With its latest product announcements, Apple has spread its A4 microprocessor across all of its non-computer products, lowering its hardware and software design and manufacturing costs. Intel takes a big hit in the move, losing three sockets in the AppleTV and seeing the chance for future non-computer design wins slip further away. Apple is using the A4 in the newest iPod touch and its relaunched AppleTV product. The chip had already claimed slots in the iPad and iPhone 4.
(The Apple A4 is a system-on-a-chip (SoC) designed by Apple and manufactured by Samsung. It combines an ARM based CPU with a PowerVR GPU with an emphasis on power efficiency. The A4 processor is the first chip produced for Apple by their new acquisition. P.A. Semi (originally "Palo Alto Semiconductor") was a fabless semiconductor company founded in Santa Clara, California in 2003 by Daniel W. Dobberpuhl who was the lead designer for the DEC Alpha 21064 and StrongARM processors. The company employed a 150-person engineering team which included people who had previously worked on processors like Itanium, Opteron and UltraSPARC. Apple acquired P.A. Semi for $278 million in April 2008.)
The previous AppleTV was effectively a PC using an Intel Pentium M-class processor and two supporting chips: an Intel memory controller with embedded graphics and an I/O chip. The three chips had cost $60 to $65 and consumed nearly 1000 square mm on the circuit board. The A4 replaces all three chips with one device that is estimated to cost Apple $15 to $20 and uses only one quarter the space.
There’s phenomenal reuse for lowering manufacturing and design costs here,” said Jeff Brown, vice president of business intelligence at UBM TechSights. Now Apple can “develop using one operating system (iOS) on all those products; that’s a big benefit."
On the downside, the A4 apparently is not up to decoding MPEG-4 H.264 video at the full 1080p resolution that today’s best TVs support. The new AppleTV costs $99, but only supports 720p video. The resolution would not be a big issue for gamers if they could use the $99 box to tap into Apple’s existing library of low-cost games for the iPhone and iPad. It’s not yet clear whether AppleTV will be able to run games or applications on a TV. Whether this limit to resolution will impact TV viewing purchases of AppleTV is also an open question. I know that Tivo resolution does not match my Comcast DVR with HD, but I'm not really a user of Tivo or AppleTV and don't know just what is the latest and greatest available technology in competition with AppleTV. Maybe someone reading this note has some insight.
Bluetooth wireless controllers exist for gaming and could be a next step for AppleTV. Apple is likely reusing a lot of the components from the iPhone on the new AppleTV and iPod Touch products. The recent addition of multi-tasking with the iPhone 4 is a step toward making this software platform a viable replacement or at least alternative for Apple's UNIX based OS.
All these changes give hints to the direction Apple is planning for future products, and a move into lower price tiers. Most observers were pleasantly surprised by the prices for the iPad compared with Apple laptop computers. Lower development and manufacturing costs will support more price drops, while maintaining profitability. It's win — win for consumers and stockholders alike.
Originally written on September 13, 2010.