An interesting report on this week’s episode of his podcast ‘The Talk Show,’ John Gruber has claimed a reliable source at Apple has said it effectively sells the Apple TV at cost, with HomePod actually being sold to customers at a loss to the company.
The insight suggests when Apple puts its hardware component costs together, plus the cost of its tvOS software team, marketing team and research and development specialists, the company doesn’t make any profit on the sale of the $180 Apple TV box, whilst the above costs for HomePod actually puts the company out of pocket, although given 99.9% of all HomePod owners most likely have a paid Apple Music subscription, the rumored lost on the speaker is most likely made back through subscriptions.
Citing a “reliable little birdie” Gruber notes he can’t prove his claims, adding he doesn’t believe Apple’s losses are very high for either product.
One thing I’ve heard from reliable little birdie is Apple effectively sells [the Apple TV] at cost. Like they really are like a $180 box. And you think wow this is amazing, it has an A10 processor which we know is super fast, it has crazy good graphics. – I’ve heard the same thing about HomePod too. Why is HomePod so much more expensive than these other speakers you can talk to? HomePod I actually have reason to believe, Apple actually sells it at a loss. I can’t prove it. I don’t think it’s a big loss.
Apple has a reputation for its margins, making it very surprising that both Apple TV and HomePod are supposedly sold without any margin. Gruber claims Apple works towards a 38 percent margin on each product it sells.
Over time things get cheaper to make. Company-wide, Apple very famously has very high margins and somehow, almost to a spooky degree, it’s always around 38-39 percent company-wide margin.