New Apple TV is iPod Touch in sheep's clothing

May have the memory and Bluetooth support to connect to App Store, play games, says virtual teardown expert

The inside of the new Apple TV likely resembles the interior of the iPod Touch, a move that allowed Apple to dramatically cut costs, a Canadian research company said today.

What's unknown, said Jeffrey Brown, who heads the business intelligence group at Ottawa-based UBM TechInsights, is whether the new model has the memory necessary to store downloaded applications, and Bluetooth connectivity that could be used by game controllers.

TechInsight's estimate pegged the Apple TV's "bill of materials" (BOM) at approximately $50, including packaging and the device's miniature remote control.

Brown's team hasn't torn apart an actual Apple TV -- the device doesn't go on sale until the end of this month -- but based its estimate on current information and a knowledge of component costs.

On Wednesday, Apple CEO Steve Jobs introduced the smaller and less expensive Apple TV, which streams rented movies and TV programs to television sets. Apple's priced the new model at $99, a 57% discount from the original Apple TV's $229.

Some of the savings came at the expense of Intel, which had provided a pair of chipsets and the microprocessor in the original model, said Brown.

The new Apple TV is powered by an A4 application processor, the Apple-designed system on a chip (SOC) made by Samsung and built around an ARM CPU. The A4 also powers the iPod Touch, iPhone 4 and iPad .

Going with the A4, which Brown estimated costs Apple $15, let Apple drop the Intel Pentium M processor inside the older Apple TV. By yanking other components, including the hard drive, standard computer memory and most of its input-output functions, Apple was able to ditch other Intel chipsets that managed memory and I/O.

"We figure that the Intel parts cost Apple $50 to $60," said Brown.

Even at the lower price, Apple will turn a profit on the smaller Apple TV. "They're going to make money off this," said Brown, who added that the revenues from content rentals won't be necessary to put the Apple TV into the black.

Other cost savings came from discarding the original's hard drive and fan, and by drastically reducing the size of the logic board that holds the device's chips.

Redesigned Apple TV includes built-in HDMI, Wi-Fi and Ethernet and is one-fourth the size of earlier models.

"We estimate that the board area in the new Apple TV is ten times smaller than in the original," said Brown. "It will be very similar to the size of the boards in the iPhone 4 and the iPod Touch."

Brown said TechInsights is "very confident" that when it opens up an Apple TV later this month it will find that "the guts will essentially be the same as the iPod Touch."

But there will still be mysteries to solve. "How much [flash] memory will be there, that's one," said Brown. "And does it have Bluetooth on board?"

Answering those questions will hint at Apple's future plans for Apple TV, Brown argued.

If the Apple TV includes plenty of memory, users can assume that Apple will offer downloadable content from the App Store, most likely games. And if the device offers integrated Bluetooth, as does the iPod Touch, game controllers could appear.

"They'll tell us whether the Apple TV has, or will have, a gaming or application use," said Brown.

It's possible, of course, that TechInsight will find those components inside the Apple TV, but that they won't be utilized by the device. "Apple always holds something back for the next version," Brown pointed out.

But he was optimistic that App Store downloads and gaming will be possible. "If they decided to keep everything on the Web, they could have shrunk it even more," said Brown.

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