The price of the most affordable Apple Watch – Apple Watch Sport, starts from US$349 (about RM1,250), but how much does it cost to make one? According to IHS Technology, only about US$84.
According to IHS Technology, who tears down gadgets to see the costs of components and manufacturing, the components of the 38mm Apple Watch Sport costs about US$81.20. If you take into account the cost of manufacturing, the cost would rise up to about US$83.70 – that’s less than RM300. This means that Apple has a gross margin of nearly 76% for the Apple Watch, which IHS claims is lowest ratio of hardware costs to retail price.
Image from iFixit
Of course, the report from IHS Technology does not take into consideration other costs of building a product such as research and development, software development, the creation of manufacturing tools, marketing and such. Apple’s Chief Financial Officer, Luca Maestri, mentioned before during Apple’s quarter earnings call that the Apple Watch’s margins will be lower than the company’s average of 40%.
So what’s the cost of the components inside an Apple Watch Sport? The touch display costs the most at US$20.50, followed by the S1 processor at US$10.20. The memory costs US$7.20, Bluetooth and Wireless connectivity costs US$3, power management and UI costs US$5.50 each. The report goes on to show the cost of other components like the enclosure, wristbands, misc, and even the box contents like charger and packaging.