The Apple Watch Series 6 (S6), on average, costs A$180 (US$136) to make according to a bill of materials (BoM) analysis by Counterpoint’s Component Research Practice.
The smartwatch’s application processor, display, sensors and casing together account for ~68% of the total device value. Assembly is about $9.
The BoM report, if anything, has a lot more generous cost allowances for components that Apple pays its suppliers, so one has to ask why the device sells from $A$599 here. Well, there are marketing and distribution costs and of course resellers profit.
- The new S6 SIP (System-in-Package), which Apple claims is 20% faster than the S5
- Wi-Fi AC dual-band and Bluetooth 5.0
- 1GB of LPDDR4X RAM and 32GB. The S6 SIP module, DRAM and memory add up to 23.7% of the overall cost
- 50% louder speaker (than S5)
- Fast charging
- The casing and body materials remain the same, including the body crown, metal frame, rear cover made of aluminium/stainless steel, ceramic/sapphire crystal back, and stainless-steel frame. Together these make up around 13.3% of the BoM cost.
- The core functionality of S6 is the same as S5 with the addition of the always-on altimeter and blood oxygen sensor, brighter display, minor upgrade to the battery, and fast charging capability.
- And you can be sure that the S7 scheduled for release in September, as with all Apple Watch series, will be just another incremental improvement – evolution, not revolution.
The Apple Watch Series 6 is essentially an update to S5 and offers few compelling reasons to upgrade.
BoM report
But Apple is doing very nicely, thank you, with a 33% lion’s share of the market against Samsung’s 8%.
Global Smartwatch Shipments Market Share (Q1 2018 – Q1 2021)
Brand | 2018 Q1 | 2018 Q2 | 2018 Q3 | 2018 Q4 | 2019 Q1 | 2019 Q2 | 2019 Q3 | 2019 Q4 | 2020 Q1 | 2020 Q2 | 2020 Q3 | 2020 Q4 | 2021 Q1 |
Apple | 26% | 22% | 21% | 37% | 26% | 23% | 26% | 34% | 30% | 30% | 28% | 40% | 33% |
Huawei | 3% | 5% | 5% | 5% | 8% | 8% | 10% | 10% | 10% | 13% | 14% | 8% | 8% |
Samsung | 5% | 5% | 8% | 8% | 9% | 10% | 8% | 9% | 9% | 7% | 10% | 10% | 8% |
Imoo | 10% | 9% | 8% | 6% | 8% | 8% | 8% | 6% | 7% | 7% | 7% | 6% | 5% |
Others | 56% | 59% | 58% | 44% | 49% | 51% | 48% | 41% | 44% | 43% | 41% | 36% | 46% |
Imoo (kids watch) and Huawei are mainly sold in China.
GadgetGuy’s review of the Apple Watch Series 6 is here.
Thanks for the article. Can you do an equivalent breakdown of vaguely equivalent products? You are looking at a markup of about 300% which sounds a lot. My dad was in a small business (pet store) and I remember him telling me about 300% markups on most things, to pay the big rents that Westfield charged, plus money to the parent company, cost of wages, running costs, pay himself a wage, etc. So I don’t know what a real markup should be. Do you sell a small number at a big profit, or lots of product at a small margin, to make your money. The problem I have with Apple and many big techs is that the stock prices largely do not reflect dividends, so are largely speculation on someone paying more money for it as a long-term gamble.
We don’t have the expertise to do bills of material (BOM) but readers are asking us to try and find more BOMs for more items. But what the article really infers is that marketing costs are probably greater than the watch BOM then you add profit for Apple and the reseller. I think a 3x times cost of goods to retail is fair – but its really about who get the lions share of the pie. No comment on share prices but I do find it interesting that the cap value is based largely on blue-sky amounts rather than performance.