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

[16BitArcadeGraphics]

that $10 headphone jack adaptor (lightning usb to 3.5 mm) must cost a few pennies to produce. look at the profit margin on that. i think cheap accessories like this is where they make the highest profit margin but the sales of such items is obviously going to be lower than major items like a phone.

 

[EdT]

And this is where you have the misconception of what the HomePod really is. It’s _not_just an assistant, it’s a music player first, voice assistant second. Alexa and Google are meant to be more assistant related and they are not intended to be on the level of music players as the HomePod is with the audio, and my point by issuing commands to Siri with the HomePod, is that it actually executes those commands very well in terms of what others are saying. Two different things you conflated on.

Do you have a HomePod, and do you also have a lossless music song that you can play via airplay to your HomePod? I don’t know if you can get Apples lossless music format (ALAC) onto an iPhone but there probably is a way and it might even be pretty simple. Play the Apple Music version of the song, then immediately send the ALAC of FLAC version of the song. Do you hear a difference? You may honestly not hear a difference, or think that the Apple Music version sounds as good or better. Sound preference is an individual thing, and what sounds good to you may not sound good to someone else.

But the HomePod is a LOT more expensive than its competitors, and you can’t get more accurate sound than what the file format can store. And if you are limited to MP3/AAC quality (330 kbps) which, without jumping thru some hoops is the best that the HomePod can easily offer, why pay anywhere from 2 to 10 more to get approximately the same quality? For comparison, a CD is 1,411 kbps.

If Apple wanted to sell a high end speaker they shouldn’t have throttled its initial data rate and still be limiting music sources just to sell Apple Music subscriptions, which is what it looks like Apple did. It was also obvious that the HomePod was going to be compared to the smart assstants like Amazons and Google especially since Apple was really late getting ANYTHING to the market. People were going to compare HomePod to Alexa. And as I said, sound is a personal preference, and cost is a definite factor in most people’s purchasing decisions. If HomePod was going to sell itself as high end it should have gone all-in. Allow lots of different sources, both Apple and 3rd party and work with stereo and surround sound systems. $350 isn’t that out of line for a good stereo/surround sound speaker and if it was wireless and portable then it’s actually probably pretty cheap. And now you’re appealing to the right customer segment.

 

[PickUrPoison]

without actual figures i don't buy that bs one bit, if their figure is so good then they wouldn't have to offer such huge trade in offers both on their us website and european websites.

the XR is not the proper comparison, it's the budget iphone and the only other budget iphone back in the day is the 5c.

The XR isn’t a budget iPhone, though it is less expensive than the XS/XS Max. The XR is the follow-on model to the 8/8 Plus.

The X wasn’t the proper comparison to a 6 Plus in 2017, was it? No, the X was a new OLED model that was $300 more expensive than the LCD 8 Plus—which is the proper comparison.

Likewise, the XS/XS Max is a few hundred dollars more than the LCD XR. The X wasn’t the appropriate comparison in 2017, and the upgraded XS/XS Max isn’t the proper comparison in 2018.

I don’t think we’d be having this disagreement if Apple had called the XR the iPhone 9, would we?

 

[ilikewhey]

The

The XR isn’t a budget iPhone, though it is less expensive than the XS/XS Max. The XR is the follow-on model to the 8/8 Plus.

The X wasn’t the proper comparison to a 6 Plus in 2017, was it? No, the X was a new OLED model that was $300 more expensive than the LCD 8 Plus—which is the proper comparison.

Likewise, the XS/XS Max is a few hundred dollars more than the LCD XR. The X wasn’t the appropriate comparison in 2017, and the upgraded XS/XS Max isn’t the proper comparison in 2018.

I don’t think we’d be having this disagreement if Apple had called the XR the iPhone 9, would we?

its a generational leap but apple is still using the same formula, the Xr is the budget friendly version of XS and Max, just like the 5c is the budget friendly 6 and 6plus. call it what you will but majority of folks out there including reviewer thinks its the budget iphone, hence why not many folks are lining up for it.

https://www.notebookcheck.net/The-s...iPhone-5c-SE-of-this-generation.331434.0.html

 

[PickUrPoison]

It's a pricing problem if you run a multi-national large cap company and you do not adjust prices internationally. Apple thought they could pull it off one more time. You can call it what you want but it is definitely related to price. The average Chinese teenager doesn't walk in and say wow Apple has a currency fluctuation problem. They walk in and say wow the price is insane.

Of course it’s related to price, which is why Apple lowered it. If Apple wants to cut into profits to offset increases due to loss of purchasing power of the local currency, they have (and have always had) that option. And that’s what they’re doing in certain markets.

China’s also got a problem with a slowdown in their economy though, it’s not just about a strong dollar.

 

[639051]

At cost or no profit are not words Apple comprehends.

 

[Naraxus]

You are literally just making stuff up. John Gruber is often very critical of Apple, sometimes in excruciating detail, and is not the type of person that a corporate PR department would launder things through. The truth is, you have no idea who his contact is. If you ever listened to one of his WWDC podcasts, you can tell that Phil Schiller is not his informant. They have a cordial, but formal relationship that is fairly obvious.

Gruber is RARELY critical of Apple.

 

[PickUrPoison]

its a generational leap but apple is still using the same formula, the Xr is the budget friendly version of XS and Max, just like the 5c is the budget friendly 6 and 6plus. call it what you will but majority of folks out there including reviewer thinks its the budget iphone, hence why not many folks are lining up for it.

https://www.notebookcheck.net/The-s...iPhone-5c-SE-of-this-generation.331434.0.html

It doesn’t bother me if people want to call the $749 XR the budget model any more than if they want to call the $699/799 iPhones 8/8 Plus the budget model. Compared to their top tier OLED big brothers in the lineup, they are a few hundred dollars cheaper, after all. But personally, I don’t think of a $749 phone as a budget iPhone. (However I do think of the $449 iPhone 7 as a budget iPhone. And the $349 SE was certainly budget, especially compared to the 6/6 Plus.)

But the word budget doesn’t change the fact that the 8 Plus and XR are the proper phones to price compare against the 6 Plus. Not the X/XS/XS Max.

I know the fact that the XR is cheaper than was the 6 Plus may be inconvenient to the narrative of a hefty price increase, but don’t shoot the messenger.

 

[639051]

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.

There’s only so much consumers can choke down. Apple isn’t innovating at this point it’s simply evolution of the product line. The home pod is a decent speaker with a terrible “assistant”. Apple TV could have had a great gaming component but Apple being stubborn choked that out. The iPhone is again just evolution of the product.

The Apple SoC is fantastic, I’ll give them that for sure. The rest is being done by others and either better and cheaper or just cheaper.

 

[ryanwarsaw]

Of course it’s related to price, which is why Apple lowered it. If Apple wants to cut into profits to offset increases due to loss of purchasing power of the local currency, they have (and have always had) that option. And that’s what they’re doing in certain markets.

China’s also got a problem with a slowdown in their economy though, it’s not just about a strong dollar.

I agree. I just like hearing it how Wall Street saw it. That is a pricing problem. Cook gave his reasons for the reports and rightfully downplayed what impact price had. He basically admitted in the best language he could that he goofed on the pricing. That is his duty to shareholders.

 

[Glockworkorange]

If one doesn’t like being limited to the Apple ecosystem, Apple is the wrong vendor for a person. You can view it as a lack of respect but Apple has been on a roll lately with their ecosystem accessories.
[doublepost=1549226432][/doublepost]
The 8+ was less expensive than the 7+. So there’s that. Xr also has more tech than the 8+ and Apple bases it’s prices on the tech.

There have been multiple posts supporting the point that apple’s margins haven’t increased. So yes, prices have risen with respect to increased costs of phone manufacturing. It’s not like new phones cost less to develop and manufacturer than old phones.

But the phones cost more and consumers don’t appear to find the “improvements” worth the cost. Yes, you’re “getting more,” but does anyone really want what they are offering (or bad enough to pay $$ for upgrades)?

I’m looking at the cost through a customer’s eyes; not as a margins issue.

 

[ilikewhey]

It doesn’t bother me if people want to call the $749 XR the budget model any more than if they want to call the $699/799 iPhones 8/8 Plus the budget model. Compared to their top tier OLED big brothers in the lineup, they are a few hundred dollars cheaper, after all. But personally, I don’t think of a $749 phone as a budget iPhone. (However I do think of the $449 iPhone 7 as a budget iPhone. And the $349 SE was certainly budget compared to the 6/6 Plus.)

But the word budget doesn’t change the fact that the 8 Plus and XR are the proper phones to price compare against the 6 Plus. Not the X/XS/XS Max.

I know the fact that the XR is cheaper than was the 6 Plus may be inconvenient to the narrative of a hefty price increase, but don’t shoot the messenger.

lol not shooting anyone, i just like engaging conversation, the xr has all the element of a budget friendly phone, cut down A chip that probably didnt pass the mustard for Xs in production, range of colors to choose from, sub HD display, no 3D touch, less antennas, and less camera, apple has set the XS as the standard going forward, its no longer a halo phone like when the X came out.

 

[I7guy]

But the phones cost more and consumers don’t appear to find the “improvements” worth the cost. Yes, you’re “getting more,” but does anyone really want what they are offering (or bad enough to pay $$ for upgrades)?

I’m looking at the cost through a customer’s eyes; not as a margins issue.

So last years iphone x at $1000 was a blockbuster and this years Xs at $1000 is "overpriced". That doesn't track.

https://www.statista.com/statistics/263402/apples-iphone-revenue-since-3rd-quarter-2007/

Actually looks like Q1/19 is right in line with other quarters. So although Apple didn't make it's guidance, iphones are being sold in-line with prior years.

 

[PickUrPoison]

I agree. I just like hearing it how Wall Street saw it. That is a pricing problem. Cook gave his reasons for the reports and rightfully downplayed what impact price had. He basically admitted in the best language he could that he goofed on the pricing. That is his duty to shareholders.

A “China’s economy slowed so suddenly and drastically that we had no idea it would happen back when we gave our guidance on November 2” (and a strong dollar) problem is in no way the same as a “no one can afford iPhones anymore because they’re outrageously overpriced” problem.

If demand in China hadn’t fallen off a cliff in Nov/Dec, Apple would have made their guidance, even in the face of the macroeconomic conditions/strong dollar issues in other countries. Then there wouldn’t have been a “pricing problem” to discuss. We’d be talking about record-setting revenues in many regions and countries including China, not record-setting revenues in many regions and countries except China.

 

[iSayuSay]

It depends on how quickly Siri responds if you do voice playback. Airplay is quite responsive on my HomePods. If you’re airplaying to your HomePod you are most likely at home or near a power supply (as HomePod requires a power supply) so battery drain shouldn’t be too much of a concern.

Well in my experience Airplaying from Spotify, Netflix and Youtube you can feel a bit lags here and there, but strangely enough pretty responsive when throwing Apple Music.

I think there’s a caching going on when using AirPlay + AM + Homepod. While 3rd party apps just go direct without it.

 

[PickUrPoison]

lol not shooting anyone, i just like engaging conversation, the xr has all the element of a budget friendly phone, cut down A chip that probably didnt pass the mustard for Xs in production, range of colors to choose from, sub HD display, no 3D touch, less antennas, and less camera, apple has set the XS as the standard going forward, its no longer a halo phone like when the X came out.

The XR is certainly de-featured compared to the XS to make that $749 price point; as you mention, the display and rear camera are probably the biggest differences. But the SoC isn’t different. The A12 chips used in the XR/XS/XS Max are identical. Also not sure why you think the X is a “halo” phone but the XS isn’t, since the XS is a “better X” in almost every way.

 

[ctdonath]

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

Apparently so. Shrug. I generally don't ask my speaker complex questions; I want excellent sound from it, not the height of Glacier Lake at low tide.

 

[Brandhouse]

The story only has to drive traffic and it has done that in comparison to much more worthwhile stories. Mission accomplished.

That's a fair call.

 

[PickUrPoison]

that $10 headphone jack adaptor (lightning usb to 3.5 mm) must cost a few pennies to produce. look at the profit margin on that. i think cheap accessories like this is where they make the highest profit margin but the sales of such items is obviously going to be lower than major items like a phone.

I know what you mean, and Apple’s cables are rather expensive. But the headphone adapter is a bad example!

Built into that cable, there’s actually a digital-to-analog converter and an amplifier, and also an analog-to-digital converter (for headset microphone signal). So actually it’s a pretty good deal

https://ifixit.org/blog/8448/apple-audio-adapter-teardown/

 

[uwdude]

Do you have a HomePod, and do you also have a lossless music song that you can play via airplay to your HomePod? I don’t know if you can get Apples lossless music format (ALAC) onto an iPhone but there probably is a way and it might even be pretty simple. Play the Apple Music version of the song, then immediately send the ALAC of FLAC version of the song. Do you hear a difference? You may honestly not hear a difference, or think that the Apple Music version sounds as good or better. Sound preference is an individual thing, and what sounds good to you may not sound good to someone else.

But the HomePod is a LOT more expensive than its competitors, and you can’t get more accurate sound than what the file format can store. And if you are limited to MP3/AAC quality (330 kbps) which, without jumping thru some hoops is the best that the HomePod can easily offer, why pay anywhere from 2 to 10 more to get approximately the same quality? For comparison, a CD is 1,411 kbps.

If Apple wanted to sell a high end speaker they shouldn’t have throttled its initial data rate and still be limiting music sources just to sell Apple Music subscriptions, which is what it looks like Apple did. It was also obvious that the HomePod was going to be compared to the smart assstants like Amazons and Google especially since Apple was really late getting ANYTHING to the market. People were going to compare HomePod to Alexa. And as I said, sound is a personal preference, and cost is a definite factor in most people’s purchasing decisions. If HomePod was going to sell itself as high end it should have gone all-in. Allow lots of different sources, both Apple and 3rd party and work with stereo and surround sound systems. $350 isn’t that out of line for a good stereo/surround sound speaker and if it was wireless and portable then it’s actually probably pretty cheap. And now you’re appealing to the right customer segment.

Except that isn't Apple's MO anymore. Apple is now trying to sell themselves as a lifestyle brand, similar to a fashion brand in the mall stores. And getting people to buy more items within that brand and stick within the ecosystem. Their customer for the Homepod is not someone in the market for a decent speaker, it's someone who already has other Apple products and thinks this would add to their experience. Therefore they have made the product just good enough to seem impressive as an Apple accessory, but not necessarily something to compare to other speakers at the price point. Apple is its own little world.

 

[Bregalad]

It's hard to say whether Apple is selling a product at/below cost when the competition is practically giving theirs away. Amazon and Google media access devices obviously sell for a fraction of their development, marketing, manufacturing and distribution costs. Both companies can do that because the data and sales generated by those devices far exceed the amount lost on the hardware.

Apple, on the other hand, has historically demanded a 30%+ profit margin on hardware. They have been very slow to capitalize on the enormous amount of information people are willing to give away, but have surely come to realize that selling a product at cost makes sense if it generates significant secondary sales. More importantly Apple must have realized that they had to get a product out before "everyone" had an Amazon Echo or Google Home already installed and gathering data. So I am willing to believe the HomePod sells much closer to cost than any other Apple device.

I'm actually shocked at how many people have paid money to Amazon/Apple/Google, etc. to put a listening device in their homes. The student who rents a room from me pays considerable rent for some space and the ability to eavesdrop on my private conversations. When Amazon is willing to pay me $500/month I'll be happy to put one of their microphones in my home.

 

[ilikewhey]

The XR is certainly de-featured compared to the XS to make that $749 price point; as you mention, the display and rear camera are probably the biggest differences. But the SoC isn’t different. The A12 chips used in the XR/XS/XS Max are identical. Also not sure why you think the X is a “halo” phone but the XS isn’t, since the XS is a “better X” in almost every way.

my apology i thought the xr has a cut down chip from the a12,

well either way, the rear camera, display, less antenna, and aluminium body is the biggest difference in my book.

when the X came out, it was released as an anniversary phone alongside 8 and 8 plus, thats why many called it the apple's halo phone.

 

[code-m]

This logic makes no sense. If it’s true that no one would care, why would Apple need to have someone put that info out. Wouldn’t change anything.

I agree with one of the previous comments.. too many people with their tinfoil hats on...

Why does any media outlet review care if Apple of any other tech company is selling a device at cost or at a loss unless their are trying to justify the cost to the public that said company has nothing to gain. Give me a break, Microsoft sold the original XBox at cost or a minor loss as the revenue was in games purchased which was subsidized the cost of the hardware. Microsoft is know for doing this with other hardware. Apple on the other hand nope. If this was the case the iPod Touch, iPhone XR and even the XS would be sold for less. This is not Apples playbook, Microsoft sure I will believe it or even Amazon, not Apple.

I am sure the profit margin is smaller compared to other hardware but it is not sold at cost or at a loss.

For example look up Apple TV 4K on Apple.com and the on the Costco.com online store, if Apple is selling it on their site for a loss or at cost are their selling to Costco at a loss. How about taking the corporate or student discount or the refurb store.

What does Gruber have to gain by mentioning this at all? As I said let the market decide, who cares if Apple, Microsoft or Amazon is selling hardware at a profit, cost or loss. If you look at Apples services revenue it makes up a fraction compared to hardware sales, Apple has always depended on hardware sales unlike Microsoft and Amazon.

Perceived free advertising by justifying Apples actions. Why are we still providing an importance to reviewers for Apple products, as a customer you can visit the store to play with those new toys or just purchase it, try it out and if you don’t like it return it. These unboxing and other reviews are lame, tell me something I don’t know. #RehashedReviews

 

[JohnnyAppleseed07]

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.

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

Apple to start charging employees 100+ a month to work at retail locations with pay to park structures.

 

[BvizioN]

Funny as hell.

I know, right?
It is a fact, customers love bargains. Better give them trash that is dirt cheap then quality stuff priced too high.