Category Archives: AppleTV

Hints About the Apple TV Business Model

Electronics market research firm iSupply just released an estimate of the bill of materials c+ assembly cost of the AppleTV at $237. They note that Apple’s margins on their “little hobby,” are quite low, on the order of 20%, compared to the 30-50% Apple enjoys on other products.

I find a few things interesting about this.

First, the performance requirements of the Apple TV aren’t likely to change much for the next decade or more. They may need to bump up the $15 nVidia GeForce Go 7300 GPU a bit to eventually handle full 1080p HighDef video, along with more RAM and hard disk, but for the most part, the costs are just going to go down. The most expensive part right now is a $40 Pentium M CPU, Other notables
are the accompanying $28 chipset and $19 802.11n broadcom wireless chips. How much are all these things going to cost in a year? In 18 months they’ll probably be half as much, which will wack $50 out of the costs, pushing margins up to almost 40% (assuming they can hold the price point).

How much will apple save if they can redesign around a more integrated solution. The AppleTV actually has a GPU as part of the Intel chipset already. In 12 months it’s replacement may well perform well enough to eliminate the need for a discrete GPU. I’d guess the wireless chip is also a candidate for either integration, or bundling (a la centrino).

The other thing this information suggests is that Apple may be more serious about this market than they’ve led people to believe if they are willing to sell the AppleTV at or near cost to gain market share. It also suggests that their take of video downloads may be better than their take from music downloads, where they seem content to make most of their money on selling iPod hardware.

Joost and the Apple TV?

I used to think a lot about “convergence,” and ubiquitous computing. It’s obvious that I’m not doing much of that any more, because it took me until now to have me consider the fact that the Apple TV runs OS X might mean that 3rd party apps, like, maybe, Joost, end up running on it.

What finally jogged my brain was this item from Om Malik’s live blogging of a talk by Steve Jobs at the D conference.

Q: Why do you call AppleTV a hobby?
A: What every body has tried is that coming from computer market, you think about getting content from your computer to your TV. I am not sure that is what consumers want. More we think about it, they are like peas. We think the content from the Internet is the real play.
GigaOM LIVE BLOGGING: Apple adds YouTube to AppleTV «

Update: Not surprisingly, this dim insight isn’t exactly news. People have already hacked the AppleTV to run 3rd party apps, including Joost.