New Apple TV Costs $64 To Make, Original: $237

Apple TV 2nd generation open
(Image courtesy of iFixIt)

Apparently, it pays to reduce the size of your “hobby” device. iSuppli has hit the books and come up with a cost estimate for the new Apple TV and compared to the original box, the new model is not only a quarter of the size but almost a quarter of the cost as well.

AllThingsD is reporting that iSuppli has done the math on both the new and old Apple TV models and there’s quite a cost difference between them. It appears that the new model costs Apple to make, where the original, larger 2007 model clocked in at 7 in material costs alone. (Keep in mind, these estimates are for hardware and manufacturing costs only — they don’t factor in research and development, software, licensing costs or anything else.)

So what makes the new Apple TV so much cheaper? Certainly losing the hard drive helped — the original white and silver ATV model “was built like a small desktop PC,” while the tiny new black box “is built more like an iPad,” even sharing some of the same components, such as the A4 processor, the Wi-Fi/Bluetooth and power management chips.

“Compared to the first-generation Apple TV, the new model offers a dramatically improved ratio of hardware cost to retail price,” iSuppli remarked on their findings. “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.”

That equates to better profit margins for Apple and of course, a better device with a sleeker design for the end user — and who knows, if enough of them sell, we could see an even cheaper model yet to come…

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