SAN FRANCISCO (Reuters) – Apple Inc.’s Apple TV home media hub carries a much lower gross margin than the company’s iPod digital media players, market research firm iSuppli said on Wednesday.

Apple TV sells for $299 while the cost of components including an Intel Corp. Pentium M processor and 40 gigabyte hard drive from Fujitsu Ltd., came to $237, iSuppli said.

That leaves a gross margin of 20.7 percent, compared to margins of 40 to 50 percent for iPods, iSuppli said.

“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,” iSuppli analyst Andrew Rassweiler said in a statement.

The device acts as a bridge between a television and a Mac or other personal computer, playing movies, TV shows and music bought from Apple’s iTunes online store on the TV screen.

Given the popularity of the iPod — Apple has sold more than 100 million since the product’s debut in late 2001 — and iTunes, iSuppli said the company would probably sell 1 million Apple TV units in 2007 and 1.4 million in 2008.

However, the device also faces challenges such as limited functionality, modest storage space, and the need to roll out more interesting content, it said.

Other component suppliers for the product included Nvidia Corp., whose GeForce Go 7300 graphics processor costs $15, and Broadcom Corp., whose wireless networking card runs about $19, iSuppli said.

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