Apple Watch was launched by Apple in a wave of critics who accused the American company of selling the product at a much higher price than the production price, so today we also see the first estimate of the cost of the components. Although Tim Cook harshly criticized analysts who estimate production costs of the various components of Apple products, here is what we see today estimate for Apple Watch component costs.
In the image above you can see the production costs for each type of component or group of components, at the end the prices of accessories and boxes are listed. The most expensive component is the Retina screen, Apple paying $20.50 for it, but this includes the cost of the touch screen controller and the ion-X protective panel, the total being high enough.
From the screen we move to the processor itself which costs no less than 10.20 dollars, the RAM memory and the flash storage medium having a combined cost of about 7.20 dollars, much lower than many would have imagined. Moving on, we move on to the component that manages the transmission of energy to the various components of the watch, this having a price of 5.50 dollars.
Continuing we reach the costs of the Wi-Fi and Bluetooth components, Apple paying only 3 dollars for the group of chips bought from Broadcom. Moving now to the chips that control the user interface + the NFC chip, the audio chip with all the amplifier and the touch controller, the estimate of American analysts is $5.50 for all the components bought by Apple.
It is fairly typical for a first-generation product rollout to have a higher retail price versus hardware cost," said Kevin Keller, senior principal analyst-materials and cost benchmarking services for IHS Technology. "While retail prices always tend to decrease over time, the ratio for the Apple Watch is lower than what we saw for the iPhone 6 Plus and other new Apple products, and could be of great benefit to Apple's bottom line if sales match the interest the Apple Watch has generated.
For the accelerometer, gyroscope, ambient light sensor and the optical one with pulse, which detects the heartbeat, the Apple company pays only 3 dollars, a small price for the functionality offered by them. In the case of the 205 mAh battery, the price of the component drops to only 0.8 dollars, so Apple pays only a little over 3 lei to buy the Apple Watch battery.
Finally, we have the costs of the box, bracelets, logic board and switches, plus other accessory components, Apple paying its partners $16.50 for all of this. As for the inductive charger, the adapter, the extension for the Sport strap and the packaging, Apple pays another 9 dollars, and this is where all the estimates regarding the components of the watch end.
To provide electromagnetic shielding, the encapsulated PCB assembly is further treated with a metalized coating deposited over the surface," Keller added. "This shielding process is used instead of conventional stamped sheet metal shielding, saving a significant amount of space, as well as cutting down slightly on weight.
Totally Apple would pay $83.70 for all Apple Watch components and the assembly, which costs only 2.5 dollars, is included in that price, and here we are talking about the price for the cheapest model of the Apple Watch Sport, which is sold for 350 dollars. Considering that we don't have estimates for the costs of stainless steel Apple Watch components, we can't know how much money Apple earns from those models, but the difference is certainly big.
Practically, in the case of the Apple Watch Sport, Apple remains with 265.30 dollars for the sale of each unit, this amount covering the costs of development, transport, promotion and any other related costs, at the end of which the profit is extracted. Tim Cook warned that estimates of this kind do not take into account all of Apple's costs and that in the case of a new product the profit is small, but it is hard to believe that Apple remains with less than 100 dollars in profit, and this in the worse case.
What do you think about these costs?
