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

[x34]

this is totally in the top 5 of the dumbest things john gruber said about apple.

also, since he started blogging on politics/ trump i can't stand reading his stuff anymore.

 

[thadoggfather]

Gruber: Apple is like goodwill
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this is totally in the top 5 of the dumbest things john gruber said about apple.

also, since he started blogging on politics/ trump i can't stand reading his stuff anymore.

The guy has true derangement. He’s a parody of his former self. His discombobulated tech blog / trump diary

 

[gnipgnop]

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.

If you do some simple inflation calculations on computers and electronics sold in the '80s and '90s, it's easy to see that the current prices on hardware are quite good in comparison. The bang for the buck is significantly higher overall. This isn't really an age of pricing burdens on consumers for these types of products.

 

[theluggage]

You can claim they’re just bad at their job and their numbers are wrong, but is that any more likely than you being right when you say, “trust me, their numbers are wrong, I know what I’m talking about and they don’t”?

All I'm actually saying is that there's no evidence that their numbers are right, no real explanation of how they calculate them and no estimate of the margin of error - so if they lead to surprising results* you should question the figures rather than believe the results. That's not "Trust me, I know what I'm talking about", that's rational reasoning 101.

The burden of proof is on the people claiming to know Apple's BOM cost to the nearest 50 cents. When that proof isn't attached to the article as a matter of course, be very suspicious.

"Experts, what do they know?" is a never a bad question to ask - the problem is then going on to say "therefore I'll unquestionably believe this random internet pundit who's 'facts' happen to support my opinion".

(*and Apple taking a lower margin on the Homepod c.f. Amazon & Google's blatantly ad-supported products is surprising, even if they're not literally taking a loss)

Like I said, I’m not vouching for their numbers.

...but you're citing them to support an argument. If you can't vouch for the numbers, how can you base an argument on them?

 

[Novus John]

Yeah, but he has deep connections inside Apple, like how could other blogger get two Apple executives on his talk show? He's their PR.

Which is why you shouldn't trust anything he says. Most large companies have their own PR departments, Apple outsource theirs.

 

[ArtOfWarfare]

It seems like the hardware is way too good for the gimped OSs that Apple makes.

The iPhone, iPad, and Apple TV all have fantastic hardware, but then Apple gimps the OSs by requiring all software to be distributed through the App Store, with absurd rules about handing Apple money at every step of the way and about what software may and may not be distributed through it.

 

[pankajdoharey]

Well the fundamental question to ask is other companies also do "R&D", how come their R&D cost id factored in and still retails at a lower cost but Apple sells it at a higher cost and yet makes a loss? I dont believe a bit of what Gruber is asserting.

 

[ignatius345]

Most people use the router supplied by their internet provider. I think they all probably include WiFi capability now, which wasn’t the case 20 years ago when Apple debuted AirPort. The demand is just not there anymore.

I don't buy that for a minute. Eero exists and a host of other "mesh networking" wifi systems -- and I'm sure Apple could have innovated there.

 

[troyhouse]

I stopped reading and believing anything gruber says long time ago.

 

[jujufreeze]

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

Then why does the Google Home Mini's $29 voice assistant put HomePod's $349 Siri to shame?

 

[Piggie]

Seeing how little you have to pay for amazing product made in China.
To the point you often wonder, how the hell do they make anything THAT cheap, and given how generic things like speakers, plastic molding's are, I don't believe this for one second.

It's how you calculate.
Less than how much it actually costs to make = no.

but if you decide to factor in how much you spend in development, and R&D, then your companies wages, and building rents, and all that THEN you may be able so say it's sold at a loss.
but sold at less than it physically costs to get them made by the factory? No way on earth.

 

[Falhófnir]

Seeing how little you have to pay for amazing product made in China.
To the point you often wonder, how the hell do they make anything THAT cheap, and given how generic things like speakers, plastic molding's are, I don't believe this for one second.

It's how you calculate.
Less than how much it actually costs to make = no.

but if you decide to factor in how much you spend in development, and R&D, then your companies wages, and building rents, and all that THEN you may be able so say it's sold at a loss.
but sold at less than it physically costs to get them made by the factory? No way on earth.

If it's technically true I could see some mind-bogglingly complex metric to work it out, something like because iPhones have a much higher unit cost in a smaller package, having home pods sat on shelves in apple stores instead of more iPhones technically loses apple money or something really stupid like that!

 

[scottsjack]

If my Apple TV 4K cost what I paid for it then Apple needs to leave California so they can lower the cost of their R&D. As usual they're probably making a killing off the optional higher memory model.

 

[Glockworkorange]

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.

I'm the same way with the ATV. I do love it, but c'mon---$180.00? Not buying it costs $180.00.

Homepod for me is a waste---I use Apple Music on my Echo, through my iMac and through my phone. All of them sound perfectly acceptable to me.

 

[subjonas]

Wow it’s pretty much unanimous, MR users think John Gruber is a liar. lol

 

[RecentlyConverted]

I think they should add a poll to this, to see if people believe Apple sells these items at cost or below. Be interesting.

 

[thadoggfather]

Wow it’s pretty much unanimous, MR users think John Gruber is a liar. lol

The guy doesn’t really add much value period. He’s an unofficial accessory to apple’s PR team and little more. One would think he’d be happy to be paid handsomely and given the exclusive to products early often, but alas, he is just another curmudgeon who now can’t even spin a turd. Reality distortion fields down.

 

[triton100]

Haha fixed that for you

Curious. Why are you on an apple forum and why don't you just by a different brand ?

 

[thadoggfather]

His twitter avatar is an NPC .. just saying

 

[CJM]

Amusing for sure. As long as Spotify doesn't work on it natively and anything outside of Apple music is a weird work around, I'm not interested.

 

[Pitogyro]

Gruber is so out of touch with anything related to money. He’s been living in his 1% bubble for so long, he honestly doesn’t understand the value of any of this stuff.

It’s a big problem with the “Apple community” in general. All these filthy rich dbags talking about what is or isn’t a good value. It’s kinda gross, honestly.

He said on more than one occasion in 2018 that Apple products should be costing more, not less.

This was in some kind of delirious fanboy apologist spin about pricing. I stopped reading his rag, removed him from the favourites bar etc. I thought he was a good writer but I realised he’s just an elitist out-of-touch dbag who chooses to write sneaky, dishonest “balanced” arguments about Apple to earn a living. Fine by me. And I just chose to stop reading him.

 

[truthertech]

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.

The most recent test showed Alexa to be a distant third behind Siri and Google in accuracy. Every survey also shows Siri can do everything that folks actually use their smart speakers for. No, Apple hasn't programmed Siri to fart on command like one of the many "skills" that Alexa can do, though you could write a Siri shortcut if you are really desperate to have Siri do that for you.

It's all such nonsense about capability. 99% of the time people use their smart speakers to listen to music/podcasts, get scores, weather, set timers, and control lights, etc. When asked to cite the things that Siri can't do that any meaningful percent of folks want to do, people scratch their heads.

 

[sterlingindigo]

“Cost”, ie. parts, labor, advertising, markup, sales, overhead, and anything else needed for a trillion dollar company to maintain its presence in the marketplace. They’re barely breaking even lol.

 

[martyhimself]

HomePod at a loss? I just checked, and in the UK it is priced at £319. The Sonos One is £199. How could it possibly be sold at a loss?

Then again, like many on this forum I find it hard to believe anyone would take anything Gruber says about Apple as serious tech journalism.

Has he called out Apple for the bent iPad Pro's and its disgraceful handling of it? I thought so.

 

[theluggage]

DUDE...the iPhone is 62% of the company’s revenue. If the GM on the overwhelming majority of Apple’s business were significantly higher than the 38% average, THE AVERAGE WOULD BE SIGNIFICANTLY HIGHER!!!!

Pardon me if I haven't read all 53 pages of accounts, but on a quick scan you all seem to be arguing over information that simply isn't there.

The 38% comes from (total net sales - cost of sales)/total net sales - or you can separate it out as 34% on product and 62% on services because Apple thoughtfully provide both net sales and cost of sales for both of those categories. Its an overall figure, not an average of anything.

For iPhones vs. Macs vs. wearables all they provide is a breakdown of net sales - there's no breakdown of how 'cost of sales' is allocated amongst these categories - and without that you simply can't work out the per-product margins. You can assume that they're somehow evenly distributed between products (in which case, yes, the iPhone is going to dominate the figure) but that is a big assumption and - in the context of this discussion about whether Apple gets a higher margin on certain products - a circular argument.

There's a lot more to 'cost of sales' than the bill of materials - labour costs, licenses and royalties, the notional cost of the included software (which could be any legally defensible figure per product that Apple chooses)* and basically any expense that can reasonably be associated with the process of selling goods and services, some of which don't even makes sense to allocate per product (ask your accountant whether the factory heating bill, subsidised meals at the warehouse canteen or Tim's hotel bill at WWDC are allowable here - better, ask 3 accountants and get 3 different answers). That's without all the possible shenanigans around deferring set-up costs and one-off income spikes over several years and other tax-optimising capers...

If Apple decides that the bundled software (and upgrade rights) are worth $200 per unit for an iPhone and $5 for a HomePod - or vice-versa - who is to argue with them, as long as they're consistent and their accounts meet legal standards? I'm not saying that's the case - I'm saying that nobody here knows what is the case, and its actually irrelevant to the sort of public profit/loss accounts that you're referring to.

* Including, for example, "amortization of the deferred value of unspecified software upgrade rights, which are bundled in the sales price of the respective product" (p27) - i.e. whatever Apple thinks is a reasonable monetary value for all those iOS updates you're going to get during the life of your purchase.