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

[DanBig]

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.

Yes, They are in some ways! The problem is Apple is failing to step back and ask them selves did we forget something as well as what would push this to a Wow product. This is where HomePod failed It needed Touch Bar and Ethernet connectivity for both power (PoE) & network. Then they would have had a Wow product!

AppleTV's only failure in hardware is the remote its designed for 6 years old not an adult hand I ended up making a 3D printed carrier so I could hold it comfortably, it still not perfect as the who trackpad does not track the way it should. The presentation is still a mess which holds true for any AppleTV it still falls short.

The whole issue of profit & loss would had been mute as they would have sold a lot more! Just on the hardware side, then the software would be the only issue for either. Apple's projections where way off given the limits of the product coming out the door.

 

[Bin Cook]

Desperate PR using sympathetic hacks to justify pricing at a time when Apple is being battered for it.

If you can’t see through this, I’ve got a bridge you can buy.

 

[Carnegie]

Cool! That's means I can make stuff up and be on shows too.

There's no way Apple is selling HomePods at a loss. And, Roku and Amazon are making similarly feature 4K streaming boxes which sell for below $100. Hell, bought a 4K Roku Ultra for $50 on Black Friday. And, I'm sure Roku didn't sell that at a loss.

A Roku Ultra sold at that much of a discount likely is sold at a loss. Whether Roku is sharing in (or carrying all of) that loss depends on the degree to which Roku is participating in the discount.

Considering all expenses (e.g. CoS, R&D and SG&A), even at regular prices Roku sells its players at an aggregate loss. It realizes pretty thin gross margins on its player revenue and its operating expenses are substantial. Most of Roku's gross profit comes from platform revenue (e.g. advertising, licensing, subscriptions), and even still - accounting for operating expenses - it's been operating at a loss.

The point is, it uses player sales to drive platform revenue, not to make money. What little gross profit it makes from player sales would easily be overwhelmed by a fair apportionment of its R&D and SG&A expenses.

 

[jlc1978]

They only thing that drives up the Apple TV cost is the stupid remote. You know that thing has a gyroscope in it? Why? Well Apple though, stupidly, that people would want to game with that remote. Reduce the cost by giving us a cheaper remote.

I think the ATV design is intended to evetually act as a TV box / gaming device /Home control hub and thus has more power and features than would be needed for just STB. Having a remote that can be usedto play games is a first step to get games on ATV and moving towards the long term vision fot ATV.

 

[TheMacDaddy1]

Maybe the Apple TV should cost more because both of my latest gen 4K versions constanly lock up during video play back on multiple applications including the Apple app.


I am seriously considering going Roku

 

[marty1980]

The problem isn’t just how much the parts cost. It’s that the competition is providing products with many similar features, along with their own exclusive features, for a much lower cost than Apple TV.

Apple isn’t doing much to justify the added cost compared to competitors. I paid $120 for my Apple TV 4th gen (no 4K). I feel that was a great value for what it does. I can’t convince myself that the 4K version is worth $180 when there’s other options that deliver a great experience for much less.

 

[ilikewhey]

The 6 Plus was $749/849/949 for 16/64/128GB so the math doesn’t work even compared to the XS Max at $1,099/1,249/1,449 for 64/256/512GB. But really the XR is the equivalent to the 6 Plus, and it’s actually cheaper at $749/799/849 for 64/128/256GB than the 6 Plus.


People have been complaining about Apple’s pricing for 30+ years. Yes, they’re expensive. Those that think they’re “worth it” are willing to pay for what they perceive to be a high value product that’s worth the higher price. Others find Windows/Linux meets their needs just as well (or even better) and they’re happy to save some money on the hardware. Different strokes for different folks, as the saying goes.

Xr is not the equivalent of u compare it top of the line back thn to top of the line today.

People been complaining that long because apple been charging huge premium for the same hardware u can find on much cheaper pc components,

again if apple was the one who developed it I.e their r&d budget, thn yes I would totally justify their cost, but these innovation u guys r trying to justify r developed by intels and others, apple just implemented when intel decided to include it in their standard packaging. Nvme, tb3, usb3.1 gen2, i have all that on my z390 gaming pc, and I paid nearly the same price for it as my x58 pc back in 2009 which only had usb2 and standard sata

 

[theluggage]

You are arguing the finer points of the accounting...totally legitimate, but likely only a small factor.

Nope - I don't even remotely claim to understand the "finer points" of accounting - but the gross point of accounting is that if you don't understand the finer points of accounting (including insider information on the company's internal accounting practices) you can't begin to deduce what the 'cost of sales' is for a particular product from aggregate figures.

No fancy accounting would be able to hide the iPhone having 55% GM, for example.

Its not even about fancy accounting - arguing about the per-product GM without inside information from Apple is an angels-on-a-pinhead debate and there is zero, zip, nada about it in the public accounts that people are pointing to.

What proportion of the cost of an iPhone goes towards the iOS license and 'unspecified future upgrade rights'? I don't know, neither do you - but the total will be in those aggregate 'cost of sales' figures somewhere and we have no information whatsoever on how Apple apportions that cost between different products.

 

[tubular]

I can't really envision a situation where it directly leads to a future sale of another Apple product.

Not more hardware. But it's clearly being sold as the ideal portal for the Apple Music service, and I think that's how Apple sees it. So in that sense, I could see Apple deciding not to maximize its profit on the hardware in hopes of making it up on the service side.

 

[DanBig]

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.

If you only need one WiFi AP thats fine!

Most folks today need a few units and depending on the units location you can have poor signal levels. As an example if you live in a city the other competing WiFi AP's can mess you up! A meshed Router setup allows you to overcome these issues.

Bottom line Apple exited just before it got hot again! With newer higher speed WiFi 802.11ac and newer you need more units closer to get the full data rate.

 

[itguy06]

He is appropriately avoiding the interminable and pointless Android vs. Apple or Microsoft vs. Apple debates, which generate nearly 100% heat, and nearly 0% light. I'm amazed that anyone bothers to engage in such debates. Besides, it's his show.

They are not pointless if you have a cohesive argument and have actually tried recent devices and OS's by both parties. And by tried I mean use each for at least 30 days. I find many in the "Mac Media" have had bad experiences with recent Apple products (bad keyboards, QC issues, machine issues, etc) and make tons of excuses for Apple and to not at least explore the alternatives.

 

[Glockworkorange]

Funny as hell.

Lol. Charging extra for poorly designed keyboards, FaceTime bugs, bending iPads and dodgy maps.

I think Apple is at the point where they understand they cannot raise prices again, at least for awhile.

If they can't raise prices and they can't grow the iPhone market because they've already blanketed the Earth, is "services" truly their new growth frontier? Do people really want to spend another $9.99 a month on television?

If you have Netflix and Hulu and Amazon and HBO and Apple Music and Spotify (and perhaps a cable account and Disney coming next year) I think it's a tall order to add ANOTHER service, unless the content is absolutely killer. Game of Thrones or Sopranos killer. I don't see Apple having that type of content, especially when the rumors are the service is going to be heavily censored or "family friendly."

Next few years will be interesting!

 

[Baymowe335]

i think hes applying to 6+ to iphone xs max, which would make sense for the math.
[doublepost=1549178093][/doublepost]
these upgrades would justify the price if apple was the one who developed them, but the fact of the matter is other companies the one who developed them and apple just integrated them,

for example, my i7 920 i purchased in 2009 was 250 dollars, the i5 9600k is 223 today
my x58 mobo that i spend 230 in 2009, the z390 motherboard that comes with TB3, bluetooth, hdmi, displayport, and gigabyte internet. i purchased it for $156.

the ram upgrade price is the worst of them all, i know apple wants to make a profit but 200usd for 16gb and 600usd for 32gb is a bit over the top considering you can get 32gb ram for 175.

How? Do you guys not know how to Calc percentages?

The 6 Plus started at $749.

The XS Max starts at $1099.

Do the math. It's actually closer to a 0% increase than a 100% increase and the phones are hardly comparable.
[doublepost=1549208557][/doublepost]

Nope - I don't even remotely claim to understand the "finer points" of accounting - but the gross point of accounting is that if you don't understand the finer points of accounting (including insider information on the company's internal accounting practices) you can't begin to deduce what the 'cost of sales' is for a particular product from aggregate figures.



Its not even about fancy accounting - arguing about the per-product GM without inside information from Apple is an angels-on-a-pinhead debate and there is zero, zip, nada about it in the public accounts that people are pointing to.

What proportion of the cost of an iPhone goes towards the iOS license and 'unspecified future upgrade rights'? I don't know, neither do you - but the total will be in those aggregate 'cost of sales' figures somewhere and we have no information whatsoever on how Apple apportions that cost between different products.

You are arguing a separate issue from the original. We have to deal with the info we have. They are key indicators which make sense. You can't say because there are some gray areas behind the numbers that this gives us no more insight than before. Of course how it's calced matters, but I simply don't believe it's completely different than what was disclosed. We will get more color over time.

I'm not going down this rabbit trail. They gave us the hardware and software GM and I'm using that for discussion purposes. The original poster just couldn't do the math and you swooped in on a technicality.

Anyway, I'm done with this.

 

[ilikewhey]

How? Do you guys not know how to Calc percentages?

The 6 Plus started at $749.

The XS Max starts at $1099.

Do the math. It's actually closer to a 0% increase than a 100% increase and the phones are hardly comparable.

i'm just trying to make sense of his cal, i believe hes comparing the 6s plus to the max option on the max model.

 

[Glockworkorange]

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.

If you follow his podcast, the not modestly titled "THE talkshow (as in THE only one)" you will see he rotates the same maybe 15 or 20 people and the majority are just members of The Apple Web---his opinions are never truly challenged because all of this guests agree with him. Same with his web site---no comments are allowed and he admits he probably won't read your emails if you send them. He spends his time linking to opinions and stories he agrees with safely from the comfort of his thought bubble. It would be nice if he were to have a debate or thoughtful exchange with someone of a different viewpoint (be it tech or politics--he fancies himself as something of a political watcher), but that would be either too much work or carry too much risk (probably both).

As I said in an earlier post; however, I have to hand it to him. He's reported to make around $500,000.00 a year from his blog and podcast (perhaps more) and that is a Hell of a nice income for recording a show perhaps three times a month with maybe a dozen posts a week with only one or two of them being longer essays carrying any real thought (the rest of the posts are just links with a few sentences).

 

[Baymowe335]

i'm just trying to make sense of his cal, i believe hes comparing the 6s plus to the max option on the max model.

Then that's silly and wrong.

 

[mike7311]

You are insane if you believe this and Apple is completely incompetent if they are doing this when competitors do it better for way less. My Apple TV freezes all the damn time and my Roku rarely does. If this is their best effort and they are losing money on it, than everyone involved in it should be fired. Apples real problem right now is that unlike what they try to portray as a progressive company, the majority of their money is pushed straight to the top executives and they are very top heavy. The actual people responsible for your products have been jumping ship to companies that will actually pay them what they are worth, Apple attracts people by using their name. That is changing and unless something big changes you bet you’ll have more products that do not live up to the Apple name.

 

[I7guy]

Lol. Charging extra for poorly designed keyboards, FaceTime bugs, bending iPads and dodgy maps.

I think Apple is at the point where they understand they cannot raise prices again, at least for awhile.

If they can't raise prices and they can't grow the iPhone market because they've already blanketed the Earth, is "services" truly their new growth frontier? Do people really want to spend another $9.99 a month on television?

If you have Netflix and Hulu and Amazon and HBO and Apple Music and Spotify (and perhaps a cable account and Disney coming next year) I think it's a tall order to add ANOTHER service, unless the content is absolutely killer. Game of Thrones or Sopranos killer. I don't see Apple having that type of content, especially when the rumors are the service is going to be heavily censored or "family friendly."

Next few years will be interesting!

Apple hasn't been raising prices if you look at the iphone msrp history and tech vs price. The max has no equivalent phone to compare prices to, so you can't say apple raised the price on the max, because there is no equivalent tech to compare it to. It's a fair statement to say the max is expensive and whether their is enough form over function for the price is up to the individual.

But I don't think apple is going to up it's prices on future phones in more than a minor increment.

 

[ctdonath]

In every category you mention, there are better products, often cheaper (not always).

Individually, maybe. But his point is TOGETHER they can't be beat. It's about the ecosystem. I'm done with decades of fiddling with stuff to make out all work together. I plugged in my Homepod, and a minute later everything else worked with it. And insofar as individual items might be better from other brands, they're not so superior as to matter.

 

[gim]

Nope, not even close.

There are thousands of articles on the internet that say otherwise.

 

[MadDawg2020]

So does this guy have any facts or figures to back any of his claims or is it just his opinion?

 

[Gilligan's last elephant]

You seem confused actually.

I said we could go to the google mini IF NEEDED...not that we do.

No, you clearly said you used Google if more complex questions arise. Not that you could use Google. You had the irony of a cheap speaker outperforming a much more expensive one pointed out and have back tracked

 

[The Game 161]

No, you clearly said you used Google if more complex questions arise. Not that you could use Google. You had the irony of a cheap speaker outperforming a much more expensive one pointed out and gave back tracked

I said IF NEEDED

Like with any smart speaker for questions you use it at the start but as I stated that quickly ends...

The HomePod gets more usage due to the sound and how it works with the ecosystem

The mini is useful at different times Hence why it’s Handy having both

I have the HomePod in lounge another in bedroom and mini in kitchen so it’s a matter of where i’am more than anything but seeing as lounge is where I’m mostly at it’s bound to get more usage there

 

[Gilligan's last elephant]

I said IF NEEDED

Like with any smart speaker for questions you use it at the start but as I stated that quickly ends...

The HomePod gets more usage due to the sound and how it works with the ecosystem

The mini is useful at different times Hence why it’s Handy having both

I have the HomePod in lounge another in bedroom and mini in kitchen so it’s a matter of where i’am more than anything but seeing as lounge is where I’m mostly at it’s bound to get more usage there

Whatever, you clearly acknowledged that Google AI is the one if more in depth questions are to be asked

 

[The Game 161]

Whatever, you clearly acknowledged that Google AI is the one if more in depth questions are to be asked

Admitting google is smarter is somehow wrong? We all know it is. Would be a lie if I said Siri was smarter

HomePod is still a more important product due to what it does better which is sound and the ecosystem

Mini rarely gets used for questions as more often than not that’s what our phones are for