Apple Watch Sport components barely cost an estimated $83.70
Even though the Apple Watch has proven to be quite successful when it comes to its initial sales, it doesn’t change the fact that these are the most expensive smartwatches in the market right now, with some even costing the average price of a mid-sized vehicle. Tim Cook was blunt in Apple’s recent conference call about how cost estimates for any Apple product were far from accurate, in a way to justify the price tag for the Apple Watch. Today a new teardown estimate emerges, and it doesn’t make Tim Cook look good.
IHS recently dissected the 38mm Apple Watch Sport, and according to the cost analysis, it doesn’t cost more than $83.70 in parts. Without details on any possible volume negotiations by Apple, IHS estimates that the display and its cover glass cost $20.50, the S1 chip another $10.20, and other things like the enclosure and the rest of the materials don’t add up to more than $83.70. Sadly the teardown doesn’t provide data for the 42mm Apple Watch Sport, nor any of the other Apple Watch models that are more expensive. We do know that the Apple Watch and Apple Watch Sport are internally identical according to an iFixit tear down, so we do have solid data for assumptions. Just to give you an idea, the teardown estimates claim that Apple’s cost of building the Apple Watch is of only 24% of its retail price, which comes in contrast to regular Apple products that go between 29 and 30%.
Keep in mind though; first-generation products have a crazy amount of R&D and marketing costs that are not accounted for in this tear down. Other factors like the amount of units produced is also a factor that drives costs up or down depending on the fixed costs of manufacturing the product. It could be that Tim Cook is right, but what do you think?