The Apple Watch is made out to be a revolutionary product. The more it costs, the better it is, right? Well, that is not the case with the cheapest version of the Apple Watch.
Research from IHS Technology suggests that the profit Apple will make from their lowest model of the Watch will be huge. The Watch and its components will make more profit compared to their other devices, such as the iPhone 6.
According to IHS, the hardware in the cheapest version of the Watch (the 38mm Sport) ends up being only 24 percent of the suggested retail price. The researchers took apart the 38mm and added up the costs of each individual component.
A member of IHS Technology, Kevin Keller stated “The ratio for the Apple Watchis 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.” Keller is IHS’ senior principal analyst of benchmarking services and materials.
The total cost of the 38mm after their evaluation? A whopping $81.20. However, this does not include a manufacturing cost. The device would then cost Apple a total of $83.70 for the Watch. Apple dubs the 38mm Apple Watch Sport with a suggested retail price of $349.
Although this may seem like Apple’s way of creating a cheap product and selling it for a high price, there is another side of the story. There are actually two other sides. The 42mm Apple Watch Sport and the 18k gold Apple Watch have not yet been analyzed. The buyer even gets the option of having a stainless-steel body, which will cost them $50 more. The desired gold Watch will be a luxury, taking a jab at any Apple lovers with a cost of $10,000.
It is not clear if IHS plans to tear-down the other versions of the watch, but many are curious if they will follow the same path as other devices.
The company also stated that the suggested retail price of a product goes down over time. In addition, IHS said that their evaluation did not include other manufacturing costs such as logistics. This is not the first time breaking down Apple products. IHS did not limit themselves to the Apple Watch. They have taken a closer look at MacBook, iPad, and iPod models as well. Previous IHS evaluations showed that several iPhone products are similar to the route the 38mm Sport Watch took.
For example, the component and manufacturing cost of the iPhone 6 was 31 percent of the suggested retail price. The iPhone 6 Plus ended up being 29.4 percent, and the iPhone 5S came in at 30.1 percent.
iFixit also did an analysis of the Apple Watch, stating that the device is not up-gradable. This means that the consumer will not be able to take apart their Watch and upgrade it as Apple releases future improvements.
“Once inside, coaxing the battery out is a cinch, but the overall device construction limits further repair options,” said iFixit.