Here's How Much It Costs Apple to Make a Vision Pro Headset

[MacRumors]

Starting at $3,500, Apple's Vision Pro price puts it at the top-end of the AR/VR headset market, but a significant portion of the cost is down to the device's premium "bill of materials," which is thought to come in at just over $1,500.

According to Omdia's research, the components used in Vision Pro are estimated to cost Apple a total of $1,542. The most expensive component is said to be the two 1.25-inch micro-OLED displays inside the headset, one for each eye. The displays provide a total of 23 million pixels, which Apple says is "more pixels than a 4K TV." Omdia estimates that Apple pays $228 for each display, or $456 per headset.

The second most expensive components are the M2 and R1 chips. The M2 is the main processor, which is the same chip that was first introduced in the 2022 MacBook Air. The M2 is responsible for processing content, running the visionOS operating system, executing computer vision algorithms, and providing graphical content. The R1 chip is responsible for all of the information coming from the cameras, sensors, and microphones. Together they cost Apple a total of $240.

As noted by CNBC, it is hard to extrapolate Apple's profit margin from these estimated figures, since they do not take into account research and development costs, packaging, shipping, sales, marketing, and any capital expenditures that can add up-front costs to large parts orders. Nevertheless, they do give an idea of how expensive the parts alone are in a given device.

Apple is expected to produce fewer than 400,000 Vision Pro headsets in 2024 due to the complexity of manufacturing, according to analyst Ming-Chi Kuo. However, Apple is said to be already working on a new version of the Apple Vision Pro that will be priced more affordably. The chips in the device are likely to be on par with the iPhone rather than Mac-level chips, and Apple may also use lower resolution internal displays and cheaper materials. It could also drop the outward-facing EyeSight feature that lets other people see a simulated rendering of the wearer's eyes.

Bloomberg's Mark Gurman believes that Apple is working on a next-generation version of the Vision Pro that could see a launch sometime in late 2025.

Article Link: Here's How Much It Costs Apple to Make a Vision Pro Headset

 

[Blackstick]

That doesn’t include the considerable R&D. They have patents for this product going back 15 or more years.

There was some diagrams where a headset was connected to an iPod of the era. Imagine coming to Apple in 2005 and this shipping in 2024. More than half your professional career spent on a product that took almost 20 years to ship. Wild.

With Vision Pro it’s not so much about today, it’s about where it could be in 5 years, 10 years? Price will come down, but I don’t foresee this product line ever being a $299 iPad or $899 MacBook Air. A $499 Quest competing with the PlayStation during Black Friday, Apple isn’t going for.

 

[NinjaHERO]

I just want a nice set of HUD glasses that bluetooth to my phone. Let my phone be the “computer”. Much simpler and lighter.

 

[scheinderrob]

That doesn’t include the considerable R&D. They have patents for this product going back 15 or more years.

There was some diagrams where a headset was connected to an iPod of the era. Imagine coming to Apple in 2005 and this shipping in 2024. More than half your professional career spent on a product that took almost 20 years to ship. Wild.

With Vision Pro it’s not so much about today, it’s about where it could be in 5 years, 10 years? Price will come down, but I don’t foresee this product line ever being a $299 iPad or $899 MacBook Air.

No need to state the obvious, especially when it literally says it right there in the article...you read it, right?

As noted by CNBC, it is hard to extrapolate Apple's profit margin from these estimated figures, since they do not take into account research and development costs

 

[Blackstick]

No need to state the obvious, especially when it literally says it right there in the article...you read it, right?

As noted by CNBC, it is hard to extrapolate Apple's profit margin from these estimated figures, since they do not take into account research and development costs

Not sure if you’re new here but this is MacRumors. By mid morning, you’ll have plenty of comments arguing both sides, “it’s factored in”, “no it’s not!”

The obvious should always be stated.

 

[SueperDrive]

Of course R&D is a big chunk, but the price tag is still ridiculous. A lot of R&D went into the first iPhone, iPad and watch too and the price was reasonable. Yes, the market is bigger but with such high price tag the market will remain small.

 

[JohnRckr]

Typical Apple margin

 

[JuicyGoomba]

That doesn’t include the considerable R&D. They have patents for this product going back 15 or more years.

There was some diagrams where a headset was connected to an iPod of the era. Imagine coming to Apple in 2005 and this shipping in 2024. More than half your professional career spent on a product that took almost 20 years to ship. Wild.

With Vision Pro it’s not so much about today, it’s about where it could be in 5 years, 10 years? Price will come down, but I don’t foresee this product line ever being a $299 iPad or $899 MacBook Air. A $499 Quest competing with the PlayStation during Black Friday, Apple isn’t going for.

I don't forsee in 5-10 years that apple will be selling an $899 MacBook Air with a 60hz LCD screen and 8gb ram, but we could both be very wrong.

 

[Ctrlos]

From the comments I have seen on YouTube it looks like that even with software improvements the EyeSight feature is pretty useless with a dim display acting as a poor cousin of just removing the headset to talk to someone. It was a clever idea to reduce a barrier between the user and company but I don't think it has much legs.

For this reason, weight and costs I wouldn't expect it to survive to mk.II. A black plastic visor with just a few swirly LEDs underneath (like the Homepod 'display') would be enough to lower the weight and bring down the costs.

That weight also seems to be a big complaint and needs to be lowered and repositioned. I'm not knocking the AVP; I think its a brilliant piece of cutting edge hardware but mk.I is clearly just a kind of beta version to be tested at scale by people buying into its idea.

 

[phenste]

Of course R&D is a big chunk, but the price tag is still ridiculous. A lot of R&D went into the first iPhone, iPad and watch too and the price was reasonable. Yes, the market is bigger but with such high price tag the market will remain small.

lmao

8GB iPhone Price Drop, 4GB iPhone Discontinued

An additional announcement from the "Beat Goes On" media event today - the iPhone will receive a price drop, moving the 8GB model down to...

www.macrumors.com

Apple giving $100 credit to early iPhone buyers - Sep. 6, 2007

After receiving hundreds of emailed complaints from Apple Inc. customers about a $200 price drop for a version of the wildly popular iPhone, chief executive Steve Jobs says the company will give certain customers who bought the gadget at its original price a credit of $100.

money.cnn.com

remember how everyone cried foul over HomePod being $349? same happened with the original iPhone being priced at $600. took apple all of three months to slash the price, discontinue the 4GB model that initially occupied the 8GB model’s new price point, and give a credit to people who initially paid full price. I vividly recall my father getting that credit after being mad that Apple screwed over early adopters like that.

 

[Larsvonhier]

bill for BOM != production costs

 

[leman]

I just want a nice set of HUD glasses that bluetooth to my phone. Let my phone be the “computer”. Much simpler and lighter.

That’s what I’d like too. Unfortunately the display technology to do this with reasonable quality does not exist yet. Same for Bluetooth.

What would be more interesting is a tiny projector that beams an image straight onto your retinas 😁

 

[leman]

Typical Apple margin

With insane, R&D, huge production line setup costs, and low volume, I’d be surprised if Apple makes a lot of money of the first Vision Pro. To them, it’s an investment in the future, not a quick cash grab.

 

[cardfan]

With insane, R&D, huge production line setup costs, and low volume, I’d be surprised if Apple makes a lot of money of the first Vision Pro. To them, it’s an investment in the future, not a quick cash grab.

Not to mention the return rate.

 

[krspkbl]

With insane, R&D, huge production line setup costs, and low volume, I’d be surprised if Apple makes a lot of money of the first Vision Pro. To them, it’s an investment in the future, not a quick cash grab.

If that was the case then why not sell it for $2,000-2,500 where they could still make a profit? If they really cared about investing in the future or a quick cash grab they could have sold it for $1,500 and took a small loss.

Lots of companies take a loss on hardware to build up the userbase and sell digital products/services. Apple does it as well because someone with an Apple product is going to buy apps/games/movies/music or subscribe to stuff like iCloud+, AppleTV, Music, etc

Let's not pretend here. Apple wants to claw back as much money as possible. I'm sure they are invested in the product and will release future models but they definitely want a quick cash grab

 

[krspkbl]

$2,000 profit per headset? They could've sold it for $2,000 - $2,500. Can't blame them though...they know people are daft enough to pay $3,500 so why not?

I'm looking forward to the $4,500 headset... why do you think they called it the Vision Pro? There will be a Vision Pro Max/Ultra.

I think it's safe to say the line up will look something like:

Vision SE - $1,500 - $500-750 profit
Vision (standard) - $2,000 - $750-1,000 profit
Vision Plus - $2,500 - $1,500 profit
Vision Pro - $3,500 - $2,000 profit
Vision Ultra - $4,500 - $2,500 profit

 

[Gasu E.]

lmao

8GB iPhone Price Drop, 4GB iPhone Discontinued

An additional announcement from the "Beat Goes On" media event today - the iPhone will receive a price drop, moving the 8GB model down to...

www.macrumors.com

Apple giving $100 credit to early iPhone buyers - Sep. 6, 2007

After receiving hundreds of emailed complaints from Apple Inc. customers about a $200 price drop for a version of the wildly popular iPhone, chief executive Steve Jobs says the company will give certain customers who bought the gadget at its original price a credit of $100.

money.cnn.com

remember how everyone cried foul over HomePod being $349? same happened with the original iPhone being priced at $600. took apple all of three months to slash the price, discontinue the 4GB model that initially occupied the 8GB model’s new price point, and give a credit to people who initially paid full price. I vividly recall my father getting that credit after being mad that Apple screwed over early adopters like that.

Homepod was mispriced. This product is intentionally priced high to manage the demand. Apple can't manufacture that many, and wants to sell only to early adopters.

 

[neuropsychguy]

Not to mention the return rate.

What is the return rate? Do you have any reliable data showing what it is?

 

[PowerMac5500]

I bought the first AppleTV. “iTV”… I thought it was cool as hell, and so I paid $399 for something sort of “advanced”. It was actually quite forward thinking, but also nowhere near its final square hockey puck form.

It was Apple’s unofficial entry into streaming, and it came at a time when the world was debating whether Blu-ray or HD DVD would be king. (We don’t always know where to look.)

Today we have Ted Lasso. If that iTV hobby box lead to Ted Lasso, it’s exciting to think about what the Vision Pro will eventually inspire. Using the same timeline, we’re going to need to be patient… it took 17 years for people to “believe.” But the VisionPro seems to have just a wee bit more weight behind it, from a slightly larger Apple Inc. So, I’m guessing it won’t take quite so long.

I’m waiting for the hockey puck version though.

 

[phewlo]

$2,000 profit per headset? They could've sold it for $2,000 - $2,500. Can't blame them though...they know people are daft enough to pay $3,500 so why not?

I'm looking forward to the $4,500 headset... why do you think they called it the Vision Pro? There will be a Vision Pro Max/Ultra.

I think it's safe to say the line up will look something like:

Vision SE - $1,500 - $500-750 profit
Vision (standard) - $2,000 - $750-1,000 profit
Vision Plus - $2,500 - $1,500 profit
Vision Pro - $3,500 - $2,000 profit
Vision Ultra - $4,500 - $2,500 profit

Where in the article did it say they were making a $2,000 profit per headset sold? 🙄

 

[coolfactor]

If that was the case then why not sell it for $2,000-2,500 where they could still make a profit? If they really cared about investing in the future or a quick cash grab they could have sold it for $1,500 and took a small loss.

Lots of companies take a loss on hardware to build up the userbase and sell digital products/services. Apple does it as well because someone with an Apple product is going to buy apps/games/movies/music or subscribe to stuff like iCloud+, AppleTV, Music, etc

Let's not pretend here. Apple wants to claw back as much money as possible. I'm sure they are invested in the product and will release future models but they definitely want a quick cash grab

They've already got steady revenues from hardware and services. They're just not willing to undervalue the Vision Pro. as they'd never be able to raise the price enough later given the lower sales volume.

They're probably losing money at the current price, but at least they are sending the message that "this thing is valuable".

Facebook has the budget headset if price is all people care about.

 

[endemize]

That’s what I’d like too. Unfortunately the display technology to do this with reasonable quality does not exist yet. Same for Bluetooth.

What would be more interesting is a tiny projector that beams an image straight onto your retinas 😁

That. . . Seems like a really good idea.

 

[G5isAlive]

$2,000 profit per headset? They could've sold it for $2,000 - $2,500. Can't blame them though...they know people are daft enough to pay $3,500 so why not?

I'm looking forward to the $4,500 headset... why do you think they called it the Vision Pro? There will be a Vision Pro Max/Ultra.

I think it's safe to say the line up will look something like:

Vision SE - $1,500 - $500-750 profit
Vision (standard) - $2,000 - $750-1,000 profit
Vision Plus - $2,500 - $1,500 profit
Vision Pro - $3,500 - $2,000 profit
Vision Ultra - $4,500 - $2,500 profit

3500-1500= 2000 profit?

Buzzzzz wrong answer. That’s the raw materials cost. Maybe. But let’s assume it’s accurate it does not include cost of setting up a new assembly line or labor costs or distribution costs, and all that is after the R&D costs which are not free. That all adds up to considerable costs.

Or do you go into restaurants and complain about the price of a steak because you can buy a pound of beef for cheaper at your grocery store?

You’ve been around enough to know better.

 

[neuropsychguy]

If that was the case then why not sell it for $2,000-2,500 where they could still make a profit? If they really cared about investing in the future or a quick cash grab they could have sold it for $1,500 and took a small loss.

Lots of companies take a loss on hardware to build up the userbase and sell digital products/services. Apple does it as well because someone with an Apple product is going to buy apps/games/movies/music or subscribe to stuff like iCloud+, AppleTV, Music, etc

Let's not pretend here. Apple wants to claw back as much money as possible. I'm sure they are invested in the product and will release future models but they definitely want a quick cash grab

Apple does not sell products for a loss. That's never how Apple has worked. Could Apple sell the AVP for less? Yes. Apple could sell all products for less and still make money. However, Apple has never focused on low margins for hardware. Here's a paper that mention's Apple's gross margins of 40%+ in the 1980s, which is higher than they are now (although with services, Apple's are creeping up): http://faculty.london.edu/chigson/casestudies/pdfs/apple.pdf

Much more intriguing is EBIT margin. How come Apple, selling its products at a significant premium price,
finished up with a lower EBIT margin? Certainly Apple was ahead in terms of gross margin. A rapidly
deteriorating gross margin in the final year was reversed in 1986 when gross margin rose 10 percentage points to 53.1%. It stayed at or around this level throughout the period 1986 to 1990.

That was early Apple. Sure Steve Jobs wasn't in charge in the mid to late 1980s, but Apple had higher margins before then too. For example, in 1982, Apple had a net profit margin of 10.5% (https://www.nytimes.com/1982/10/20/...-inc-reports-earnings-for-qtr-to-sept-24.html), which means gross margins were considerably higher given corporate taxes at the time.

In 2002, Apple's gross margins were "low" at 28% (https://www.annualreports.com/HostedData/AnnualReportArchive/a/NASDAQ_AAPL_2002.pdf) but by the late 00s, gross margins with Jobs in charge were around 40% (https://www.statista.com/statistics/263436/apples-gross-margin-since-2005/), which is where they've been since then. There has been a recent trend upward, but Apple has also had a significant increase in services revenue with high gross margins (>70%).

Using current hardware margins, we can estimate how much Apple is making on the AVP. Apple's hardware margins are somewhere around 35 - 40% (on average, not necessarily for the AVP). Let's assume that the AVP is at the lower end of the hardware margins; this is an educated guess because as a new product in a new product category, Apple likely has lower hardware margins at present on the AVP (although any storage upgrades will increase margins). For simplicity we'll say 35% (gross, not net). This means Apple "makes" $1225 on each AVP (net margins are lower). That is likely the highest amount of money Apple is making on the AVP, even if we are being generous and pretending there are no costs that bring gross down to net.

Ultimately we don't know what Apple's margins are on the AVP, but cost of components is only part of the overall production costs. Maybe Apple is making $1000 per AVP, but profits might also be lower per unit.

My point with this lengthy reply is that Apple is making money on the Apple Vision Pro at its current price point, unless Apple is doing something it's never done before with a major hardware product -- use it as a loss leader. But again, there is no evidence Apple has ever priced products as loss leaders for services so the safest assumption is Apple priced the AVP to make money from the hardware.

 

[nfl46]

$2,000 profit per headset? They could've sold it for $2,000 - $2,500. Can't blame them though...they know people are daft enough to pay $3,500 so why not?

I'm looking forward to the $4,500 headset... why do you think they called it the Vision Pro? There will be a Vision Pro Max/Ultra.

I think it's safe to say the line up will look something like:

Vision SE - $1,500 - $500-750 profit
Vision (standard) - $2,000 - $750-1,000 profit
Vision Plus - $2,500 - $1,500 profit
Vision Pro - $3,500 - $2,000 profit
Vision Ultra - $4,500 - $2,500 profit

Sir, you aren’t new here. Stop the BS. You know damn well…

I’m sorry that Apple priced you out of their “crappy expensive headset, that you wouldn’t be surprised Apple killed next year.”