Gruber: Apple TV is Sold at Cost, HomePod at Slight Loss

Discussion in 'MacRumors.com News Discussion' started by MacRumors, Feb 1, 2019.

  1. MacRumors macrumors bot

    MacRumors

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    On the latest episode of The Talk Show, Daring Fireball's John Gruber discusses Apple TV and HomePod pricing and whether Apple is charging too much for some of its products.

    According to Gruber, Apple is actually selling the 2017 Apple TV 4K at cost, suggesting the device costs Apple $180 to make. As for the HomePod, Gruber said he believes Apple sells it at a loss.

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    Apple sells the 4K Apple TV for $180, and the HomePod for $349, though the HomePod at least is often available at a discount from third-party retailers. When the HomePod was released, estimates suggested it cost $216 to make in raw components, which does not factor into account other costs like research and development, software creation, and more.

    Both the Apple TV 4K and the HomePod are priced higher than competing products from other companies like Amazon and Google, and rumors have suggested that Apple is working on lower-cost versions of both devices. For the Apple TV, Apple is said to be developing a stick-style Apple TV device, and for the HomePod, rumors suggest a smaller, cheaper model is in the works.

    Gruber said that he also suspects the AirPods are priced close to cost as well, though he's not sure and can't prove it. And, of course, over time, things become less expensive to manufacture as component costs come down. Something that cost $180 in 2017 might not cost the same in 2019, as an example.

    Overall, Gruber says that Apple isn't pricing its products too high, it's developing products that are too good.

    "If you think it's a problem that these products are so expensive compared to their competition, that too few people buy them, it's not because Apple is charging too much, it's because Apple engineered and designed too good of a product," said Gruber.

    (Thanks, Ryan Jones!)

    Article Link: Gruber: Apple TV is Sold at Cost, HomePod at Slight Loss
     
  2. pradeepbabloo macrumors member

    pradeepbabloo

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    Well, the HomePod is really good speaker. I just wish Siri to be on par with Alexa or Google.
    Having said that, I do not believe Apple sells it for a loss. May be for less profit, but not loss.
     
  3. zin macrumors 6502

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    Funny as hell.
     
  4. now i see it macrumors 68030

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    Gruber (whom I like) is a PR arm of Apple. He's on their "A" list. Whatever "rumors" he reveals have received the golden stamp of approval by Apple Markting. Sorry, but I just don't buy it that he has a "secret bird" trickling him secrets. That bird is probably Phil himself.
     
  5. WannaGoMac macrumors 68020

    WannaGoMac

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  6. sofila macrumors 6502a

    sofila

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    It's all part of the game, try to keep people closer to a whole ecosystem. But I really don't believe in Apple selling at cost or loss. I believe that John Grubers's disposable income relys upon Apple for 99,95%. An unofficial spoke-person often disguised as independent. Too biased. And these two products have been on the market for more than a few weeks. All of a sudden he comes out saying Apple prices aren't too high. Yes
     
  7. Relentless Power macrumors Penryn

    Relentless Power

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    I see this said a lot, and it’s not necessarily true in respect to the HomePod. Siri does really well with the HomePod in terms of user commands and it’s responsiveness is actually better than most probably expect. Even the microphone can pick up your voice with Siri from a distance and very few times has it been inaccurate for my usage. Where Siri needs the most improvement, is further development with dictation and deciphering phrases/words, but for in-house commands, Siri does really well.
     
  8. twocents macrumors regular

    twocents

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    #8
    Haha fixed that for you
     
  9. gugy macrumors 68030

    gugy

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    There is no way Apple sells anything at cost or slight loss. Try again. lol
     
  10. Glockworkorange macrumors 65816

    Glockworkorange

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  11. G5isAlive macrumors 6502a

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  12. jlc1978, Feb 1, 2019
    Last edited: Feb 3, 2019

    jlc1978 macrumors 68020

    jlc1978

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    It really depends on how you allocate costs. There is the manufacturing costs, which are a fixed cost for each unit, that doesn't change for a given volume. The other costs, such as R&D. software development, etc. cane allocated over the production run, split between similar projects, etc. The more you make the lower the total cost (fixed plus allocated) and you can price based on a planned production run. At some point the per unit revenue above manufacturing costs*units sold covers the total allocated costs, you have broke even and the product is making a profit.

    So yah, if Apple planned to sell a million units and have only sold 100K so far the HomePod could be unprofitable based on the total costs and total revenue to date but that is not the whole picture.
     
  13. TheIguana macrumors 6502a

    TheIguana

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    The problem on cost is not these tertiary products in Apple's ecosystem, it is the primary devices like iPhones and Macs that are starting to get pretty out there.
     
  14. rturner2 macrumors 6502a

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    Next he’ll say the watch bands are at cost. Hahaha.

    HomePod is a great speaker.
     
  15. neuropsychguy macrumors 65816

    neuropsychguy

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    If a cost or slight loss HomePod resulted in an ongoing high margin Apple Music subscription, they might. I'm not saying Apple is, I'm pointing they might in some circumstances.
     
  16. dumastudetto macrumors 68030

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    I've gotta agree with Gruber here. Apple is pushing the envelope and driving forward product innovation like never before. This leads to higher costs for consumers, but it doesn't automatically mean Apple is making more profit per unit sold. Their hardware margins have actually fallen in recent financial quarters.
     
  17. Eduardo1971 macrumors 65816

    Eduardo1971

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    I love both of my stereo-paired HomePod’s. The sound is great and asking Siri to turn off/on my connected home accessories is an added bonus.

    Hopefully I’ll be able to add another HomePod to our upstairs and downstairs bedrooms.
     
  18. keysofanxiety macrumors G3

    keysofanxiety

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    Well that’s evidently horse hockey. Of course they make a profit on products and to imply there’s nothing that can be improved with these is incredibly disingenuous.

    Man I love Apple products but Gruber’s taken a good gulp of the Koolaid. Reading this sort of sycophantic hyperbole doesn’t exactly encourage Apple’s team to price things according to the real world.
     
  19. Surf760 macrumors newbie

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    I love my Apple TV 4k. I bought it on release date. I'm not buying for a second that it costs them $180 to make it when Roku and others distribute products that essentially do the same at a fraction of the costs.

    I have a hard time buying the same with the Homepod considering the cost of its competitors. Not to mention that speaker products are notoriously high margin products.
     
  20. dumastudetto macrumors 68030

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    Apple Music subscriptions aren't high margin for Apple. Most of the money goes to the music industry.
     
  21. dazz87 macrumors 65816

    dazz87

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  22. ouimetnick macrumors 68020

    ouimetnick

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    #22
    I consider John Gruber & Rene Ritchie to be Apple's unofficial PR folks. Both are massive sheep/die hard fans, and I'm sure Apple tells them certain things, but I highly doubt Apple would sell something below cost. Near cost, perhaps, but not below.

    Rene's YouTube videos are nice though.
     
  23. napabar macrumors 6502

    napabar

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    Gruber has been dipping into his skank weed again. Usually brings up absurd political posts, or nonsense like this.
     
  24. dumastudetto macrumors 68030

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    John and Rene are always fair and honest. Their commentary is always bang on the money. They are completely respected and I regard them as 100% trustworthy.
     
  25. edgonzalez32 macrumors 6502

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    Yeah, it's a little annoying sometimes. I also noticed that anytime someone tries to jump into a deeper discussion about Android or windows, he shuts it down. Like damn dude, apple isn't the only company in the world that makes good products.
     

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