What's an Apple TV for, exactly? It's not a DVR, can't function as a cable set top box, play a DVD, or rip one. If you don't have a wireless network in your house, a speedy internet connection, a digital television and an iTunes account, it won't do much of anything at all. And unlike most Apple products, a teardown of the components and a little arithmetic shows that the margins on the Apple TV are tiny compared to the usual Apple product. What's Apple thinking on this one?
"This suggests that Apple is taking a market-penetration strategy for
the Apple TV, rather than the simple profit-per-unit approach it has
always used in the past," said Andrew Rassweiler, teardown services
manager and senior analyst for iSuppli. "The Apple TV itself is a very
low-cost design, primarily due to its use of a trailing-edge
microprocessor. At US$299, some have called the Apple TV the 'cheapest
Mac.' However, based on the minimal microprocessor performance and the
application's scaled needs, it might be better to call the Apple TV a
Some decidedly non-Apple thinking here, perhaps. Find a market that barely exists but is poised for explosive growth. Get in early. Price the unit cheaply to gain market share, hoping to become the industry standard. Maybe Jobs can get a job in Redmond thinking like that.