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
95 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
95 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
95 months ago
Before everyone goes nuts, remember R&D costs need to be recouped.
Score: 34 Votes (Like | Disagree)
applesith Avatar
95 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
95 months ago
Wow! That's it?! Are you serious?


Score: 29 Votes (Like | Disagree)
RDeckard Avatar
95 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)

Popular Stories

cook sept 2020 event

Gurman: Apple Preparing Pre-Recorded iPhone 14 and Apple Watch Series 8 Event

Sunday August 7, 2022 6:13 am PDT by
Apple has "started to record" its virtual September event, where it's expected to announce the upcoming iPhone 14 lineup, the Apple Watch Series 8, and a new "rugged" Apple Watch model, according to Bloomberg's Mark Gurman. Writing in his latest Power On newsletter, Gurman says the event, which is expected to take place in the early part of September, is already under production, implying...
iPhone 14 Lineup Feature Purple

Color Options for All iPhone 14 Models: Everything We Know

Monday August 8, 2022 3:59 am PDT by
The iPhone 14 and iPhone 14 Pro models are rumored to be available in a refreshed range of color options, including an all-new purple color. Most expectations about the iPhone 14 lineup's color options come from an unverified post on Chinese social media site Weibo earlier this year. Overall, the iPhone 14 and iPhone 14 Pro's selection of color options could look fairly similar to those of the ...
ios 16 beta 5 battery percent

iOS 16 Beta 5: Battery Percentage Now Displayed in iPhone Status Bar

Monday August 8, 2022 10:43 am PDT by
With the fifth beta of iOS 16, Apple has updated the battery icon on iPhones with Face ID to display the specific battery percentage rather than just a visual representation of battery level. The new battery indicator is available on iPhone 12 and iPhone 13 models, with the exception of the 5.4-inch iPhone 12/13 mini. It is also available on the iPhone 11 Pro and Pro Max, XS and XS Max, and...
iOS 16 battery percentage

Apple Limiting iOS 16 Beta 5 Battery Percentage Display to Select iPhones: Here Are the Supported Devices

Tuesday August 9, 2022 2:51 am PDT by
Apple this week brought back one of the most highly requested features from iOS users since the launch of the iPhone X in 2017: the ability to see your battery percentage directly in the status bar. Ever since the launch of the iPhone X with the notch, Apple has not allowed users to show their battery percentage directly in the status bar, forcing them to swipe down into Control Center to...
ios 16 battery indicator 2

Everything New in iOS 16 Beta 5: Battery Percentage in Status Bar, Find My Changes and More

Monday August 8, 2022 12:53 pm PDT by
Apple today seeded the fifth beta of iOS 16 to developers for testing purposes, introducing some small but notable changes to the iOS operating system. Subscribe to the MacRumors YouTube channel for more videos. We've rounded up everything new in the fifth beta below. Battery Percentage in Status Bar The battery icon in the status bar now displays the exact battery percent, a feature that ...
iphone 14 pro max camera bump compared lipilipsi 16 9

Bigger iPhone 14 Pro Max Camera Bump Shown Alongside iPhone 13 Pro Max

Monday August 8, 2022 4:33 am PDT by
The camera bump on the upcoming iPhone 14 Pro Max is expected to be the largest rear lens housing Apple has ever installed on its flagship smartphones, and a new photo offers a rare glimpse at just how prominent it is compared to Apple's predecessor device. iPhone 14 Pro Max dummy (left) vs iPhone 13 Pro Max All iPhone 14 models are expected to see upgrades to the Ultra Wide camera on the...
airpods pro black background

Beyond iPhone 14: Five Apple Products Expected to Launch Later This Year

Monday August 8, 2022 9:43 am PDT by
While the iPhone 14 and Apple Watch Series 8 are expected to be announced in September as usual, there are several more Apple products rumored to launch later this year, including new iPad and Mac models and more. Beyond the iPhone and Apple Watch, we've put together a list of five Apple products that are most likely to be unveiled by the end of 2022. Second-Generation AirPods Pro Apple...