Cost of AppleTV

BusinessWeek has an interesting article on the cost of the components that go into making AppleTV.

They make the point that Apple’s margin on the product is lower than usual when compared to its other products.

I am always curious where the costs are in computer products, the processor is it in this one which is not a surprise really.

The article does make the good point that upping the size of the disc drive to 160GB and increasing the price to $399 gives Apple more of a margin, and that people will need that higher capacity once true HD content is available.

I seem to recall that the margins on the initial iPod were not all that great either, and that they did get better over time along with a spread in models (hence pricing). Perhaps we shall see the same thing with AppleTV.

I for one am not feeling constrained by the size of the drive, yet. And I can stream most content from my Mac pretty well since I have enabled 802.11n at 5GHz only.


One Response to Cost of AppleTV

  1. noel says:

    But isn’t it always the way with new products (especially tech) that you start out risking and hope that a huge market demand will increase your production and thus your costs go down per unit as economies of scale kick in? Meanwhile you need not reduce your pricing until/unless a competitor comes along and your margins rise.

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