Apple’s TV Model Uses Cheaper Chip: Will Cost Intel
Dow Jones — September 4, 2010 — Lower pricing is one of the most noticeable features of Apple Inc.’s latest gadget for delivering Internet video to televisions. Some of the savings appear to come at the expense of Intel Corp.
Where the original $229 Apple TV device used Intel chips, the $99 version announced on Wednesday uses an Apple-designed microprocessor called the A4. Apple doesn’t discuss how much it pays for such components, but an Ottawa-based research firm attached dollar figures to the technology switch on Thursday.
UBM TechInsights—as part of a preliminary analysis in advance of taking apart the new device—estimates that Apple pays around $15 for each A4 chip. By contrast, the firm says the prior Apple TV used Intel technology that cost Apple $60 to $65 per device. Besides a Pentium M microprocessor to handle computing functions, the original Apple TV also had an Intel chip that managed memory and graphics and another that handled input-output functions, the firm says.
The older device, in other words, was essentially a personal computer, complete with a hard drive for downloading and storing movies. The new one streams rented video content, a simpler task that doesn’t require as much computing power. UBM TechInsights puts Apple’s cost for all the components in the new Apple TV at $47.
An Intel spokesman declined comment, as did a spokeswoman for Apple.
Any impact of the shift on Intel won’t be clear for some time. Apple didn’t sell a large number of the prior Apple TVs—famously dubbed a “hobby” by Apple CEO Steve Jobs—and the same term was used by Mr. Jobs in discussing the new version Wednesday. Some analysts say few consumers have been eager to buy additional set-top boxes for Internet content, noting that Apple will face plenty of competition on whatever demand does emerge.
The retooled Apple TV is another sign of Apple’s broadening use of the A4, which arrived on the scene with the iPad in the spring and was later used on the iPhone 4. It is also used in an updated version of the iPod touch, also announced on Wednesday. The chip—the first to emerge from a chip design team at the company—is manufactured for Apple by Samsung Electronics Co. and based on technology licensed from ARM Holdings PLC.
UBM TechInsights put a preliminary cost estimate of $148 for all components—including $15 for the A4—in one of the new iPods with 32 gigabytes of data-storage capacity. The firm notes that the estimate is subject to change once it has a chance to take the device apart and confirm its assumptions about components and their suppliers.
