Apple’s $349 HomePod speaker costs Apple an estimated $216 in raw materials to build. The figure comes from research conducted by TechInsights.
Given the HomePod’s $349 price, that $216 cost suggests Apple is generating margins of about 38 percent, according to the product analysis firm. That compares with margins of 66 percent and 56 percent for the Google Home and Amazon Echo, products that compete in the smart-speaker market, but offer lower audio quality, according to the firm’s estimates.
The internal components of the HomePod cost Apple an estimated $58. Those components include the microphones, tweeter, woofer, and power management chips. Components like the lighting system for Siri and other animations cost $60. The smart speaker is powered by the A8 chip, which is priced at around $25.
“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.”
Other components, including the external housing and other exterior parts cost $25. Manufacturing, testing, and packaging the HomePod adds $17.50 to the cost of manufacturing.
Apple is operating at a lower profit margin than usual with the HomePod when compared to other products they sell. For example, the $999 iPhone X reportedly costs just under $358 to make.
It should be noted that cost estimates by companies like TechInsights don’t take into consideration expenses such as research and development, the development of the software, and other costs.
During a 2015 earnings call, Apple CEO Tim Cook said cost estimates such as this are “much different from reality.” “I’ve never seen one that is anywhere close to being accurate.”