Back in 2015, Apple CEO Tim Cook said cost estimates are often "much different from reality." "I've never seen one that is anywhere close to being accurate," he said.
True. In reality, Apple probably makes much more than estimates.
Back in 2015, Apple CEO Tim Cook said cost estimates are often "much different from reality." "I've never seen one that is anywhere close to being accurate," he said.
Have to take into account mass production that will reduce costs even further. Apple will not take a big hit on margins. Come on...this is Tim Cook.I think you're wrong. If these cost estimates are anywhere close to being right, the price for the HP is fair. Besides, how much more do you think the cost total would be if you added all the rest into the equation. $3-5 more maybe?
Hate to threadjack. Sorry everybody. Did you work at Munro & Associates? They specialize in competitive benchmarking, costing and teardowns. Nerding out. Sorry.From the story... "TechInsights believes the external housing and other exterior components add up to $25, while manufacturing, testing, and packaging cost an additional $17.50"
You are correct that shipping, marketing and R&D costs are not included but that was not the point of the story. To include R&D costs into product cost we would have to know both the total cost to develop (which Apple is unlikely to share) and the total number of units sold which we won't know until the product is obsolete. I have no idea how accurate these estimates are but I have worked in the automotive industry and we always bought competitors vehicles when they launched a new product and we disassembled them to estimate what their costs were. I was part of the team that dissected radios and automatic air control modules to see what microprocessor and memory chips were being used. We never cared about R&D costs but we always wanted to know estimated product costs (components, assembly, test, etc.).
That's a given. But we aren't far enough into the production timeline for that to have any meaningful effect yet.Have to take into account mass production that will reduce costs.
As usual, people will ignore the assembly, packaging, shipping, marketing, R&D, and countless other costs that go into the device and complain about the price.
That seems like a lot, I expected something below $150 to be honest.
Does anybody know the component costs for Amazon's Echo?
That seems like a lot, I expected something below $150 to be honest.
Does anybody know the component costs for Amazon's Echo?
Also, R&D costs are 90+ % a one-time cost, so one could apply some or all profit margin to "cover" R&D and once that's been met, start applying it towards the other costs.and R&D costs are not included but that was not the point of the story. To include R&D costs into product cost we would have to know both the total cost to develop
The Echo and Home are both being sold at a loss. There's no 66 and 56 percent margin on them. Numerous sources have agreed they're sold at a loss in order to get the much more valuable things they bring.
http://fortune.com/2018/01/03/amazon-echo-google-home-prices/
An Amazon Echo owner will spend about $400 more per year than a normal Prime member (and Prime members spend about 4x more than a non-member). So you can see how beneficial it is for Amazon to get people to have an Echo. Even if you sell it at a loss, you still come out way ahead in the end due to the increase in overall sales from that person.
https://marketingland.com/survey-am...-400-per-year-prime-subscribers-amazon-231351
With the Google Home, Google gains a lot more search data from that person, which they use to make more money. That data is much more valuable than the little loss they take from selling the Home for $20 with a $20 credit this holiday season.
My guess is HP is a real-world test of technologies that will be used in some future AR/VR products. Beta testers pay $350 for the privilege of supplying Apple engineers with use-case data.All your points seem valid, but I can't help but think the Echo will make money for the company because Alexa works. Siri is a joke. So what was Apple's reason to offer a smart speaker? To extend their services and profits? Or was it really all about the "sound"? With a high retail price, and a voice assistant that is inconsistent at best, not sure how they plan to make more money off this. Can't control other services, only the Apple eco-system stuff, and a few Homekit offerings. Seems a bit underwhelming. Great if you are an Apple fanboy, but for the rest of the world? Not so much.
That BOM number seems high given that the case materials are injection molded plastics and fabric, and the audio parts are commodity stuff from China -- similar to the speakers and mics sold by dozens of outlets. The electronics use parts that benefit from the huge scale of iPhone manufacturing, ditto software.
Certainly true, but they are likely made by the same factories that pump out the cheap OEM speakers and mics. IOW the unit price is lower than if Apple made them in a dedicated factory. I installed some home theater speakers over the holidays and the magnet assemblies on the woofers looked nearly identical to the one shown in the iFixit teardown.The tweeters and microphones are custom designed by Apple. And not commodity parts available available to other manufacturers.
Certainly true, but they are likely made by the same factories that pump out the cheap OEM speakers and mics. IOW the unit price is lower than if Apple made them in a dedicated factory
Actually it's not valid at all. His points are based on the Dot and the Mini. That has nothing to do with the Echo and the Home. That would be like me making proclamation about the Google Home Max but only having info about the Google Home. That don't make no sense.All your points seem valid, but I can't help but think the Echo will make money for the company because Alexa works. Siri is a joke. So what was Apple's reason to offer a smart speaker? To extend their services and profits? Or was it really all about the "sound"? With a high retail price, and a voice assistant that is inconsistent at best, not sure how they plan to make more money off this. Can't control other services, only the Apple eco-system stuff, and a few Homekit offerings. Seems a bit underwhelming. Great if you are an Apple fanboy, but for the rest of the world? Not so much.
.... The A8 chip, which powers the speaker's spatial awareness, Siri features, sound adjustments, and other smart features, costs an estimated ...[/QUOTE]
"Siri features" are worth less than $25, sounds about right.
If thats the case, it makes me think they made it just to have their hat in the game. They really are missing the boat on so many fronts. The arrive late to the smart speaker party, invest in something above and beyond to make something superior, charge a lot more, and think they will corner the market. They very well may considering the fan base, but really it's more a game of catch up. How long can they sustain this business model?
They've sustained this business model since the very beginning.
Apple rarely if ever plans on cornering the market. The company's long history is of being far back in the pack in terms of unit sales, but at the front of the pack for profitability. Simply put, they don't have to sell mass-market/low-margin products to reach profitability.
Before iPhone, Mac sales were around 2% of the PC market; now they're 10% (yet people here complain that 10% isn't enough). iPhone was judged a late entry into the smartphone market, and has always avoided the low-price end of that market. Hence even as the #1 or #2-selling brand, they've far from cornered the market. iPad is the dominant tablet, of course. Again, it wasn't the first, but Apple's execution defined the category and in this case, it is dominant in that category. iPod is the best example of Apple being the most dominant in a product category. Again, it was "just another MP3 player" when introduced, but Apple did indeed find a way to corner that market.
Overall, my sense of things is along the lines of what Apple itself has said, many times - their goal isn't to sell the most, but to sell the best-designed product. They build a better mousetrap, but due to price the entire world does not beat a path to its door. This, however, is intentional. A better mousetrap ought to cost more. Since their goal is not mass-market quantities (which often come at slimmer profit margins), they price to be profitable at a lower number of units sold. If they end up selling mass-market quantities anyway, so much the better.
The real question is, how many Echo Dots does Amazon have to sell to make the same profit Apple makes on a single HomePod? Maybe Amazon can potentially make more money on its customer relationships than Apple can, but in both cases, the companies have ways to make add-on sales. iPhone is likely the #1 reason Mac unit sales have quadrupled over the past 10 years. At $350 each, and something that could be placed singly, or in pairs, in many or all rooms of the house... they don't need to put them in every household to be profitable.
Actually it's not valid at all. His points are based on the Dot and the Mini. That has nothing to do with the Echo and the Home. That would be like me making proclamation about the Google Home Max but only having info about the Google Home. That don't make no sense.Of course Amazon wants you to spend more and Google wants you to add to their data stream. Same with Apple wanting the HomePod to help lock you into their ecosystem. That quote isn't offering anything insightful.
Bolded from your quote: The HomePod is not for me. Doesn't seem to be for you either. But you would be mistaken in thinking Apple crafting the HP to help cement the ecosystem lock-in is a mistake. They've made an ungodly fortune concentrating on "Apple just being Apple for Apple people" inside the garden and underwhelming to those outside of it. They've never really concerned themselves with what the rest of the world thinks. So far, it's worked.