Apple Watch Sport Component Costs Estimated at $83.70, Which Won't Sit Well With Tim Cook

IHS iSuppli often tears down devices to estimate component costs, and today, the research firm released its report on the Apple Watch, suggesting it has the lowest hardware costs compared to retail price of any Apple product IHS has researched.

The 38mm Apple Watch Sport dissected by IHS was estimated to cost $81.20 when broken down by component. In IHS' estimation, the most expensive component in the Apple Watch is the display (including OLED and Ion-X cover glass), priced at $20.50, followed by the processor on the S1 chip, priced at $10.20. In addition to component costs, IHS adds an estimated $2.50 for manufacturing costs, bringing its total estimate for the Apple Watch's raw cost to $83.70. IHS did not give similar cost breakdowns for the stainless steel or gold Apple Watches, both of which have sapphire cover displays and different casing materials.

ihsapplewatchcosts
At $83.70, IHS says the hardware costs of the Apple Watch are "only about 24 percent" of the manufacturer's suggested retail price of $349, while other Apple product component costs have ranged from 29 to 38 percent, giving the Apple Watch a higher potential profit margin. During Apple's most recent earnings call, the company announced that Apple Watch profit margins would actually be slimmer than other Apple products, at least during its first quarter of availability.

"It is fairly typical for a first-generation product rollout to have a higher retail price versus hardware cost," said Kevin Keller, senior principal analyst-materials and cost benchmarking services for IHS Technology. "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 other new Apple products, and could be of great benefit to Apple's bottom line if sales match the interest the Apple Watch has generated."

IHS' component cost estimations come just three days after Apple CEO Tim Cook declared that component cost breakdowns on Apple products are inaccurate. "There are cost breakdowns around our products that are much different than the reality," he said. "I've never seen one that is anywhere close to being accurate."

While these types of cost breakdowns look at the potential expense related to each individual component in a device, they do not take into account other possible expenses related to product creation like research and development, advertising, software, or distribution, making them of little practical use for estimating profit margin.

IHS iSuppli's report also looks at each component in the Apple Watch, many of which have already been well explored in other teardowns from iFixit and Chipworks. It doesn't offer much new information, but it does give an interesting look at the S1 chip in the Apple Watch, and a special coating added for electromagnetic shielding.

"To provide electromagnetic shielding, the encapsulated PCB assembly is further treated with a metalized coating deposited over the surface," Keller added. "This shielding process is used in place of conventional stamped sheet metal shielding, saving a significant amount of space, as well as cutting down slightly on weight."

IHS confirms that the Apple Watch Sport includes 8GB of Toshiba flash memory, 512MB of Micron RAM, and components manufactured by Broadcom, STMicro, Maxim, NXP, and Analog Devices. It also highlights the use of an accelerometer/gyroscope from STMicro instead of Invensense, something that was also pointed out by Chipworks last Friday.

At this point, we've had a very thorough look at the 38mm Apple Watch Sport, but we have yet to see into a 42mm device to see the differences between the two models. We haven't seen a detailed teardown of a stainless steel Apple Watch or an Apple Watch Edition, but iFixit took a quick look inside a stainless steel version and found its internals to be the same as the Apple Watch Sport.

Top Rated Comments

tevion5 Avatar
76 months ago
To the people who think the watch is over priced as a result of this...try selling bags of cement and piles of wood for the same price as a fully assembled house of identical mass.
Score: 145 Votes (Like | Disagree)
Patriot24 Avatar
76 months ago
That. Is. Not. The. Cost. Of. The. Watch. Don't. Even. Start. R&D. Marketing. Advertising. On. And. On. Stop.
Score: 72 Votes (Like | Disagree)
vodouman Avatar
76 months ago
Before everyone goes nuts, remember R&D costs need to be recouped.
Score: 34 Votes (Like | Disagree)
applesith Avatar
76 months ago
Here come the people who know better and want to tell apple how to run their business. And dictate what their profit should be.

Go start your own company and make stuff with a smaller margin out of the kindness of your heart and let me know how it turns out.
Score: 32 Votes (Like | Disagree)
Locoboof Avatar
76 months ago
Wow! That's it?! Are you serious?


Score: 29 Votes (Like | Disagree)
RDeckard Avatar
76 months ago
Oh boy, here we go again with these stupid iSuppli estimates (and whining comments to come)...

When you go to a great steak restaurant, do you complain to your server that you can buy all the meat and veggies for your dinner for less than $20 at the grocery store???

Didn't think so.
Score: 28 Votes (Like | Disagree)

Top Stories

apple transfer google photos 1

Apple Launches Service for Transferring iCloud Photos and Videos to Google Photos

Wednesday March 3, 2021 12:04 pm PST by
Apple this week introduced a new service that's designed to make it quick and easy for iCloud users to transfer their stored photos and videos to Google Photos. As outlined in an Apple support document, you can go to Apple's privacy website and sign in to see the "Transfer a copy of your data" option. If you select this and go through all the steps, Apple will transfer your iCloud photos and ...
PIA23764 RoverNamePlateonMars web

NASA Mars Perseverance Rover Uses Same PowerPC Chipset Found in 1998 G3 iMac

Tuesday March 2, 2021 3:21 am PST by
NASA's Perseverance rover, which recently made history landing on the surface of Mars, is powered by the same processor used in an iMac more than 23 years old. Image Credit: NASA As reported by NewScientist (via Gizmodo), the rover includes the PowerPC 750 processor, the same chip used in the G3 iMac in 1998. The main chipset is the same; however, there are differences between the...
rosetta 2

Rosetta May Be Removed From M1 Macs in Some Regions on macOS 11.3

Tuesday March 2, 2021 5:20 pm PST by
Installing the upcoming macOS 11.3 software update on an M1 Mac may result in Rosetta 2 being removed in one or more regions around the world. In the third beta of macOS 11.3 seeded to developers for testing today, MacRumors contributor Steve Moser uncovered new strings in the beta's code indicating that "Rosetta will be removed upon installing this update." Another new string reads "Rosetta ...
iphone 6 in hand

Apple Faces Another iPhone Lawsuit Over 'Programmed Obsolescence'

Monday March 1, 2021 6:44 am PST by
Apple faces a new class-action lawsuit that accuses it of deliberately releasing iOS updates that slowly reduce the performance of an iPhone, forcing customers to upgrade their devices. The lawsuit comes from the Portuguese Consumer Protection Agency, Deco Proteste (via Marketeer), which in a statement says that it will proceed with a case against the Cupertino tech giant because it...
magsafe charging brick feature

Prosser: iPhone 12 MagSafe Battery Pack to Feature Reverse Charging

Monday March 1, 2021 1:18 pm PST by
Apple is working on MagSafe-compatible battery packs that will be compatible with the iPhone 12 models, and leaker Jon Prosser today said on the Genius Bar podcast that one version of the battery pack will feature "reverse charging." According to Prosser, Apple is working on two versions of the battery packs, one that's a standard version and one that's a premium version with reverse...
Screen Shot 2021 03 03 at 11

MagSafe Charging Port for iPhone Appears in Apple Patent

Wednesday March 3, 2021 1:30 am PST by
In a newly granted patent, Apple envisions a type of connectivity port using an iteration of its magnetic MagSafe charger to charge an iPhone, potentially paving the way for a future without Lightning. Submitted to the United States Patent and Trademark Office on Tuesday (via Patently Apple), the patent outlines a three-pinned MagSafe charger, similar to the ones found in older MacBook...
Apple Prefer Lightning Over USB C Feature

iPhone Sticking With Lightning Port Over USB-C for 'Foreseeable Future'

Tuesday March 2, 2021 9:32 am PST by
Apple will retain the Lightning connector on the iPhone for the "foreseeable future," with no intention of switching to USB-C, according to reliable analyst Ming-Chi Kuo. In spite of much of the industry moving toward USB-C, Apple will not be using it to replace the Lightning connector on the iPhone 13, or indeed on any iPhone model for the time being. In a note seen by MacRumors yesterday,...
iPad mini pro feature

Sketchy Rumor Claims 'iPad Mini Pro' Launching in Second Half of 2021

Wednesday March 3, 2021 3:04 am PST by
Apple is expected to launch a sixth-generation iPad mini in the first half of 2021, possibly as soon as this March, based on long-standing rumors. However, a new rumor out of Asia that has gained traction in the last 24 hours suggests an "iPad mini Pro" will arrive in the second half of this year. According to a post on Korean blog Naver, whose rumor track record is unknown, the device...
apple pencil 3 leak

New Apple Pencil Allegedly Leaks With Glossy Finish and Redesigned Tip

Wednesday March 3, 2021 6:17 am PST by
Images supposedly depicting a third-generation Apple Pencil have been shared on Twitter by the leaker known as "Mr. White." The purported new Apple Pencil appears to share a very similar design to the current, second-generation Apple Pencil, which is shorter than the previous version and charges inductively on the side of an iPad. The updated Apple Pencil appears to have a glossy...
apple watch ecg wrist

Apple Watch ECG Feature Gets Approved in Australia

Wednesday March 3, 2021 2:07 am PST by
The Australian government has approved ECG functionality on the Apple Watch, giving Apple the all-clear to launch the feature for Apple Watch users in the country, according to a regulatory document first spotted by The 8-Bit. Earlier last month, the Apple Watch's irregular heart rhythm notification received approval in Australia, although ECG did not. Irregular heart rhythm is a feature...