Apple Watch Bill of Materials Just $83.70

[Maura]

BGR reports today that IHS iSuppli has provided some new estimates about how much the Apple Watch costs Apple to make, revealing that the Apple Watch Sport costs approximately $83.70 to make, which represents 24% of the suggested retail price of $349.

“It is fairly typical for a first-generation product rollout to have a higher retail price versus hardware cost,” said IHS Technology analyst Kevin Keller. “While retail prices always tend to decrease over time, the ratio for the Apple Watch is lower than what we saw for the iPhone 6 Plus and the other new Apple products, and that could be of great benefit to Apple’s bottom line if sales match the interest the Apple Watch has generated.”

BGR says that the profit margins will be even higher for Apple on the stainless steel Apple Watch and the gold Apple Watch Edition, because the internal components are exactly the same in both the high-end and the cheaper models, making all the more profits for Apple.

Source: Apple Watch bill of materials cost 83.70 BGR

 

[Jenningsville]

The massive upfront R&D, sales & marketing and manufacturing tooling & set up costs prorated per unit across the projected sales volume will be a significant extra cost on top of the per unit $83.70 BOM cost. Only a company with coffers as large as Apple could have placed an investment bet as large as that. Let's hope the Watch is successful and the bet pays off, because it will encourage Apple to go with more innovation bets in the future.