Apple's gross margin on HomePod sales lags behind its rivals' figures

Apple's gross margin on HomePod sales lags behind its rivals' figures
According to a report published by Bloomberg on Wednesday, Apple's HomePod smart speaker is providing Apple with a 38% gross margin with its price of $349.  Analysts at TechInsights say that Apple is spending $216 to produce each HomePod unit and is making $133 in gross profit on each sale. That means that Apple's gross margin lags behind rivals Amazon and Google, producers of the Echo and Home line of smart speakers, respectively.

Amazon, which created the smart speaker category with the first widespread rollout of the Amazon Echo in 2015, has a 56% gross margin on its Echo devices. Google, which has three variants of its Home line of smart speakers, is said to have a gross margin of 66%.

Al Cowsky, TechInsight manager, says that Apple is willing to accept a lower margin on the HomePod in order to keep the price lower than it could have been. Cowsky says that by doing this, Apple will be able to make up in volume what it loses in profits on individual HomePod sales. A teardown by IHS reveals that Apple's gross margin on its flagship Apple iPhone X smartphone is 64%. Had Apple priced its smart speaker with a similar margin, the device would cost consumers $600. Obviously, to remain competitive in a market it is entering late, Apple decided to keep the price of the HomePod lower than it might have been by accepting a lower gross margin..


As expected, the audio performance of the HomePod has been fantastic, while Siri has failed to match her rivals like Alexa and Google Assistant. You can check out our review of the device by clicking on this link.

source: Bloomberg

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13 Comments

1. mclaren113

Posts: 45; Member since: Dec 12, 2017

Is it the 1st of April today?

9. sgodsell

Posts: 6734; Member since: Mar 16, 2013

I know. This is bull $hit that it costs Apple $216 for their single woofer mono speaker with only an A8 processor. Listen if companies like Raspberry Pi can sell an entire SBC for $35 and it has a quad core 64 bit processor, and a ton of ports. Then there is no way this HomePod costs $216. Also Apple care is $35. Out of warranty or no Apple Care for the HomePod is $280. This is a ploy to make it seem like Apple is giving you a lot for the HomePod price of $350.

11. theviolinist

Posts: 209; Member since: Feb 03, 2018

Why would a speaker need more than an A8 processor?

12. Ninetysix

Posts: 2933; Member since: Oct 08, 2012

Higher GFLOPs..duh

2. juanita4248

Posts: 2; Member since: Feb 07, 2018

its look awesome its my wish to try it

3. GoTstan

Posts: 386; Member since: Jul 25, 2015

We are witnessing the downfall of apple. It's a damn shame Jobs passed. Who knows where apple would be right now, I'd probably still be a fan. They lost their edge. They won't catch up with echo. Maybe google home. Another maybe, maybe their AR tech can right the ship. I get that they have scrooge Mcdck money so they'll always be around, but they won't be at the forefront

13. vincelongman

Posts: 5611; Member since: Feb 10, 2013

Yea, their hardware is still competive, but they need to realise how far behind they've fallen in software The HomePod is a great example The hardware is top notch, even considered the best by many reviewers Yet the software means is barely a smart speaker in comparison with Echo and Home Also they need to be more customer friend, e.g. they should add support for bluetooth, aux, Chromecast, Spotify, Google Play Music, Amazon, ... so its useful and convenient

4. iushnt

Posts: 3054; Member since: Feb 06, 2013

It’s a great product it seems and good value for money from Apple.

6. imlegitcusimthasht

Posts: 306; Member since: Jan 30, 2017

No BT, no aux,no portability, no speaker pair, no water rating, no removable cable, no spotify...sure are a lot of No's for a 350 plus tax device. Siri is dumb, and useless. Apple Homepod is a rip off. Worth no more than 150 to 200 fof its features. Here is a way better value, Buy 2 Sony XB-40 light up led bt speakers. Comparable toJBL Xtremes. Pair them together to make them twice as loud and pair an Echo dot via BT for Audio out to the Sonys. All you really need is 1 xb40 or xtreme to destroy the Apple Homepod

10. imlegitcusimthasht

Posts: 306; Member since: Jan 30, 2017

Okay, lets say it sounds great. Well, if you're really into music, you wouldn't want a homepod to be your living room or even bed room source anyways. You'll def. want a hone theater/studio set up which can rattle your whole house incase you really wanna jam from your living room or bedroom for a party. I don't know about the best buy demos, but I know the ones I tried are can't fill a room the way a studio or hone theater system can. I'm talking a 1000 watts sound at least

8. cmdacos

Posts: 3818; Member since: Nov 01, 2016

You can't be serious, lol. If all you want is good sound quality from very limited sources and nothing else, then it is an amazing value, hahahha

5. duckofdeath unregistered

At that price you can get a PAIR of active quality 5" monitor speakers. And they don't come with an "assistant" that'll order a lifetime subscription to Penthouse magazine when you ask for today's weather. Is $100 of that building cost "money in the pocket" for the CEO?

7. KickRocks

Posts: 262; Member since: Mar 22, 2011

Because it sucks

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