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HomePod Costs an Estimated $216 to Make
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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.
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like the TV
Hate to threadjack. Sorry everybody. Did you work at Munro & Associates? They specialize in competitive benchmarking, costing and teardowns. Nerding out. Sorry.
I love the HomePod so far. Siri hears me almost every time when I speak normally (she listens better than my kids!). The music portion of the HomePod is nailed down, and I find myself reaching for my phone less to check super small things which then lead to getting distracted. Also for anyone wondering it does work in Canada - the only restriction is I had to change my iPhone to English (American) as the HomePod demanded the settings of it match my phone.
That's a given. But we aren't far enough into the production timeline for that to have any meaningful effect yet.
If that is indeed the cost, then I can see that as one of the reasons for marketing the “stereo” experience of TWO HomePods.
Don't know the cost, but for sure a lot less.
No signal processing chip (Apple's A8), no 16 GB RAM, no seven element tweeter array and accompanying separate (or 7 channel) DAC(s) and amplifiers, and no six element microphone array and accompanying ADCs (or 6 channel ADC).
Also... Apple has an internal custom power supply that plugs in the wall. Don't know for sure, but I would guess Amazon Echo uses a generic and inexpensive wall-wart that plugs in the wall. Hate those...
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Reducing margins seems to be the cost for this late into the game. Making an awesome product will perhaps give Apple an edge to account for the huge disadvantage Siri has while facing Google & Amazon assistants
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.
Plus, all of the R&D work isn't going to be 100% exclusive to this device. Subsequent models or revisions don't require 100% new R&D, but more like 10-20%, if that. Some of the R&D work can apply to entirely different hardware or technology as well.
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.
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.
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.
HomePod tweeters and microphones are custom designed by, and manufactured for, Apple. And are not commodity parts 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. 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.
While not manufactured in a dedicated factory (that would be foolish), it is speculation that they're made in factories that pump out cheap generic parts.
so with every employee that purchases one, 50% off, they are losing money?
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.
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.
In other words Apple charges more, therefore makes more money.
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.
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.
I received a Sonos One for Christmas, and I recently listened to the HomePod. For me there is no reason to upgrade. Especially at twice the price of the Sonos. Not twice as good in my opinion. Not to mention 90% of my music library is available on Amazon.
As far as the ecosystem thing goes, I have not really felt I have suffered. I do like handoff and use it between my Apple devices, but for things like movies, music, and photos, I am invested in other non apple services, and we do just fine sharing between devices.