to have a completely hap-hazard approach to design – especially interface design.

  3. …”these estimates exclude R&D, software, packaging, and marketing costs which all contribute to the final retail price.”

    Well, that’s not exactly how it works. Retail price for a product is set based on what market will bear; not based on how much a product cost to develop, manufacture and advertise. The goal is to set a retail price well above the price of components and cost of delivery to retail channels, so that profits from such price can fuel future R&D for subsequent products. This isn’t always the case. Some companies often set retail price below the actual component price (MS Internet Explorer, X-Box and Zune are fine examples), deliberately losing a lot of money on such product for strategic reasons (to choke a competitor to death, or to make up on a related product, such as games in the case of X-Box).

    It is very important to know what is the price of components that go into a piece of hardware. That price, together with the estimated cost of putting them together (fairly low, with current manufacturing automation) and delivering them to channels (easily quantifiable) gives us the level of profitability of that product.

    Apple’s products have consistently had a wide gap between the retail price and total price of components (sometimes even over 50%), while Dell, HP, Acer rarely (if ever) cracked 15%.

    There is a reason why Apple keeps innovating; it can afford to.

  4. …”these estimates exclude R&D, software, packaging, and marketing costs which all contribute to the final retail price.”

    Well, that’s not exactly how it works. Retail price for a product is set based on what market will bear; not based on how much a product cost to develop, manufacture and advertise. The goal is to set a retail price well above the price of components and cost of delivery to retail channels, so that profits from such price can fuel future R&D for subsequent products. This isn’t always the case. Some companies often set retail price below the actual component price (MS Internet Explorer, X-Box and Zune are fine examples), deliberately losing a lot of money on such product for strategic reasons (to choke a competitor to death, or to make up on a related product, such as games in the case of X-Box).

    It is very important to know what is the price of components that go into a piece of hardware. That price, together with the estimated cost of putting them together (fairly low, with current manufacturing automation) and delivering them to channels (easily quantifiable) gives us the level of profitability of that product.

    Apple’s products have consistently had a wide gap between the retail price and total price of components (sometimes even over 50%), while Dell, HP, Acer rarely (if ever) cracked 15%.

    There is a reason why Apple keeps innovating; it can afford to.

  5. That didn’t come out quite right; obviously, primary reason for innovation at Apple is the presence of innovators (Jobs, Ive, Forestall, etc). Of course, money helps a lot…

  6. That didn’t come out quite right; obviously, primary reason for innovation at Apple is the presence of innovators (Jobs, Ive, Forestall, etc). Of course, money helps a lot…

  7. @Predrag

    I think lots of companies can afford to innovate – M$ can certainly afford it. It’s just that they can’t seem to be bothered. Too much effort. There seems to be a very pervasive ‘low effort – high return’ expectation in a lot of companies. At least that’s what it looks like to me as a consumer.

  8. @Predrag

    I think lots of companies can afford to innovate – M$ can certainly afford it. It’s just that they can’t seem to be bothered. Too much effort. There seems to be a very pervasive ‘low effort – high return’ expectation in a lot of companies. At least that’s what it looks like to me as a consumer.

  9. “As always, these estimates exclude R&D, software, packaging, and marketing costs which all contribute to the final retail price.”

    —————-

    and don’t forget profit.

  10. “As always, these estimates exclude R&D, software, packaging, and marketing costs which all contribute to the final retail price.”

    —————-

    and don’t forget profit.

  11. @ The Mac That Roared

    MS is missing a single-minded leadership structure, and instead is composed of independent contradictory factions that are often at odds with each other. At Apple, if the company invests time into a particular product segment, it helps other segments. Improving the underlying code of OS X is good for iOS, for example.
    At MS, products live in dozens of walled gardens with much less cooperation between departments. They have the money, it’s true, but they also have countless managers fighting over it and jealously guarding it.

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