Since the Apple Watch has reached early buyers, it has been taken apart, as well as put through various torture tests. Now, a report by IHS Technology has revealed exactly how much it costs Apple to make a single Watch. Also Read - Apple Music Lossless, Spatial Audio features with Dolby Atmos coming soon to India
As per the report, the chips, sensors and the other parts total up to only $81.20, and it goes up to $83.70 when the $2.50 per unit manufacturing expense is factored in. With the Apple Watch Sport retailing at $350, the total cost to manufacture a Watch is 24 percent of the retail price. Also Read - Apple sells more iPads in early 2021 than ever, grows along with Samsung
“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,” said Kevin Keller, a senior analyst for IHS.
While this may sound like Apple is making a killing on every Watch it manufactures, the report doesn’t actually factor in all other costs. These include expensive TV ads, marketing costs, logistics, R&D among others.
It is little wonder than CEO Tim Cook disputes IHS’ claims. “Generally, there’s cost breakdowns that come out around our products that are much different than the reality,” Cook said at the earnings call. “I’ve never seen one that is anywhere close to being accurate.”
Here’s a breakdown of the components as per the IHS report.