back to article What is Apple's idiot tax on Watch these days? 'About $265 or 80%'

A teardown of the Apple Watch has found that Sir Jony's arm candy costs a grand total of $83.70 to build, apparently. Research house IHS estimates that the total bill of materials for each California wristjob is about a fifth of the $399 starting retail price: the team found that the hardware in the latest iThing carries a …

  1. gnasher729 Silver badge

    "Idiot tax"? More like idiot writer.

    Only an idiot would think that the difference between bill of parts and retail price is profit.

    1. Anonymous Coward
      Anonymous Coward

      Well if you consider the cost of design, packaging and transportation, then this bill of parts is a total shame. However, considering Apple is almost certainly getting these parts much cheaper than anyone can disclose, it's damn near a wash. Of course you could of probably come to this conclusion yourself, if you weren't so exhausted from having to think. Well, at least having to think about something other than throat love with Apple products :-/. To each his own I guess. OH PA!!! I WANNA' BE A DANCA!!

    2. Anonymous Coward
      Anonymous Coward

      except

      Of course not but its still 2x to 3x times difference of any of its major competitors. Proving if you own the well off 1st world hipster more money than brains market you own the world.

    3. AMBxx Silver badge
      Windows

      Software costs nothing to develop!

      Of course, Apple's only cost is the hardware. No software to develop, marketing, distribution etc etc.

      Not buying one (Apple free household), just think that looking at the cost of materials in isolation is stupid. Like complaining that a restaurant charges you £10 for a steak when you can buy one for £3 in a supermarket.

      1. VinceH Silver badge

        Re: Software costs nothing to develop!

        "Of course, Apple's only cost is the hardware. No software to develop, marketing, distribution etc etc."

        Do you know, I can't help but wonder if the writer of the article may have been referring to that sort of thing when he said "and, crucially, development costs have to be recouped" - the headline was probably penned by someone else.

        The bottom line (see what I did there) is that the people who do these tear down reports have no way of knowing those costs, so they can only report on the costs they can reasonably determine: the bill of materials. Always read them bearing that in mind.

      2. This post has been deleted by its author

    4. Bob Vistakin
      Facepalm

      Oh dear. Well, at least no-ones saying "You're wearing it wrong".

      1. Anonymous Coward
        Anonymous Coward

        The truth is out there: http://i.imgur.com/GWccA7x.jpg

  2. W Donelson

    Idiot Register

    The cost of your pages is 0 as they do not exist in reality.

    So pay your "journalists" 0 as well.

    Right?

    1. Anonymous Coward
      Anonymous Coward

      Re: Idiot Register

      I wonder if the Chinese smartwatches (that existed before Apple Watch) have an 80% margin...

      1. Voland's right hand Silver badge

        Re: Idiot Register

        II wonder if the Chinese smartwatches (that existed before Apple Watch) have an 80% margin...

        Wrong reference example. That is the margin for luxury goods - f.e. that is the Parvenue Tax on the Omega.

        IMHO, Parvenue is more descriptive than Idiot for this particular occasion.

    2. asdf Silver badge

      Re: Idiot Register

      Because all companies are hardware companies eh?

    3. diodesign (Written by Reg staff) Silver badge

      Re: Idiot Register

      Oh dear. A sense of humor bypass in the comments on an Apple story. How unexpected.

      C.

    4. Spacedman
      Joke

      Re: Idiot Register

      You're thinking of the Huffington Post.

  3. Anonymous Coward
    Anonymous Coward

    Oh God, more oxygen for IHS

    They used to be called iSuppli, a bloody stupid name those f@@ktards would never have come up with if Apple hadn't existed. They were full of BS then and nothing seems to have changed. Who pays these sp@@k-monkeys and why does our favourite tech site still insist on giving them any publicity at all?

    "Biting the hand that feeds IT"? Really? "Licking the love-pump of idiot marketeers" (R), more like.

    1. Anonymous Coward
      Anonymous Coward

      Re: Oh God, more oxygen for IHS

      Apple stole the once trendy "i", it was around before Apple. For instance www.idrive.com (R.I.P.). I think even iRiver was even around before Apple took to the trend (And iRiver was popular). But since you bring it up, the trendy "i" isn't so trendy any more, just like stalling on OS 10 'X' isn't.

      BTW, the once trendy "i" used to stand for "internet", however I never found out if Apple came forth with what their implied meaning of theirs was. They dismissed "internet", "intelligent" and "interactive", but I never heard them give meaning to it. It's not obvious like how everyone just knows that the X in OS X is actually the Roman numeral of 10.

      P.S. idrive rocked. 10GB online storage that you could, theoretically, boot from! It is an earlier "Cloud" from the year 1999 that will be missed.

      1. Anonymous Coward
        Anonymous Coward

        Re: Oh God, more oxygen for IHS

        Oh wow, this is off topic, but since I started remembering the "Hacky-Dos" I used to do with idrive, I looked them up. This is from the wikipedia page...(they were just 10 years too early!)

        "In January 2000, the company began offering unlimited storage space and an application called Filo."

        "The service was rated as a "Top 5 Web Application" by CNET in 2000 and one of the "3 Top Technologies to Watch" by Fortune Magazine in 2000. "

        https://en.wikipedia.org/wiki/I-drive

        Remember, all this was FREE! It appears time has withered away and now charges us hard money AND our personal information!! I miss 1999!!!

      2. Britt

        Re: Oh God, more oxygen for IHS

        iDrive was also the name given to the GT mountain bike crank system for the full sus models.

        1. werdsmith Silver badge

          Re: Oh God, more oxygen for IHS

          iDrive still is the name for the BMW in car control system.

          The company founded by The Beatles: Apple Corps (1967) still trades.

          1. Anonymous Coward
            Anonymous Coward

            Re: Oh God, more oxygen for IHS

            I thought the meaning of the "i" in Apple products was obvious... It's the first person singular, cheaper and easier to fit on the label than "me me me me me me me"

      3. Sarah Balfour

        Re: Oh God, more oxygen for IHS

        Idiot. Seriously, though, I always thought it stood for 'innovative' or 'innovation', neither of which are even remotely applicable now.

  4. Anonymous Coward
    Anonymous Coward

    Hi, I'm Steve Jobs

    I'm a god and another thing... I've sent zombies to the thread.

  5. hemsl

    Idiot?

    Since many of your readers will be buyers or users of Apple products, referring to an "idiot tax" is pretty insulting to these same reasons.

    Anyone who does not consider Apple/Android/Windows as a matter of tribal loyalty (and, despite comments on tech boards, there's quite a few of us) will regard such journalism as pretty pathetic. Which it is.

    Any while you're at it, please stop using exclamation marks after every word in headlines about Yahoo. It stopped being funny a long time ago.

    1. diodesign (Written by Reg staff) Silver badge

      Re: Idiot?

      ZDNet is that way ----->

      C.

      1. Anonymous Coward
        Anonymous Coward

        Re: Idiot? - @diodesign

        Thank you for making this one of the most amusing btl discussions in a long time. Is there a course you can do on snappy punchlines for those of us who are less gifted?

    2. Jamie Jones Silver badge
      Flame

      Re: Idiot?

      Anyone who wants one of these watches, and would get upset by this article needs to check into reality-hotel.

      FFS, everyone expects to get wrapped in cotton wool these days.

      The Register is one of the last places to avoid this PC crap, and long may it continue.

      And so called "comedian" Stewart Lee is clueless on the subject to claim that before 'PC' people were racist, homophobic bigots. That is a totally different issue, and worlds apart from being offended by a blackboard being called as such, or a Register journalist calling people idiots.

      I sometimes wish my life was so uncomplicated that I had time to be offended by such trivialities, but then I realise what a boring life you and other Daily Mail readers must lead.

      Do I offend you? Believe it or not, I don't intend to, but if I have, it says more about you than me.

      1. Waspy

        Re: Idiot?

        "And so called "comedian" Stewart Lee..."

        I'm really not sure Stewart Lee's pieces on political correctness were aimed at The Reg...he's political correctness gone mad though, absolutely mad I'm telling you

    3. Blank Reg Silver badge

      Re: Idiot?

      If you're offended that someone you don't even know may have indirectly implied that you're idiot, then maybe they're right.

    4. Anonymous Coward
      Anonymous Coward

      Re: Idiot?

      "Any while you're at it, please stop using exclamation marks after every word in headlines about Yahoo. It stopped being funny a long time ago."

      Please don't. Any way to ridicule Yahoo!, no matter how small, should be used with alacrity.

    5. Anonymous Coward
      Anonymous Coward

      Re: Idiot?

      Sorry. But it is an idiot tax. All apple products are vastly overpriced, simply because they can be. Idiots have been brainwashed by the hype, made to believe that anyone that has anything that's not an iPhone has it because they can't afford one. Its mass media brainwashing pushed by journalists all getting paid in freebies and lavish complimentary product launches.

      1. werdsmith Silver badge

        Re: Idiot?

        Well at least you began your comment with an apology for the rest of it.

        If people want to spend the money they earn any way they want then there are obviously 1000s of different idiot taxes.

        You want to join a golf club for £????? thousand per year? Your money your choice.

        You want to pay £????? for a an item of jewellery made of a precious metal with a scrap value by weight of £??. Your money your choice.

        You want a private box at xxx Premier League football ground, you want to fly first class for £4000 instead of £100, you want posh fish and chips at Ester Bloomingtails etc etc etc etc.

        You want it, you can afford it, you feel it's worth it then your money your choice. Nobody else's business.

        Personally I use an iPhone, but it is a 5S that I bought off Ebay with a broken screen for £160. Pretty much tax free.

        1. Oninoshiko

          Re: Idiot?

          Everyone pays one idiot tax or another.

          I bought some imaginary space ships, myself.

          Get over yourself.

  6. phil dude
    Coat

    oh well...

    Brilliant engineering.

    I'll probably never own one...

    P.

  7. MrDamage

    Check your brains at the door, you won't need them.

    It's amazing how much those who worship at the Sphincter of Jobs get offended by any article which is critical of the iCultists and their favoured, over-priced, mediocre and "we did it second/third/tenth, but we'll spend enough on advertising to make people think we did it first" iShiney.

    Today's multiple choice questions is;

    Are iCultists

    a) On drugs

    b) Lobotomised

    c) Gullible

    d) Just really, really stupid. So stupid they make Mr Gumby seem like a legitimate brain surgeon.

    Cue the downvotes. Unlike iCultists, I can take the criticism.

    1. bdam
      Pint

      Re: Check your brains at the door, you won't need them.

      He was a great man indeed, and during #antennagate sure knew how to hold his phone.

    2. werdsmith Silver badge

      Re: Check your brains at the door, you won't need them.

      I really don't understand why some people get so wound up by what other people buy!

      What's the real problem in your life?

      1. MrDamage

        What's the real problem in your life?

        I have nothing against anyone who buys an iProduct.

        I do have a thing against anyone who is a cultist, whether it be of a product, religion, or political persuasion. These sorts of people do not think rationally, and seeing as they will not engage their own brains, and instead rely on others to tell them what to think, say, and how to dress and act, then the mockery they receive is justified.*

        *Unless they always have to wear a helmet and be told to stop licking the windows.

  8. Innocent-Bystander*

    MSRP-BoM !=Profit

    You have to consider engineering costs, patent agreements, development of the initial apps, marketing costs and if Apple is to be believed they were having major fallout in manufacturing so the cost of defects also drove it up. That of course assumes building out the supply chain goes without a hitch. There are a lot more moving parts in designing and manufacturing a product than the cost of the sum of the parts.

    Apple is notorious for raping its customer base but I doubt they would make over 50% margin on them. Probably closer to 30%.

    1. Eddy Ito Silver badge

      Re: MSRP-BoM !=Profit

      Sure, or we could to the maths. Last I saw Apple ordered 5 million of these things so if we go with the starting price of $399 that makes a 50% margin a cost of $199.50. Less parts and labor gives $115.80 each for R&D, etc. Pretty simple from here, 5 million units times $115.80 is $579 million. Working from a 30% margin that climbs to $978 million. I find the latter number a bit harder to believe than a bit more than half a billion dollars. Even if the margin on the first order is only 30% it goes up substantially on any subsequent orders since any future R&D is only going to be on slight improvements and tweaks rather than starting from scratch. Sure, even if we allow the bad Taptic Engines in the first batch and say Apple ate that cost it's still quite the margin but keep in mind we all know Apple tends to work the contracts so the vendors pay when their kit doesn't perform so the vendor will eat most of that, not Apple.

      1. Anonymous Coward
        Anonymous Coward

        Re: MSRP-BoM !=Profit - @Eddy Ito

        The profit margins on cars and their BOMs are notoriously secret, but I have seen it suggested that more than half of the cost of a new luxury car - that's cost, people, not selling price - is marketing. The Apple Watch is in modern terms a small low volume consumer product yet I seem to have seen more puffery about it than for the entire product lines of other manufacturers. Sony loses money on phones, and I suspect that their entire marketing spend is less than that for the Apple Watch.

        How much does "assisting" people like Charles Arthur cost? How much does all that product placement in movies and TV programmes cost? Around the world, it could add up to rather a lot.

        Having worked for US companies as well as UK ones, I'm very aware of the different approach to marketing spend, and how it gets concealed in financial statements.

  9. DNTP Silver badge

    R. A. E.

    OK, let's run this into the ground. If you reduced an Apple Sport Watch (~72 grams) to its component elements of aluminum, silicon, carbon, oxygen, hydrogen plus a smattering of other things, according to my very rough calculation on the bulk commodities markets the Sport Watch probably wouldn't break $2, so Apple is obviously enjoying a $397 profit per unit.

    Math check: Most of the mass of the Watch comes from the aluminum ($1.88/kg) case, silicon ($2.11/kg) and oxygen ($2.50/kg, cryogenic liquid) glass face, and ceramic (silicon and oxygen again) bezel. Every other element is irrelevant for this rough calculation simply because they are only present in extremely tiny quantities. You'd do even cheaper by sourcing silicon dioxide as a single chemical instead of high purity silicon and liquid oxygen separately.

    Reductio ad absurdam? No, lets Reductio Ad Elementum instead.

    1. DN4

      Re: R. A. E.

      Well said. And now please actually go read the article and find out that the breakdown includes the assembly cost.

    2. Philip Lewis

      Re: R. A. E.

      if were able to upvote from this app, i would do so!

      I am reduced to tears.

  10. Winkypop Silver badge
    Devil

    Do the kids even wear watches these days?

    And doesn't iTime just stop when your iThing battery gives out?

    1. Anonymous Coward
      Anonymous Coward

      Re: Do the kids even wear watches these days?

      "And doesn't iTime just stop when your iThing battery gives out?"

      God, this is so meta. Did Apple Time and Apple Space exist before the Big Jobs started? And what does the Apple Universe expand into? Will its expansion continue forever with the innovation getting thinner and thinner as Apple Space gets more and more stretched, or will there be a Big Crunch? Will a Big Crunch start when the Chinese Dragon takes a bite out of the Apple Universe? Is the RDF analogous to the Higgs Field, and if so is it the RDF that gives Apple press releases their gravitas? Are we still in the period of hyperinflation or is this the "normal" rate of Apple expansion?

      Thank God it's Friday.

  11. Bronek Kozicki Silver badge
    Devil

    "if sales match the interest the Apple Watch has generated"

    ... does he mean that if all the journalists who slavishly follow the trend to write about, show and pontificate this one product, had actually bought one, then Apple would be much richer than it is now?

  12. adnim Silver badge
    Meh

    The true value

    of the Apple watch like most Apple products is in the price, imho this is the only value of the Apple watch.

    1. Anonymous Coward
      Anonymous Coward

      Re: The true value

      This is just market economics 101: the value of anything is what people are prepared to pay for it.

      However, this has the corollary that markets are very elastic. Post nuclear war an Apple Watch would be worthless, whereas a mechanical winder watch with date could be quite valuable (it would allow you to work out when to plant, estimate the tides and other useful things for a subsistence economy.) A Lamborghini would be worthless while an old Land Rover (or even a Ford Fiesta) would be very valuable indeed - repairable, spares by cannibalisation, there's bound to be some Diesel fuel and engine oil still around - almost as valuable as a good cart and a couple of horses, or a small sailing boat with rowlocks and oars. A mobile phone would be worthless, a couple of small mirrors, pairs of binoculars and a guide to heliograph code would be extremely valuable. The list goes on.

  13. Annihilator
    Thumb Up

    Progression

    The second Watch costs $83.70 to build. The 1st watch probably cost $10m+.

  14. Anonymous Coward
    Happy

    Wow....

    ...there are sure some noobs about today....

    Either that or the Apple marketing department and got a fresh set of unpaid interns again.

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