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Read more about Apple keeps slim profit margin on HomePad speaker, which cost $216 to build on Business Standard. Given the HomePod's $349 price, that $216 cost suggests Apple is generating margins of about 38 percent, according to the TechInsights
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speaker, which cost $216 to build
Apple Inc.’s HomePod, the company’s first foray into speakers in a decade, costs
$216 to build and generates thinner profit margins than other products like the
Apple Watch and iPhone, according to analysis by TechInsights.
Given the HomePod’s $349 price, that $216 cost suggests Apple is generating
margins of about 38 percent, according to the product analysis firm. That
compares with margins of 66 percent and 56 percent for the Google Home and
Amazon Echo, products that compete in the smart-speaker market, but offer
lower audio quality, according to the firm’s estimates.
“Apple is compressing their margins a bit, wanting to go big or go home,” said Al
Cowsky, TechInsight’s costing manager. “In doing so, I suspect they reduced the
selling price from a normal Apple margin in order to sell more units on volume.”
For comparison, the Cupertino, California-based company generates margins of
64 percent on the flagship iPhone X, according to a materials teardown by IHS
A $349 original Apple Watch from 2015 was estimated by IHS to cost only $84 for
Apple’s latest hardware product has won praise for its sound quality but criticism
for the lack of smooth integration with the Siri digital voice assistant and the
inability to work tightly with some popular outside applications, unlike its rivals.
Apple, like Amazon.com Inc. and Alphabet Inc.’s Google, wants the HomePod to
keep consumers tied to its system of services like its music subscription.
The bulk of the HomePod’s costs come from the internal speaker technology,
including the many microphones, tweeters, the woofer and the power
management components. That adds up to $58, while an additional $60 includes
various smaller parts like the lighting system used to display the Siri animation on
the top of the device.
The HomePod’s A8 chip is estimated to cost $25.50, while the external housing
and other items come in at $25. TechInsights also estimates manufacturing,
testing, and packaging to add up to $17.50.
Apple didn’t respond to requests for comment on the HomePod materials
analysis. Apple Chief Executive Officer Tim Cook commented on component
breakdowns in 2015 during an earnings call by stating he has “never seen one
that is anywhere close to being accurate.”
Article By - Business Standard