The new Apple TV carries a Bill of Materials (BOM) of $61.98, including additional items boxes with the product, based on a preliminary estimate from iSuppli. When the manufacturing costs are added in, the second-generation Apple TV’s production cost rises to $63.95.
The table below presents a summary of iSuppli’s preliminary BOM and manufacturing cost estimate for the second generation Apple TV, broken down by subsystem. Please note that iSuppli’s teardown assessment accounts only for hardware and manufacturing costs, and does not take into consideration other expenses such as R&D, software, licensing and royalties.
Apple TV’s core – From PC to iPad
“The first Apple TV was built like a net top computer. The architecture was basically a stripped down, small-form-factor desktop PC,” observed Andrew Rassweiler, director, principal analyst and teardown services manager, for iSuppli. “The second generation Apple TV is more like an iPad or iPod Touch with no display. The Apple TV’s A4 processor core, Wi-Fi/Bluetooth chip and power management chip are the same building blocks used in the, iPad, iPhone 4 and iPod Touch.”
While no two Apple designs are identical, and are always uniquely designed to fit a desired form and function, the commonality of elements and features among the Apple TV, iPad, iPhone 4 and iPod touch is striking.
Compared to the first-generation Apple TV, the new model offers a dramatically improved ratio of hardware cost to retail price. The initial version of the Apple TV appeared to be a near give-away or subsidized product for Apple, sold at prices that weren’t much more than the underlying hardware costs. With the second generation version of the hardware, the Apple TV’s price is about 35 percent above its BOM and manufacturing cost.
However, even with this improvement, at a current retail price of $99, the second-generation Apple TV is at the bottom end of the hardware margin spectrum for Apple products. The most recent generation of nano is at the opposite end of the margin range, and is one of Apple’s most profitable hardware items, in percentage terms.
Cadillac of remotes
The Apple TV continues to exhibit the industry-leading electronic and industrial design so evident in Apple’s recent products, including the iPhone 4 and the iPad. This design aplomb is exemplified in the product’s remote control.
“The Apple TV’s remote control represents more incredible mechanical engineering from Apple,” Rassweiler said. “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.”
Samsung/Apple partnership continues with Apple TV
As in so many other recent Apple designs, Samsung Electronics Co. Ltd. is the marquee component supplier for the Apple TV. Samsung manufactures the Apple-labeled A4 applications processor in the Apple TV, along with the mobile Double Data Rate (DDR) SDRAM. With these key components, Samsung dominates the applications processor subsystem, which is the most expensive section of the Apple TV at a cost of $16.55, or 26.7 percent of the product’s BOM.
“Samsung’s partnership with Apple is strategic, and though Apple has a propensity to switch suppliers with smaller components in its systems, the apps processor core is so important and so central to all these Apple product designs now that this partnership is unlikely to change dramatically in the near future,” Rassweiler noted.
The second most expensive subsystem of the Apple TV is the memory section, costing $14, and accounting for 22.6 percent of the BOM. This section is based on 8Gbytes of Multi-Level Cell (MLC) NAND type flash. In the specific Apple TV torn down by iSuppli, Toshiba Corp. was the supplier of this memory, although Apple always employs qualified alternative sources for such commodity parts.
Only 6Gbytes of this NAND flash likely is available for user media storage. The remaining 2Gbytes probably is reserved for the operating system.
Interestingly, there is an empty slot on the Apple TV’s Printed Circuit Board (PCB) that suggests Apple can at least double the NAND flash capacity if desired. However, Apple appears to have forgone this option in order to maintain the $99 key price point.
Panasonic and Broadcom in Wi-Fi/Bluetooth section
The Wi-Fi/Bluetooth module features Panasonic Corp. and Broadcom Corp. devices. Costing $7.65, the module represents 12.3 percent of the Apple TV’s BOM.
Interface surprise - Analogix
The interface section comes in at $2.60, or at 4.2 percent of the BOM. This section is centered on Analogix Semiconductor Inc.’s ANX9836 HDMI transmitter and Digital Audio Interface device. This represents the first appearance of Analogix in the nearly 1,000 electronic products torn down by iSuppli.
The power supply section costs $2.15, or 3.5 percent of the BOM.
Other component suppliers in the Apple TV include Dialog Semiconductor plc in the power management subsystem, Texas Instruments Inc. with a 16-bit microcontroller, Delta Electronics with an Ethernet filter and SMSC with an Ethernet transceiver.
Outside the box
Looking beyond the internals of the Apple TV, additional items boxed with the product—including the flashy remote control—are estimated at $6.10, or 9.8 percent of the BOM.
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