Bloomberg is reporting that TechInsights estimates Apple HomePod manufacturing costs add up to $216. That translates into a 38% margin which is far lower than on other Apple products. It is also lower than estimated margins for Amazon Echo (56%) and Google Home (66%), although those margins are based on list prices which are routinely discounted. Bloomberg’s Mark Gurman wrote:
“The bulk of the HomePod’s costs come from the internal speaker technology, including the many microphones, tweeters, the woofer and the power management components. That adds up to $58, while an additional $60 includes various smaller parts like the lighting system used to display the Siri animation on the top of the device.
“The HomePod’s A8 chip is estimated to cost $25.50, while the external housing and other items come in at $25. TechInsights also estimates manufacturing, testing, and packaging to add up to $17.50.”
A8 Chip Matches Total Cost of Google Home Mini
That last bit about A8 chip costs is worth noting. The entire cost of a Google Home Mini is estimated to be $26 while an Amazon Echo Dot is $31. The A8 chip may be the difference-maker for Apple HomePod over the long-run. There is an assumption that all smart speakers will be dumb and all of the intelligence will reside in the cloud. However, there are use cases and features that can be improved by utilizing more on-device processing power. Apple hasn’t introduced any of these as yet, but the presence of the chip provides downstream opportunities to add capabilities.
The other item worth noting is that a $216 cost means that Apple is not likely to transform HomePod into a sub $200 device anytime soon. That means Amazon and Google will continue to have a price advantage for users that are not enthralled by the Apple mystique or the HomePod’s purported focus on sound quality.