Apple probably makes less profit on the HomePod than Google and Amazon do on their speakers

  • Apple’s smart speaker, the HomePod, has gone on sale in the US for $US349 (£319 in the UK) last week.
  • Analysts at TechInsight have calculated that it costs Apple $US216 to build a HomePod, and estimated the company makes a ~38% profit.
  • That would be much less than the reported profit Google and Amazon make from their own smart speakers, Home and Echo, which respectively generate an estimated 66% and 56%.

Apple began selling its HomePod smart speaker last week and, between mixed reviews and a furniture staining issue, it hasn’t been the company’s smoothest launch.

Now it turns out Apple might not even be making that much money on the speakers. A new report from analyst firm TechInsight, which we saw via Bloomberg, has shed some light on the HomePod’s value, which apparently costs Apple about $US216 (£153) to manufacture. Apple sells the device for $US349 in the US, which results in a 38% profit cut.

And while that’s certainly not meagre, its competitors Google and Amazon make a whopping 66% and 56% profit off their respective smart speakers (the higher-end Home Max and Echo Plus), while also offering lower audio quality, according to TechInsight.

HomePodAppleThe HomePod’s internal structure, with all its high-precision components.

“Apple is compressing their margins a bit, wanting to go big or go home,” Al Cowsky, TechInsight’s costing manager, told Bloomberg. “In doing so, I suspect they reduced the selling price from a normal Apple margin in order to sell more units on volume.”

Breaking down the costs of the HomePod, TechInsight reveals that most of the internal components add up to about $US58 (£41), while the lighting parts that allow the top glass to display a glowing Siri display come at about $US60 (£42). The A8 chip, accessories, and other packaging parts bring it all up to the estimated $US216 (£153).

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