IHS iSuppli Estimates $349 Apple Watch Sport Costs Just $84 To Produce
Apple's market capitalization currently sits at nearly $750 billion, and it didn't get there by charging pedestrian prices for its gadgets. Just the opposite, Apple often attaches premium price tags to its products, and the same goes for its recently launched Apple Watch line. Speaking of which, preliminary data from IHS shows that the new Apple Watch has the lowest ratio of hardware cost to retail price of any Apple phone.
By tearing down the Apple Watch Sport, IHS was able to estimate a bill of materials (BOM) of $81.20. Adding in $2.50 for manufacturing expenses, the research firm reckons it cost Apple $83.70 to build each Apple Watch Sport model, which sells at retail starting at $349. That means the hardware costs are only about 24 percent of the MSRP, whereas the estimated hardware cost to MSRP ratios for other products IHS has looked at in the past have ranged from 29 percent to 98 percent.
Source: IHS
"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."
The most expensive piece of the Apple Watch is the touchscreen display module, which clocks in at $20.50 and is more than twice as expensive as the apps processor ($10.20). After those two pieces, it's the memory that costs the most at $7.20.
From top to bottom, IHS didn't find many surprises, though did note that the Apple Watch contains several new features and manufacturing methods, notably the Pulse Oximeter, Force Touch sensor, and Taptic Engine feedback, to name a few.
By tearing down the Apple Watch Sport, IHS was able to estimate a bill of materials (BOM) of $81.20. Adding in $2.50 for manufacturing expenses, the research firm reckons it cost Apple $83.70 to build each Apple Watch Sport model, which sells at retail starting at $349. That means the hardware costs are only about 24 percent of the MSRP, whereas the estimated hardware cost to MSRP ratios for other products IHS has looked at in the past have ranged from 29 percent to 98 percent.
Source: IHS
"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."
The most expensive piece of the Apple Watch is the touchscreen display module, which clocks in at $20.50 and is more than twice as expensive as the apps processor ($10.20). After those two pieces, it's the memory that costs the most at $7.20.
From top to bottom, IHS didn't find many surprises, though did note that the Apple Watch contains several new features and manufacturing methods, notably the Pulse Oximeter, Force Touch sensor, and Taptic Engine feedback, to name a few.
