HomePod Costs $216 to Make and has a Thinner Profit Margin Compared to Other Apple Products

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Feb 15, 2018

According to TechInsights, Apple’s HomePod costs $216 to make and has an extremely thinner profit margin when compared to the likes of Apple Watch and iPhone.

Apple Has a 38% Profit Margin on the $349 HomePod Smart Speaker

Compared to the likes of Google Home, Amazon Echo and many other smart speakers out there, the HomePod is an expensive buy at $349. But you will be surprised to learn that Apple is not quite making a huge profit with its new smart speaker, with TechInsights reporting that it costs $216 to build and has a thinner profit margin at just 38%. When you compare that to the Apple Watch and iPhone, that’s a massive difference. To put things into perspective, the Google Home has a profit margin of 66% while the Amazon Echo sits at 56%.

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According to TechInsights, it appears as though Apple is selling the HomePod with a slightly less profit margin on purpose. The reason behind this is that Apple wants to sell its new smart speaker in bulk and it’s pretty serious about it too. In other words: “Apple is compressing their margins a bit, wanting to go big or go home,” according to Al Cowsky, TechInsight’s costing manager.

To put things into further perspective, the iPhone X has a profit margin of 64 percent. That is actually quite huge when you factor in the fact that Apple sells its new flagship with a $999 price tag.

The initial reviews of the HomePod have been mixed so far. Though the sound quality has been praised by many, but the entire experience is significantly marred down by the capabilities of Siri. Compared to Google Assistant and Amazon’s Alexa, Siri has a long way to go before it can stand shoulder to shoulder with the competition. In other words, the HomePod has the looks, but not the smarts in a lot of areas.

If you are buying the HomePod exclusively for listening to music on Apple Music, then it’s a good buy. If you need an assistant which will handle your everyday questions, then you might want to look elsewhere.

Source: Bloomberg