Apple TV Generates Far Slimmer Profit Margins than iPod, iPhone

Press Release - June 25, 2007

As Apple TV gains momentum in the consumer sector, analyst are calling this hot new set-top-box product a major departure from Apple’s traditional pricing strategy.

Research firm, iSuppli, says that Apple TV is far less profitable than the hardware giant’s other non-computer products, costing approximately $237 to manufacture and selling for just $299. That leaves a profit margin of only 20%, before marketing and distribution costs, and stands in stark contrast to the Apple iPhone, which is expected to generate margins in excess of 50%.

“This is certainly a departure for Apple, or at least it’s approaching a departure,” commented iSuppli analyst, Andrew Rassweiler, noting that the firm’s $237 cost estimate assumed very low prices on all components.

If costs worked out to be much higher, “we’d be looking at a device that Apple was subsidizing,” Rassweiler explained, suggesting that the company may hope to make up the difference in video content deals.

Apple TV allows users to wirelessly access TV and video content stored on a nearby Mac or Windows computer. Analysts expect it to play a major role in further digitalizing the home entertainment market.