Preliminary estimate shows Apple Watch Sport hardware costs only
about 24 percent of MSRP; lowest of any Apple product examined by
IHS
The much-anticipated new Apple Watch has the lowest hardware
costs compared to retail price of any Apple product IHS Technology
has researched, according to a preliminary estimate by IHS (NYSE:
IHS) and its Teardown Mobile Handsets Intelligence Service. The
teardown of the Apple Watch Sport by IHS Technology estimates that
the actual hardware costs are only about 24 percent of the
manufacturer’s suggested retail price (MSRP). Estimated hardware
cost to MSRP ratios for other Apple products reviewed by IHS are in
the range of 29 to 98 percent.
The teardown of the Apple Watch Sport 38 mm by IHS Technology
shows a bill of materials of $81.20 with the cost of production
rising to $83.70 when the $2.50 manufacturing expense is added. The
retail price of the Apple Watch Sport 38 mm is $349.00. The IHS
Technology analysis does not include logistics, amortized capital
expenses, overhead, SG&A, R&D, software, IP licensing and
other variables throughout the supply chain such as the EMS
provider.
“It is fairly typical for a first-generation product rollout to
have a higher retail price versus hardware cost,” said Kevin
Keller, senior principal analyst-materials and cost benchmarking
services for IHS Technology. “While retail prices always tend to
decrease over time, the ratio for the Apple Watch is lower than
what we saw for the iPhone 6 Plus and other new Apple products, and
could be of great benefit to Apple’s bottom line if sales match the
interest the Apple Watch has generated.”
New Features and Manufacturing Methods
There are several new features and manufacturing methods used in
the Apple Watch Sport, including: a Pulse Oximeter, Force Touch
sensor, "Taptic Engine" feedback, encapsulated modular printed
circuit board (PCB) assembly and stacked-die integrated circuits
(IC).
“While these features have been promoted by Apple and none are
necessarily revelatory,” Keller said. “It is noteworthy that many
features are appearing for the first time – in combination – in one
device. It could be a bellwether for other future Apple
products.”
The Taptic Engine built into the Apple Watch, and integrated
with the loudspeaker, contains a linear actuator which provides
haptic feedback and vibrations. “We found that the device consumes
a substantial amount of space inside the watch, and we would expect
further miniaturization of this function in future iterations of
the product,” Keller said.
The preliminary results of the teardown do not show any big
surprises in the IC content; all of the manufacturers identified so
far were expected. The Apple Watch NAND memory is a Toshiba Flash
8GB and DRAM is a Micron SDRAM 512MB. Broadcom, STMicro, Maxim,
Analog Devices and NXP are used for connectivity and interface. One
noteworthy change is a shift from Invensense to STMicro for the
accelerometer/gyroscope.
“The display is LG’s plastic OLED display and the touchscreen
overlay module is a TPK Slim GG utilizing their ‘Force Touch’
technology,” Keller said. “Force Touch was recently incorporated
into the latest MacBook and is expected to be found in the next
iPhone generation.”
Apple “Unibody” Tradition Continued
The fabrication of the enclosure continues the Apple "Unibody"
tradition of precision machining from a single block of aluminum.
Apple is now extending this design philosophy into a highly
miniaturized realm, mating the legacy of precision watchmaking with
Apple’s specialized manufacturing practices. As with their previous
products, Apple has taken fabrication techniques – once typically
restricted to low-volume manufacturing and prototyping – and scaled
them into a high-volume production environment.
'”The encapsulation of the entire printed circuit board assembly
into a single monolithic module is especially noteworthy,” Keller
said. “Whereas many products might have some form of semi-flexible
encapsulant applied to the board for protection, shock and
vibration purposes, Apple has effectively created one large IC out
of the entire assembly. This encapsulation is done by encasing the
board in the same plastic/epoxy material used for conventional ICs.
Indeed, many of the devices found inside the assembly are already
encapsulated, effectively creating an IC-within-an-IC affair.
“To provide electromagnetic shielding, the encapsulated PCB
assembly is further treated with a metalized coating deposited over
the surface,” Keller added. “This shielding process is used in
place of conventional stamped sheet metal shielding, saving a
significant amount of space, as well as cutting down slightly on
weight.”
Potential Boost for Wireless Charging
The Apple Watch is equipped with inductive charging technology
and is being shipped with a wireless charger, based on Apple’s own
proprietary MagSafe charging technology.
“It has been speculated that the Apple Watch could be compatible
with the Wireless Power Consortium’s (WPC) Qi wireless charging
specification,” said Vicky Yussuff, analyst-power supplies &
wireless power for IHS. “AppleInsider recently shared a video which
appears to show the Apple Watch MagSafe charger being used to
charge the Moto 360 smart watch. This would suggest that Apple’s
charger is Qi-compatible.
"Apple has not been announced as a member of the WPC or even a
supporter of the consortium, so it is unlikely that they have
produced a 'certified' Qi product. However, the Qi specification is
an open standard meaning it is still possible for Apple to
build products which are compatible to the specification. This
could be the case with the Apple Watch MagSafe charger,” Yussuff
said. “Although it cannot be verified if both the Moto 360
smartwatch and Magsafe wireless charger used in the video were both
un-modified ‘off the shelf’ products, this could potentially be
another boost for the wireless charging industry looking to
increase interoperability.”
The Apple Watch battery appears to be somewhat simpler to
replace than the batteries in many other Apple products. As long as
the display can be carefully removed, the battery is attached with
a simple snap-on connector.
IHS Technology will conduct a free webinar about its teardown of
the Apple Watch Sport on May 5, 2015 at 12:00 pm EDT. For more
information about the webinar and the Apple Watch teardown visit:
https://technology.ihs.com/wearables.
Apple Watch Sport Cost Summary
Direct Material Costs $ 81.20
(Component Costs)
Conversion Costs $ 2.50
(Assembly/Insertion/Test Costs)
Total Cost $ 83.70
(Direct Materials & Manufacturing)
Source: IHS Technology Apple Watch Sport 38mm (A1553) April
2015
About IHS
(www.ihs.com)
IHS (NYSE: IHS) is the leading source of insight, analytics and
expertise in critical areas that shape today’s business landscape.
Businesses and governments in more than 150 countries around the
globe rely on the comprehensive content, expert independent
analysis and flexible delivery methods of IHS to make high-impact
decisions and develop strategies with speed and confidence. IHS has
been in business since 1959 and became a publicly traded company on
the New York Stock Exchange in 2005. Headquartered in Englewood,
Colorado, USA, IHS is committed to sustainable, profitable growth
and employs about 8,800 people in 32 countries around the
world.
IHS is a registered trademark of IHS Inc. All other company and
product names may be trademarks of their respective owners. © 2015
IHS Inc. All rights reserved.
Photos/Multimedia Gallery Available:
http://www.businesswire.com/multimedia/home/20150430006412/en/
IHSPress Team, +1 303-305-8021press@ihs.com
IHS (NYSE:IHS)
Historical Stock Chart
From Mar 2024 to Apr 2024
IHS (NYSE:IHS)
Historical Stock Chart
From Apr 2023 to Apr 2024