I personally was very excited to see when Steve Jobs first made mention of the AppleTV at a news conference at an Apple store. Usually these announcements happen under much fanfare and a big Apple convention. The AppleTV (then iTV) was different. Jobs also mentioned in passing that this was a hobby.
This certainly holds true. A company called iSuppli has figured out that the AppleTV costs Apple about $237 to make. The retail price is $299. Usually Apple products sell for the retail or just under. That leaves about a $63 margin for both Apple and the retailer to make. Usually an Apple product is made for about half of what the retail price is.
With the new HD offerings, the AppleTV’s 40 GB hard drive will be insufficient. They will soon be offering build-to-order units with larger drives. Perhaps that will offer a little more profit margin.
It’s obvious Apple will take a hit on price to get into the living room, something every hardware maker has been trying to do for over a decade.
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