Apple Inc. isn't seeing that much green with Apple TV... yet.
In a story from Home Media Magazine, it appears that in a study from iSuppli Corp, they "found that when tabulating the bill of materials for the device, excluding cables, packaging and marketing expenses, the gross margin dipped below 20%" for the $300 priced unit.
Compare that with the "gross margins for Apple's line of iPod portable music and video players ranges from 40% to 50%." Apple's biggest hope "is to migrate its successful iTunes service from the Internet."
"This suggests that Apple is taking a market-penetration strategy ... rather than the simple profit-per-unit approach it has always used in the past," stated Andrew Rassweiler, the senior analyst for El Segundo, Calif.-based iSuppli.
In addition to this "Apple reduced costs to the device by utilizing a less expensive microprocessor and logic chips, compared to a standard PC. It said the device faces numerous challenges within the home, including access to major studio content, requirement of broadband Internet capability, a digital TV, home wireless network and an iTunes account."
Also, "the lack of an internal digital video recorder, a DVD ripping device, cable/satellite connectivity and limited storage capacity (40GB) would brand the Apple TV as an undefined product and hinder consumer adoption, especially of those with HDTVs."
Despite all this, "iSuppli said Apple TV shipments would reach 1 million units in 2007 and 1.4 million units in 2008."