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

[hagar]

Just when most people realise Apple has become too expensive and sales are dropping, this... coincidence? I think not.

 

[ROGmaster]

I know your phone or tablet can be used to cast but the inclusion of the dedicated remote increases the price. That was the point I was making.

I have the first and second gen chromecasts and I agree it’s a good device for the price.

A remote does increase the price but generally speaking remotes are not expensive to make so it should influence the price by about 10-15$ tops in my opinion which is not that much.

 

[clauzzz203]

If something was made at cost or for the benefit of the consumer/ecosystem, tim would have axed it years ago

 

[Shanghaichica]

A remote does increase the price but generally speaking remotes are not expensive to make so it should influence the price by about 10-15$ tops in my opinion which is not that much.

Well the Siri remote has voice search a track pad and gyroscope and has an aluminium back. Apple charge £60 for the remote alone. I’m not saying all that tech is necessary but that’s the remote that comes with it so that will bump up the price by about £30.
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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.

Oh I get you. I don’t often airplay from third party apps but I did once and the audio kept dropping out.
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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?

I think the problem is there wasn’t a two tier system in the days of the 6 plus. The 6 plus was simply the best of what Apple had to offer for that year.
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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.

Sound quality is relative. You could spend £300 on a speaker system or £1,000 or £10,000. You would expect as you spend more money the sound quality would improve. This is why some people will spend £70 on a stereo system and others who value sound quality will do research and spend more money to get better quality sound. I disagree that the HomePod is just good enough in terms of sound quality. Of course there will be more expensive speakers that sound a lot better or speakers in the same price bracket that sound a little bit better.

I think Apple have made a speaker with good sound quality and smart assistant features for people that are already invested in the Apple ecosystem.

If I’m a neutral customer and want a speaker with good sound quality and smart assistant features I’m more likely to buy a Sonos speaker or the google home max. The HomePod wouldn’t be considered as it’s for people in the Apple ecosystem.

 

[palmerc]

I dont believe apple sells anything at cost.

If you're talking about cost of parts... however, building an Apple TV or HomePod requires assembly and warranty, but more importantly it requires software updates and server support for years. As a publicly traded corporation they cannot simply dismiss those costs.

A HomePod estimate I saw for parts alone was $216. With warranty $248. That leaves $100, but that isn't a profit. From that marketing, R&D, channel costs, software development, annual software updates, and server side costs all take a bite. It wouldn't surprise me that in a new product like this, or a low volume one, that the costs are much higher than you would expect since they drive cost down with sales volume.

It is easy to be cynical about such things, but reality is often more complicated than you expect.

 

[PickUrPoison]

I think the problem is there wasn’t a two tier system in the days of the 6 plus. The 6 plus was simply the best of what Apple had to offer for that year.

Yes, and the discussion was which current tier is equivalent to the 6 Plus. I maintain that the XR is the equivalent, whereas others claim it’s the XS or even XS Max, since they are the “top of the line”, like the 6 Plus was (for its time).

Here’s my reasoning: For 2017, it isn’t logical (to me) to say that the 6 Plus is properly compared to the X and not the 8 Plus. So why would the newer version of the X be the appropriate comparison for 2018?

It seems clear to me that the evolutionary path of the $699 8 and $799 8 Plus is the $749 XR. But then again I’m not trying to push a narrative that says the $799 8 Plus has almost doubled in price, just because it’s now possible to spend $1,449 on a “top of the line” iPhone!

 

[palmerc]

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.

I'd say it is more of a matter of his lack of interest in non-Apple products. He does use them, he does discuss them, but it has never been his interest. He is also very critical of Apple products, as are a number of the Apple podcast celebrities.

Just listening to the most recent Talk Show with John Moltz they spend quite a bit of effort hating the remote and the lack of a provided gaming controller. I actually get annoyed by the complaining about the remote, because I like it. There has also been tons of complaining/discussion about keyboards and Touch Bar.

So labelling Gruber as a PR shill for Apple is hardly accurate. He likes Apple products and that is his stated interest, but he is also quite critical of things he doesn't like or feel fall short.

 

[Ihm]

Believe Apple and Gruber and you are in the Trapple.

 

[bobob]

If you're talking about cost of parts... however, building an Apple TV or HomePod requires assembly and warranty, but more importantly it requires software updates and server support for years. As a publicly traded corporation they cannot simply dismiss those costs.

A HomePod estimate I saw for parts alone was $216. With warranty $248. That leaves $100, but that isn't a profit. From that marketing, R&D, channel costs, software development, annual software updates, and server side costs all take a bite. It wouldn't surprise me that in a new product like this, or a low volume one, that the costs are much higher than you would expect since they drive cost down with sales volume.

It is easy to be cynical about such things, but reality is often more complicated than you expect.

You've got to wade through pages and pages of uninformed nonsense here at the MacRumors forums before you are lucky enough to reach an island of rational analysis like this comment.

 

[Marekul]

Yes, and the discussion was which current tier is equivalent to the 6 Plus. I maintain that the XR is the equivalent, whereas others claim it’s the XS or even XS Max, since they are the “top of the line”, like the 6 Plus was (for its time).

Here’s my reasoning: For 2017, it isn’t logical (to me) to say that the 6 Plus is properly compared to the X and not the 8 Plus. So why would the newer version of the X be the appropriate comparison for 2018?

It seems clear to me that the evolutionary path of the $699 8 and $799 8 Plus is the $749 XR. But then again I’m not trying to push a narrative that says the $799 8 Plus has almost doubled in price, just because it’s now possible to spend $1,449 on a “top of the line” iPhone!

2014 Top iPhone (6+)
$749 - $949

2018 Top iPhone (XS Max)
$1,099 - $1,449

So the current top of the line iPhone is 350 - 500$ more expensive than the best 2014 models.

 

[alexgowers]

The homepod uses low end speaker components. The only way it costs so much is the chips and dsp apple insists improves the turd. When speakers half the price with a proper speaker design are better you have to wonder what apple is smoking.

 

[TheFluffyDuck]

Sold at cost with a 70% profit margin

 

[Reelmower]

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 agree on the appleTV. It is hard to believe that it cost them $180 to build.
I’m an apple guy. We have 8 iPhones, 2 ipads, 3 MacBook airs, 4 airport expresses and an appleTV. Unfortunately, we don’t want plan to buy any more of any of those but the iPhones. We use our Rokus, stream music through our google homes, don’t really need tablets now and the new MacBooks are expensive and not attractive to me. If apple keeps jacking up iPhone prices I may eventually have to rethink them, but we really do love our iPhones.

 

[PortoMavericks]

Believe Apple and Gruber and you are in the Trapple.

 

[Sir Ruben]

The Apple defence brigade are out in force at the moment, explaining to us why the problem doesn't lie with Apple that everything has gotten more expensive, to the point where upgrades are slowing down.

Also the current Apple TV is the same as the previous gen but with the inclusion of 4K. Much of the parts remain the same.

I love Apple products, but the likes of Gruber and Rene Richie need to get real. It's a simple fact that iPhones have gotten to the point where 1K upwards is resulting in less upgrades. That's just a fact, so producing YouTube vids and articles justifying and 'explaining' things in detail to us isn't going to change that. At these prices with incremental upgrades each year this will continue to happen. The average Joe Bloggs on the street is happy with their iPhone 6S and sees no value in frequently dropping 1K+.

 

[Ramchi]

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.

XR modem is slower than already slower XS Modems... otherwise XR is an excellent product but bit outdated specs on some features for the price they are quoting. Even Dual SIM is not both active and no dual apps like WhatsApp and iMessages. It's a great mobile of course

 

[EdT]

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.

I’ll agree that is what Apple is doing. I don’t think it’s working very well, at least right now.

 

[lsutigerfan1976]

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.

Next article will be how a $1000 iphone is sold at a loss also. lol

 

[EdT]

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.

Glacier Lake? The one in Colorado, Oregon, California, Montana or Alaska? Or one of the ones in either Canada or Iceland?

 

[ipponrg]

If you're talking about cost of parts... however, building an Apple TV or HomePod requires assembly and warranty, but more importantly it requires software updates and server support for years. As a publicly traded corporation they cannot simply dismiss those costs.

A HomePod estimate I saw for parts alone was $216. With warranty $248. That leaves $100, but that isn't a profit. From that marketing, R&D, channel costs, software development, annual software updates, and server side costs all take a bite. It wouldn't surprise me that in a new product like this, or a low volume one, that the costs are much higher than you would expect since they drive cost down with sales volume.

It is easy to be cynical about such things, but reality is often more complicated than you expect.

Agreed but taking your own advice, you’d know the cost of parts would be cheaper than what you have estimated because of Apple’s connection to suppliers in bulk.

Software updates and server support is not a significant cost in this product in the overall scheme of things. Engineers are shared, and virtualization makes scaling up/down easy.

 

[EdT]

Next article will be how a $1000 iphone is sold at a loss also. lol

Any expensive item can lose money if they end up sitting in a warehouse and aren’t selling.

 

[LordVic]

I do not believe this report one bit. There is no way Apple is taking a loss on any products. They have killed products in their lineup that were profitable but not profitable enough. So the liklihood of keeping around these two products, especially the TV which is a "hobby" is laughable.

And if Apple IS losing money on these products, despite their quite comparably high price points than Apple's supply management has failed somewhere, since their competition in the industries have all managed competing products at lesser cost/prices.

Not sure what Gruber is trying to do here. now if he's including items that haven't sold and warehousing or inventory write down costs, than that's an unfair and manipulative statement.

 

[EdT]

Agreed but taking your own advice, you’d know the cost of parts would be cheaper than what you have estimated because of Apple’s connection to suppliers in bulk.

Software updates and server support is not a significant cost in this product in the overall scheme of things. Engineers are shared, and virtualization makes scaling up/down easy.

Do you work in one of the consumer tech companies? I work in an industrial automation company, we make machines that go into assembly lines, and I haven’t seen, with either my company or it’s competitors such an easy scale ability. I know when we get a job and are told it’s just like a previous job with just a few modifications then we are going to have problems especially because no money was set aside to cover contingencies. The management tends to see every problem as a nail and reason that we’ve already invented the hammer, so no or very little development cost.

 

[ipponrg]

Do you work in one of the consumer tech companies? I work in an industrial automation company, we make machines that go into assembly lines, and I haven’t seen, with either my company or it’s competitors such an easy scale ability. I know when we get a job and are told it’s just like a previous job with just a few modifications then we are going to have problems especially because no money was set aside to cover contingencies. The management tends to see every problem as a nail and reason that we’ve already invented the hammer, so no or very little development cost.

The answer to the first question is yes. Suppliers like it when you sign a huge contract for them to manufacture something. This is also what Tim Cook and China are good at. Obviously, you want to get your designs and process all taken care of before you begin production.

Regarding scaling, I am talking about software. Server upkeep is a cost but is grossly exaggerated in this context because if Apple was using cloud web services, it’s easy to horizontally scale on demand

 

[I7guy]

I do not believe this report one bit. There is no way Apple is taking a loss on any products. They have killed products in their lineup that were profitable but not profitable enough. So the liklihood of keeping around these two products, especially the TV which is a "hobby" is laughable.

And if Apple IS losing money on these products, despite their quite comparably high price points than Apple's supply management has failed somewhere, since their competition in the industries have all managed competing products at lesser cost/prices.

Not sure what Gruber is trying to do here. now if he's including items that haven't sold and warehousing or inventory write down costs, than that's an unfair and manipulative statement.

They have killed products, but you are only conjecturing as to the reason. If