Mikey Campbell
According to the latest research from TechInsights, Apple is shelling out $216 to build HomePod, meaning margins from the tech giant's first smart speaker are much slimmer than those of its flagship iPhone line.
If the estimate is correct, Apple is generating margins of approximately 38 percent on the $349 HomePod, reports Bloomberg. The figure is not only lower than iPhone and iPad, but also competing smart speakers like Amazon Echo and Google Home, which boast margins of 56 percent and 66 percent, respectively.
A breakdown of component costs finds HomePod's microphones, tweeters, single woofer and power management hardware add up to $58, while other miscellaneous parts like the OLED panel come out to another $60, the report said. TechInsights pegs Apple's A8 chip at $25.50, as the housing and other unmentioned components run another $25. Manufacturing, testing and packaging tack on $17.50 to the final cost, the firm estimates.
The parts in question were laid bare in a teardown conducted by iFixit earlier this week.
"Apple is compressing their margins a bit, wanting to go big or go home," said TechInsight manager Al Cowsky. "In doing so, I suspect they reduced the selling price from a normal Apple margin in order to sell more units on volume."
Apple typically nets huge margins on its mobile device lineup, competently leveraging its supply chain sway and massive share of the memory market to drive down component and assembly pricing.
For example, TechInsights in November estimated a 64-gigabyte iPhone X costs about $357.50 to make, giving Apple a 64 percent margin on the $999 handset. The mid-tier iPhone 8 reaps a lower margin of 59 percent, the firm said.
As usual, the cost estimate is just that and should not be taken as gospel. Apple CEO Tim Cook himself commented on supply chain "guesstimators" in 2015, saying he has never seen an estimated bill of materials breakdown from "that's even close to accurate."
Andrew Orr
Amber Neely
William Gallagher
Christine McKee
AppleInsider Staff
39 Comments
Quality doesn't come cheap. This is a heck of a product.
So, its a bit like the Airpods, wonder if that's a new Apple strategy, sure seems like it.
so quality built an amazing sound... want a second one! A few tweaks and this will be a rockstar product!!! Sharktank would not like this product, not high enough margins. Would not get a deal
:| These things are mostly useless, since so many things are unaccounted for and it leads to people, who don't know any better, to actually believe these numbers as fact.
Any cost breakdown reports need to be taken with a grain of salt, but this is an impressively high component cost compared to its MSRP. The device certainly feels, looks (including the iFixit teardown), and sounds like the components would be in that ballpark range; and the MSRP is definitely lower than I'd expect for its market position.
That said, there are several questionable statements about the component breakdown. For example, they refer to "an additional $60 includes various smaller parts like the lighting system used to display the Siri animation on the top of the device," which is just the 38mm Apple Watch display, but I don't think it contains the capacitance touch or force touch elements of the display, and can probably be the Series 0 Watch display with the lower brightness. These could also be discarded displays that weren't good enough for the Apple Watch but would be perfectly fine for use under a translucence, plastic top cover for the HomePod's basic animation.
Here are the results from IHS for the iPhone 8 Plus. They say the A11 Bionic with 6 cores is $27.50, but the A8 in the HomePod, which very well could discards that may have a core disabled because it's not needed is $25.50? Those numbers don't click for me. Other values fo this build do seem low, so it could even out, but this "estimate" is sending up a lot of red flags.