Apple TV is built from tweaked old iPhone chips. Apple has never sold anything for cost. HomePod at $349 losing money? Doubt it.
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Gruber: Apple TV is Sold at Cost, HomePod at Slight Loss
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He mentioned it in a podcast briefly and was very non chalant about the whole thing and Rene Ritchie , a guest on the episode, chalked it up to magnified internet outrage and that we don’t really know the figures that are defective it could be a small batch and gruber pretty much agreed
It was very disingenuous. They don’t want ties severed with Apple and it’s obvious
The job of the management of a large company like Apple is to convince the shareholders that you are making money hand over fist while simultaneously convincing the tax collectors that you're barely breaking even, preferably without telling an actionable lie to either of them. People with such skills are a breed apart and earn every penny of their huge salaries (except... who wrote the report which showed that...?)
I am sure Tim Cook would laugh his ass off if he were read this article. I say there is no chance that Apple sells anything at cost or even close to cost. I suspect they even made some money on the $29 battery replacements that they did last year. Apple will not allow themselves to lose money on anything!
Yeah, a few years back ( before the advent of the iMac Pro ) Gruber was interviewing Schiller and Federighi and didn't ask them why/when the Mac Pro would be updated because ( in my opinion ) it was too controversial. Since then I haven't read anything he writes.
Even if AppleTV is a low or zero-profit device, I don’t hear Gruber saying anything about iPhones, iPads or Macs! We’ve been paying huge markups on those forever.
And then there’s accessories (I shudder to think)!
Having recently tried and failed miserably to download an earlier version of macOS, it occurs to me that Microsoft used to be the ones that made it difficult and for Apple it was easy. This made it easy to troubleshoot and fix older Macs, but potentially even newer ones.
Now, Microsoft makes it easy and Apple are the difficult (if not impossible) ones. Little by little, things like this erode the advantage that made me happy to pay more for Apple computers and devices.
And then there’s accessories (I shudder to think)!
Having recently tried and failed miserably to download an earlier version of macOS, it occurs to me that Microsoft used to be the ones that made it difficult and for Apple it was easy. This made it easy to troubleshoot and fix older Macs, but potentially even newer ones.
Now, Microsoft makes it easy and Apple are the difficult (if not impossible) ones. Little by little, things like this erode the advantage that made me happy to pay more for Apple computers and devices.
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I don’t really disagree about the HomePod and the Apple TV being low profit devices. But yes the iPhone and iPad Pro prices are extortionate.
Microsoft lost money on every Xbox and Xbox 360 console it sold. It’s not always such a ridiculous idea to lose money to get a product into someone’s living room.
If only they took full advantage of it and didn’t limit you to lossy 256kb songs
(Yes, I know Tidal and AirPlay is a workaround)
I think it's entirely possible that he's right. There's a heck of a lot going on in a HomePod. Throw in the software development costs, and I think that in its own right it could easily come out revenue-neutral. But as a Siri-based portal to Apple Music subscriptions, I could see it being a net gain to their bottom line. Just like Apple used to sell the iPod Shuffle for cost, maybe the lowest cost device Apple ever sold, just as a way to keep people in the ecosystem.
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I highly doubt Apple is selling either of these at cost or at a loss. These two items are arguably the most external to the Apple ecosystem. AppleTV is basically standalone, and it serves as a portal for viewing your other subscriptions (Netflix, Prime Video, Hulu, etc.). Unless they have future plans to work in a content subscription of their own, it doesn't really make sense for them to sell it at cost, I can't really envision a situation where it directly leads to a future sale of another Apple product.
Sure why not? Selling their hardware "at cost" is exactly how Amazon products began to succeed. Amazon did not go after profit for years, but they focused on gaining traction and market share. Eventually, the strategy of giving away their products "at cost" would succeed.
Sounds like a good strategy if this is intentional by Apple.
Sounds like a good strategy if this is intentional by Apple.
The internet is overflowing with random pundits who unquestionably disbelieve anyone whose facts don’t support their opinion.
Like I said:
OP claimed that if people did research/googled they would see that Apple couldn’t be losing money on HomePod, based on BOM cost calcs. I took him up on the challenge. If you have an issue with the provider of the only data that seems to exist on HomePod BOM, maybe it would be best to take it up with them.
The estimated cost that we’ve seen online ($216) gives a profit margin of 38% at a $349 retail, but we’ve seen these at $249. Maybe the cost to resellers is at that $200-ish level, which would give Apple little to no profit?
What is the purpose of saying the Homepod is made at cost? To convince people to buy it?
Gruber makes his living (a very good living I might add) off kissing Apple's ass.
I agree. The HomePod seems feasible to cost >$200, but I don’t see how the Apple TV could cost $180 to make. The remote is pretty neat and intricate, and the processor is powerful, so maybe that bumps up the cost quite a bit? Also, the cost to resellers is probably at the $100 level, so maybe stronger third party sales make the margin plummet. And didn’t some cable companies give away an AppleTV? They probably worked out a lower cost from Apple, so this would drop their margin even more.
If this is, in fact, their strategy with regard to these two products, it would seem to be a new strategy. They said several years ago that they didn’t care about market share with regard to the iPhone. I, for one, don’t think Apple will ever prioritize market share over profitability with any of their products.
the appleTV supposed "at cost" figure includes R&D but we need to remember the appleTV literally uses a iPhone SoC (R&D for it already covered from that) TVOS is based off iOS which itself is based off MacOS, nearly every other chip is a commodity part you can price out of asia.
I'd be surprised if they has less than a 50% margin on it
I'd be surprised if they has less than a 50% margin on it