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.
“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.”
In comparison, Apple is said to generate margins of 64% on the iPhone X and the first generation Apple Watch had material and manufacturing costs of $83.70, just 24% of its $349 price tag, says IHS.
Most of the HomePod's costs come from the many internal speaker parts including microphones, tweeters, the woofer, and power management components. Those add up to $58. There's another $60 in various small parts including the lighting system used to display the Siri animation. The A8 chip is estimated to cost $25.50. The housing and other items are said to cost $25. Manufacturing, testing, and packaging adds up to $17.50. Check out this teardown to see everything that's inside.
Apple didn't comment on the report; however, it's criticized the accuracy of these reports in the past.