Tim Cook says component cost breakdown of Apple products are nowhere ‘close to being accurate’

BY Rajesh Pandey

Published 28 Apr 2015

Apple Watch teardown

At the Q2, 2015 earnings call today, Tim Cook said that the cost breakdown of various Apple products published by analyst firms are wildly inaccurate. 

Cook said during the earnings call that while he has not seen the cost breakdown of the Apple Watch, the margins on the smartwatch are lower than its other products. Cook explained that this is because the first quarter of any new product is a “learning period” for the company. However, he did not provide any estimates on the profit margin of the smartwatch after the first quarter.

“I haven’t seen [them for Apple Watch], but generally there are cost breakdowns around our products that are much different than the reality. I’ve never seen one that is anywhere close to being accurate,” Cook said at the earnings call.

He then praised the Apple Watch by saying it is an incredible new product with a lot of innovative new features.

Various analysts have pegged that the iPhone 6 component cost is nearly $200, though they don’t take into account the labour charges, R&D expenses and more. These other indirect expenses also make up a significant part of a device post, which is never included by most analysts when they calculate gross profit margins of Apple for a particular product.

[Via MacRumors]