Apple Tax: Apple Watch Costs Just $84 to Make

[cknobman]

More reason to laugh at the morons who buy this crap.

 

[henrytcasey]

Forgot to mention how in a year or so the battery, already diminutive in size, will start to last less and less time, so get out your wallets and buy another iWatch. Nothing easier than parting a fool and his money...

And while Apple claims the warranty will cover defective batteries, they're the ones who will mark the difference between defective and depleted...

 

[henrytcasey]

All businesses maximize their profits based on what consumers are willing to pay. Does anybody think there is $2 worth of corn and powdered cheese in a bag of Doritos?

Exactly, it's not like Apple wouldn't do market research for the price thresholds for consumers.

 

[henrytcasey]

I can't believe the WHINING...

If you don't want one don't buy it. If you do then go ahead and buy one. Whether it's "worth it" is completely up to the consumer.

For that matter, how many people really "need" anything more than a basic cellphone? I had one in 1999 with a basic black/white screen and it worked great.

Do you NEED a tablet? A gaming PC? Expensive shoes?

Sure the iWatch will have short battery life initially but did you expect Apple to simply wait several more years for better batteries while the competition brought out their own watches in the mean time?

I wonder how much thought people put into these comments.

The uproar that Apple's stirring by going further into the luxury goods industry will only help this product thrive anyway, the question becomes 'What's the fuss about?' and consumers become curious.

 

[henrytcasey]

How is ~$500 for a computer on your wrist a ridiculous price???

My Omega is nothing but good old stainless steel and sapphire.
It tells the time which I have to manually adjust every time I fly somewhere, and a date I have to change every time a month has less than 31 days.
That cost THOUSANDS of dollars. Not hundreds.

The fact that you need an equally expensive phone for the device to work properly is an issue, though. That price for a standalone product makes sense, but for an accessory there's an argument to be made.

 

[henrytcasey]

yeah, it costs $84 to make, because absolutely NO marketing or R&D went into the making of the iwatch... very smart reasoning, must feel great to call people sheeple from your high horse, when basic concepts escape you!

I still doubt there is $400 worth of R&D and marketing to make up the difference between parts cost and retail price.

If a dozen companies can manage to make semi-decent 7" tablets for less than $100, there is little doubt they could make 2" wrist-mounted tablets for under $100 if there really was strong market demand for it.

They're trying to make a product that is equal parts fashion accessory that models and celebrities would brandish and a computer everybody can track their health with, so a comparison to cheap tablets is kind of a stretch if you ask me.

A lot of R&D has to go into this product in order to try and define the market for the public. We may have seen the Pebble get kickstarted, and followed Android Wear news, but those products aren't selling on the scale Apple is looking for with the Apple Watch.

 

[RCguitarist]

I don't think it's fair to underestimate the research and development costs to create a new product; remember that the PS3, when including R&D, cost over $900 per unit during its first year on sale. It can take a long time for those not insignificant costs to be spread out enough that the product will actually break even, same with marketing (which will also be an ongoing cost), distribution, staff-training, support etc.

To be frank; there's no point in totalling up the parts in the device, as you're not buying a collection of parts, you're buying the product that they make, and that's a very different thing.

It's the same when people discuss self-building computers; yes, individual parts might cost you less if you build them yourselves, but if a manufacturer can take those same parts and put them in a smaller, specialised package, then you're not just paying for the parts anymore, and nor should you expect to be.

That is comparing apples to oranges. Developing a brand new game console with brand new software and systems is a much bigger investment than taking a product you already have (iphone 6 and just changing the dimensions, restyling the UI and adding/removing a few features.

 

[henrytcasey]

I don't think it's fair to underestimate the research and development costs to create a new product; remember that the PS3, when including R&D, cost over $900 per unit during its first year on sale. It can take a long time for those not insignificant costs to be spread out enough that the product will actually break even, same with marketing (which will also be an ongoing cost), distribution, staff-training, support etc.

To be frank; there's no point in totalling up the parts in the device, as you're not buying a collection of parts, you're buying the product that they make, and that's a very different thing.

It's the same when people discuss self-building computers; yes, individual parts might cost you less if you build them yourselves, but if a manufacturer can take those same parts and put them in a smaller, specialised package, then you're not just paying for the parts anymore, and nor should you expect to be.

That is comparing apples to oranges. Developing a brand new game console with brand new software and systems is a much bigger investment than taking a product you already have (iphone 6 and just changing the dimensions, restyling the UI and adding/removing a few features.

Considering there is no breakout hit in the wearable market yet, I don't think "changing dimensions and restyling" is exactly what the challenge here is.

Whether they succeeded on the first pass aside, they were trying to figure out what user experience is right for something on your wrist. The range of needs and wants ranges pretty widely, and if they just changed proportions and modified the user interface, a method that has been done before without wild success, they would soley be resting on Being Apple. The fact that the app chooser interface and the way you navigate between glances is so different from the standards of iOS shows that they didn't just start from an existing template.

 

[Solandri]

All businesses maximize their profits based on what consumers are willing to pay. Does anybody think there is $2 worth of corn and powdered cheese in a bag of Doritos?

Typical margins for electronic equipment brands is about 5%. Apple is at about 24%.
https://biz.yahoo.com/p/314qpmd.html

For PC brands the average is less than 1%. HP is around 5%. Lenovo is around 2%. Dell is now privately held, but they were around 5% when they were public.
https://biz.yahoo.com/p/812qpmd.html

Which is what most of us familiar with tech have been saying all along. Those profit margins don't come out of thin air. There's a hefty Apple tax associated with their products. You're basically paying extra for a designer brand name, not for better or more expensive components.

 

[henrytcasey]

All businesses maximize their profits based on what consumers are willing to pay. Does anybody think there is $2 worth of corn and powdered cheese in a bag of Doritos?

Typical margins for electronic equipment brands is about 5%. Apple is at about 24%.
https://biz.yahoo.com/p/314qpmd.html

For PC brands the average is less than 1%. HP is around 5%. Lenovo is around 2%. Dell is now privately held, but they were around 5% when they were public.
https://biz.yahoo.com/p/812qpmd.html

Which is what most of us familiar with tech have been saying all along. Those profit margins don't come out of thin air. There's a hefty Apple tax associated with their products. You're basically paying extra for a designer brand name, not for better or more expensive components.

Additionally: some users like OS X more than Windows, and that basic pattern ripples outwards because consumers develop brand loyalty: people will pay more for an experience they prefer.

 

[Blazer1985]

You can take R&D, marketing, adv, everything into account.. But if a company that is selling a small percentage of worldwide phones / tablets / laptops / aio ends up having more profit than everyone else in the world.. You can be assured they have a beefy margin on every single device. That's what is called "Apple tax".

 

[Blazer1985]

Oh and 2.5$ on assembly costs should be called slavery btw.

 

[Vlad Rose]

How is ~$500 for a computer on your wrist a ridiculous price???

It's not a computer on your wrist, but basically just a glorified touch screen as it is unable to do anything without an accompanying iPhone along side it.

 

[dextermat]

1- turn around
2- bend over
3- pull your pants down
4- pull your underwear down
5- apply sand
6- let apple have it's ways
7- pay 400 $

result, you have a "nice" watch

 

[Vlad Rose]

1- turn around
2- bend over
3- pull your pants down
4- pull your underwear down
5- apply sand
6- let apple have it's ways
7- pay 400 $

result, you have a "nice" watch

Hard to even call it a watch with the horrid battery life. And with it being digital only, it can't even be correct twice a day... lol. Personally, I'd call it more of a fashion accessory, like a bracelet.

One of the quotes I read in another review was rather funny: "While this is no easy task compared to a normal watch, the sealed battery can be replaced by Apple for an unspecified amount."

Personally, I'm afraid to ask how much.

 

[WRXSTIGuy]

Crapple - bring manufacturing back to the US.

 

[therealduckofdeath]

How is ~$500 for a computer on your wrist a ridiculous price???

My Omega is nothing but good old stainless steel and sapphire.
It tells the time which I have to manually adjust every time I fly somewhere, and a date I have to change every time a month has less than 31 days.
That cost THOUSANDS of dollars. Not hundreds.

One is hand built the other is mass produced with off the shelve components in Chinese factories by semi-slave labour. Good enough answer for you?

 

[jl0329]

Does the $84 include all the overhead, the marketing and oh, the R&D expense?

If the answer is yes, I am going all in on Apple's stock.

 

[mrmez]

How is ~$500 for a computer on your wrist a ridiculous price???

My Omega is nothing but good old stainless steel and sapphire.
It tells the time which I have to manually adjust every time I fly somewhere, and a date I have to change every time a month has less than 31 days.
That cost THOUSANDS of dollars. Not hundreds.

One is hand built the other is mass produced with off the shelve components in Chinese factories by semi-slave labour. Good enough answer for you?

No not really.

Firstly, I can't find any evidence that the Seamaster is hand built. Secondly, apart from design changes, its mostly the same since it was released in the 40's.

On the other hand you are correct about the Apple watch, but, unlike the Omega it has...

APL0778 as the central processing unit (CPU), with an integrated PowerVR SGX543 graphics processing unit (GPU).[2]
512 MB DRAM from Elpida, wire bonded on top of the APL0778 CPU
NFC controller from NXP
NFC booster chip from AMS
8 GB Flash from SanDisk and Toshiba
Wireless charging chip from IDT
Touch controller from |ADI
Integrated Gyro/Accelerometer from STMicroelectronics
BCM43342 Wi-Fi/FM/BT combo chip from Broadcom
Power Management Unit (PMU) from Dialog Semiconductor

Add a battery, touch screen, and Alu case, strap, then go buy another 5 and still spend less than a Seamaster. Not to mention the ridiculous R&D, industrial design, marketing, employee wages, plant and equipment, board and CEO bonus' and stock options, investor returns etc etc etc.

Again, not that I'd buy an Apple watch, I'd get another Omega. When you look at how many people want a cut from the profits of that watch, $500 isn't expensive at all.