Hobby turns hit: Apple TV on pace to sell 1 million units per quarter

Apple Online Store“Apple (AAPL) seems to have a modest hit on its hands with the new Apple TV box,” Eric Savitz reports for Barron’s.

MacDailyNews Take: That “box” is so tiny, it’s more like a “puck.” (Plus, it’s snappy compared to our old Apple TV units!)

Savitz reports, “JMP Research analyst Alex Gauna writes this morning that the device is selling out in many of the company’s U.S. retail stores. The analyst reports that checks find that ‘the new Apple TV product has continued to sell out in Apple stores across the nation after its launch last week.'”

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“Gauna believes Apple TV is selling at a pace at least one quarter to one third that of the iPad, or at least 1 million units a quarter,” Savitz reports. “He says the $99 price point ‘is resonating with consumers.'”

Full article here.

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

54 Comments

  1. @ken1w,
    I don’t think we know the profit. It’s been reported that the cost of goods sold (COGS) is ~$62. So, the “contribution” is probably just above $30/unit — price minus variable costs (or mostly cost of goods sold in this case). Outside, we won’t have an exact figure for R&D, marketing, other corporate “peanut-buttered” expenses. There’s probably a healthy profit in there, but it’s not price minus COGS.

  2. Tiger
    I think you are correct, there is more than just component costs. My guess is Apple is making almost no profit–it is still just a hobby to Steve. I think it is like the razor business–make your money on the blades or in this case the rentals.

  3. Tiger
    I think you are correct, there is more than just component costs. My guess is Apple is making almost no profit–it is still just a hobby to Steve. I think it is like the razor business–make your money on the blades or in this case the rentals.

  4. @ TigerCliff

    > I don’t think we know the profit.

    I just used $30 as an example. You can be sure there is a reasonable profit per unit in there, and $30 profit from a $99 sale is probably about Apple’s acceptable limit. Apple makes profit from selling the hardware (not “razor blades” or “printer ink”), so if it was a break-even proposition at $99 retail, Apple TV 2.0 would still be in the secret lab until they could do it for $99 and make a reasonable profit.

    Once a product is released, those “other” expenses go down as a percentage of overall cost, so the actual profit per unit will only get better over time, especially if Apple can sell more than one million per quarter.

  5. @ TigerCliff

    > I don’t think we know the profit.

    I just used $30 as an example. You can be sure there is a reasonable profit per unit in there, and $30 profit from a $99 sale is probably about Apple’s acceptable limit. Apple makes profit from selling the hardware (not “razor blades” or “printer ink”), so if it was a break-even proposition at $99 retail, Apple TV 2.0 would still be in the secret lab until they could do it for $99 and make a reasonable profit.

    Once a product is released, those “other” expenses go down as a percentage of overall cost, so the actual profit per unit will only get better over time, especially if Apple can sell more than one million per quarter.

  6. ATV and server farm means not just a la carte movie, music or books. It could mean free on ad programs like Discovery, Disney, ESPN and CNN network streaming daily without the chains of a cable company.

    Think paradigm shift. Apple Network via dumb pipe lines hosting any network. Like Blockbuster, Cable’s days are numbered.

    Joeg

  7. ATV and server farm means not just a la carte movie, music or books. It could mean free on ad programs like Discovery, Disney, ESPN and CNN network streaming daily without the chains of a cable company.

    Think paradigm shift. Apple Network via dumb pipe lines hosting any network. Like Blockbuster, Cable’s days are numbered.

    Joeg

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