Apple Watch Costs Under $85 To Make

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It only costs $85 to make an Apple Watch? Makes you wonder how much those $250 watch bands cost to make. :eek:

According to a teardown carried out by IHS Technology the actual hardware costs of the 38mm Apple Watch Sport are only about 24 percent of the manufacturer's suggested retail price, giving it the lowest hardware costs compared to retail price of any Apple product.
 
And this is the reason why Apple is the most profitable company there is. That and the fact that they have plenty of customer willing to pay the price.
 
It only costs $85 to make an Apple Watch? Makes you wonder how much those $250 watch bands cost to make. :eek:
That doesn't include R&D, advertising, testing, shipping and other initial investment costs. All those costs have to be amortised somehow.
 
...and still the douchebags will lap it up. Wait for the excuses to be made by the people who are paying so much to start coming out now. I love it how people get utterly robbed blind and then make excuses for the robbers.
 
That's $85 in hardware costs.
There is also cost to assemble, test, package, ship, and distribute. There is also ongoing support costs, R&D (likely minimal as Apple runs a pretty tight ship). There is a profit margin, oh yes, there is, but it's not based on only the $85 cost in hardware. Oh, and that $85 is likely off -- Apple likely negotiated pricing. It's probably less. ;)

That $400 video card you bought? the "cost" is similar - the actual parts are not all that much in comparison.

Then again, companies that make things do not stay in business long if they don't make a profit.

No, not an Apple fan boy -- haven't owned an Apple product since the early 1980's, but I do work in the electronics industry and deal with costing / pricing / etc on a daily basis which is why articles like this annoy the fuck out of me.
 
Do those costs include software? I'd hope the programmers get paid. Then you have to account for the fact that there are only a few people who'd even buy this watch. I'm surprised it's as cheap as it is.
 
That's $85 in hardware costs.
There is also cost to assemble, test, package, ship, and distribute. There is also ongoing support costs, R&D (likely minimal as Apple runs a pretty tight ship). There is a profit margin, oh yes, there is, but it's not based on only the $85 cost in hardware. Oh, and that $85 is likely off -- Apple likely negotiated pricing. It's probably less. ;)

but android wear watches are only around $250?
 
Most of the electronics are having insanely low price for components.

For example, Galaxy s5 is about 200 bucks to make, but they sell it for $650.

The labor, R&D, and adertising...etc adds up.....
 
but android wear watches are only around $250?

Different hardware too. BOM is likely less than $85.00. As for R&D, software costs, etc, can't say. I know what our costs are for stuff like that and it adds up. The final selling price has margin in it, but also what the target customers will pay for it. Android users, $260, Apple users... couple of mortgage payments :)
 
That doesn't include R&D, advertising, testing, shipping and other initial investment costs. All those costs have to be amortised somehow.

They could sold the thing for 125$ and covered all that cost in first 2-3 hours of them being on sale.
 
Different hardware too. BOM is likely less than $85.00. As for R&D, software costs, etc, can't say. I know what our costs are for stuff like that and it adds up. The final selling price has margin in it, but also what the target customers will pay for it. Android users, $260, Apple users... couple of mortgage payments :)

Good point! Also forgot that the sports band versions were only $350. $350 isn't that far off compared to some of the android watches.. I take my comment back now :D
 
Good point! Also forgot that the sports band versions were only $350. $350 isn't that far off compared to some of the android watches.. I take my comment back now :D

Costs / pricing / margins is crazy stuff. "Real" cost is pretty complex - we fudge and average things for R&D time. Actual cost for manufacturing are pretty easy Parts + Assembly + Shipping + Tariffs (basically). That tells you your dock "cost". Then you have to inspect it, test it, maintain the firmware, support the product, pack it, ship it, and so on.

My main point was articles like the one linked are really misleading and do make for good Internet arguing fodder.
 
Firstly, the cost IHS lists doesn't include everything else that goes into the price, such as engineer salaries, assembly costs, logistics cost, advertising, R&D, etc.

Secondly, the cost that IHS estimates for the hardware is based on cost estimations of known process types, for older packaging/wafer processing techniques. IHS can't estimate cost of new semiconductor processes because they have no clue what is being used.

I can say with 100% certainty, and I can't say why I can say with 100% certainty, that the price IHS is showing is not correct, even for just the material cost. That number should be approximately tripled.
 
All the fools here that think Apple actually spent a lot of money doing R&D needs to stop drinking that kool-aid. All they did was copy what all the other smartwatches before them already had done, and have it work with their OS. Whoopee. Soooooooooo expensive.
 
Firstly, the cost IHS lists doesn't include everything else that goes into the price, such as engineer salaries, assembly costs, logistics cost, advertising, R&D, etc.
from the link said:
Note that the analysis does not include logistics, amortized capital expenses, overhead, R&D, software, IP licensing and other costs.

On the other point, the S1 board mostly includes standard components under the epoxy. Suggesting that all prices should be tripled for a BOM estimate is ridiculous. The main "APL 0778" SoC is probably the biggest variable, but $10 and change isn't an unreasonable cost estimate for a SoC of that size. If you claim that it's built on a leading edge process, you're way ahead of ABI Research. Suggesting that Apple is launching a risky new design on a brand new process would be very unusual. lol https://www.abiresearch.com/press/apple-watch-insides-pcb-details-revealed-for-the-f/ (the Elpida memory is DRAM, not SRAM... the photo has a typo)
 
Copy or not, I don't think ANY new products would have taken off, at this day and age, without Apple releasing a copy and/or version of their own.

SS Gear was the first smartwatch that was made by a major brand that I am aware of, but that sank since no one knew about it, media coverage was mediocre at best (in fact I only heard about it since I work in a similar industry, I do not remember any significant media coverage or even advertisement of the said watch). Apple watch in comparison gets much more media coverage (and hence free advertisement), thus it, in a way, helps the industry push such things forward.
 
Also, another thing to consider that it does not have any direct competition. If you want an iOS, you are going to buy Apple. If you buy Apple, their product line up does not have very many choices, so they are not burning cash by releasing so many models either.

Go to Android, who profits from the Apps and software? Google.

Who makes Android phones? at least 10 companies, so within Android itself there is already a very heavy competition with each other, which cuts into their profit. And since they do not profit from Apps in anyway (if anything, they must spend money into Apps), their entire profit comes entirely from the hardware, a much less lucrative market.
 
That's how Apple is highly profitable by selling low end junk for a premium to the uninformed who think this is a good thing.
 
Couldn't the same be said for a ton of other things, particularly jewerlry which actually is functionally useless?

Well one thing Apple has going for it is that due to its market penetration globally, it'll be easier to replace an Apple product under warranty than otherwise.

In the few locations around the world which my family members reside for any extended periods of time (Taiwan, Ireland and Canada), no other companies have easily reachable repair centers except for Apple. There is virtually no brand overlap between the other brands.

At least that is one perk of Apple...
 
I'd be surprised if it added another 20 dollars to the cost. Gold plating isn't as expensive as people think.

Especially since Apple mixes in some kind of ceramic instead of other metals for their 18K gold. It's still 18K by weight, but it has more volume than typical 18K gold.
 
Firstly, the cost IHS lists doesn't include everything else that goes into the price, such as engineer salaries, assembly costs, logistics cost, advertising, R&D, etc.

They know their market and they know fully well that they could have priced it much lower and still covered all of that within the first hour.
 
Always wondered what the material, energy, and labor costs of something like a i7-5960X is. Just the cost to make that one chip ignoring the R&D cost and the cost of building the fab. Is it even a dollar? I'd be astonished if it was more than $10. Does the HSF cost intel more to source than the actual silicon that goes under it?
 
That doesn't include R&D, advertising, testing, shipping and other initial investment costs. All those costs have to be amortised somehow.

As far as advertising goes, Apple gets a lot of free advertising. They don't need to put in as much as another similar company would.
 
Saw my first Apple Watch in the field yesterday. My high school age GROCERY BAGGER was wearing it. He was fiddling with it when he was supposed to be bagging me up. I have been into tech my whole life, i am typing this on a mac, and i just wanted to smack the kid.
 
Saw my first Apple Watch in the field yesterday. My high school age GROCERY BAGGER was wearing it. He was fiddling with it when he was supposed to be bagging me up. I have been into tech my whole life, i am typing this on a mac, and i just wanted to smack the kid.

I would have called him out on it...or at least called his manager. My comment would have been "if you can afford to pay this kid enough to buy an apple watch, he must be a really hard worker"....sarcasm would be needed though.
 
That's $85 in hardware costs.
There is also cost to assemble, test, package, ship, and distribute. There is also ongoing support costs, R&D (likely minimal as Apple runs a pretty tight ship). There is a profit margin, oh yes, there is, but it's not based on only the $85 cost in hardware. Oh, and that $85 is likely off -- Apple likely negotiated pricing. It's probably less. ;)

That $400 video card you bought? the "cost" is similar - the actual parts are not all that much in comparison.

Then again, companies that make things do not stay in business long if they don't make a profit.

No, not an Apple fan boy -- haven't owned an Apple product since the early 1980's, but I do work in the electronics industry and deal with costing / pricing / etc on a daily basis which is why articles like this annoy the fuck out of me.


This right here.
 
The Apple watch is the most absolutely "For Suckers Only" product I've ever seen Apple make...! Talking about Apple products in particular, that's saying something...;)
 
You guys make it sound like it's easy to make. I'll give you $100 and make me a working or better than the apple watch or even the samsung watch including software and I want regular updates and compatible apps.
 
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