Teardown of the 38mm Apple Watch Sport reveals the watch only cost Apple $83.70 - not more than 24% of the total retail price
The Apple Watch has been quite a rave since its official announcement but you must all agree that the rant of it being too expensive was endless following the pricing revelations by the company. And being days into the market, the watch is still causing a stir. However, we are way past the ‘oohs’ and ‘ahhs’ about the luxury smartwatch and now it’s time to get down for some real business talk. Here is the bitter reality – the Apple Watch is only portrayed as a luxury and it didn’t take some gold mines to develop.
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Prices range from $349 to $17,000, depending on the versions ordered, but in all of the cases Apple is keeping a giant’s share of profit margins. Research firm HIS got to the bottom of the teardown of 38mm Apple Watch Sport and it was revealed that Apple wouldn’t have spent more than $83.70 to build it. Shocker? We don’t think so. The giant fruit logo has been known for a long time to gobble down huge margins but the Apple Watch honestly seems a bit too overrated.
This means that the cost of the Apple Watch hardly makes up about 24% of the total retail cost which many people have been crying about since it’s clearly a rip off. This might leave customers even angrier that compared to all other Apple devices, this one is the lowest hardware cost. The cost of building other Apple products usually makes up about 29% and 38% of the retail price set by the company.
The watch’s OLED display with Ion-X cover glass (courtesy of Korean electronics company LG) is the most expensive component costing around $20.50 and the company’s own A1 processor falls second with a cost of $10.20.
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Kevin Keller, senior principal analyst at HIS, stated that “It is fairly typical for a first-generation product rollout to have a higher retail price versus hardware cost. While retail prices always tend to decrease over time, the ratio for the Apple Watch is lower than what we saw for the iPhone 6 Plus and other new Apple products, and could be of great benefit to Apple’s bottom line if sales match the interest the Apple Watch has generated.”