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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.

appletvhomepod-800x413.jpg
One thing I've heard from reliable little birdie is Apple effectively sells [the Apple TV] at cost. Like they really are like a $180 box. And you think wow this is amazing, it has an A10 processor which we know is super fast, it has crazy good graphics.

I've heard the same thing about HomePod too. Why is HomePod so much more expensive than these other speakers you can talk to? HomePod I actually have reason to believe, Apple actually sells it at a loss. I can't prove it. I don't think it's a big loss.
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
 

now i see it

macrumors G4
Jan 2, 2002
10,895
23,086
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.
 

sofila

macrumors 65816
Jan 19, 2006
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Ramtop Mountains
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
 

44267547

Cancelled
Jul 12, 2016
37,642
42,492
I just wish Siri to be on par with Alexa or Google.

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.
 

jlc1978

macrumors 603
Aug 14, 2009
5,585
4,440
I dont believe apple sells anything at cost.

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.
 
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dumastudetto

macrumors 603
Aug 28, 2013
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Los Angeles, USA
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.
 

keysofanxiety

macrumors G3
Nov 23, 2011
9,539
25,302
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,"

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.
 

Surf760

macrumors regular
Jun 9, 2017
131
168
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.
 

edgonzalez32

Suspended
Jul 21, 2011
673
1,256
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.
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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