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HomePod costs $216 to build and generates thinner profit margins | Report

15 February 2018 4

A recent teardown by iFixit has already given us a much better preview of what goes inside Apple’s first smart speaker. And, now a research conducted by TechInsights and shared by Bloomberg is providing us the raw idea of the actual cost of the HomePod based on the components used inside it.

Going by the researched report, it costs Apple an estimated $216 in raw components to build the HomePod, which actually sells for $349.

Internal components like the microphones, tweeter, woofer, and power management chips cost Apple an estimated $58, while smaller components like the lighting system used for Siri and other animations cost $60.


Talking about the A8 chip, which empowers the HomePod, Siri features, sound adjustments, and other smart features cost an estimated $25. Also, the external housing and other exterior components have believed to cost $25, while manufacturing, testing, and packaging cost an additional $17.50.

HomePod is said to be having a smaller profit margin than the competing speaker products from other companies. According to TechInsights, the HomePod has a profit margin of 38% based on component costs. Compared to this, the Google Home and Amazon Echo have margins of 66 and 56 percent, respectively.

"Apple is compressing their margins a bit, wanting to go big or go home," said Al Cowsky, TechInsight's costing manager. "In doing so, I suspect they reduced the selling price from a normal Apple margin in order to sell more units on volume."

The research hasn’t taken into account the expenses like research and development, software creation, and other related costs. So, we can’t take the $216 to be the exact cost of the product.


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HomePod costs $216 to build and generates thinner profit margins | Report
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MayaSingh

Actually, the iFixit score of just 1 and that too for an Apple product gives me a bit weird feeling about the HomePod. Never thought Apple would go so low.

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