Apple Sells Apple TV Hardware at Cost, HomePod Apparently Sells “At a Loss”: Gruber [u]
Apple blogger and insider John Gruber has shared some little nuggets of info from his famous “little birdies”, regarding Apple TV and HomePod sales—which don’t apparently make any money for Apple on hardware sales:
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.
If true, it appears Apple may be following a business model like Amazon when it comes to Apple TV and HomePod sales. That is, losing money on hardware, but making money on services from customers. Amazon has been known to sell their Kindle e-book readers at a loss, only to make money when customers buy e-books.
For Apple, when customers buy an Apple TV, it ensures they are remaining within the company’s ecosystem of apps and services (iCloud, Apple Music, subscriptions, etc). The same goes for HomePod, which definitely ensures customers retain their Apple Music subscriptions, because Siri can only perform requests from the company’s own music streaming service.
According to Gruber, he proclaims “If you think it’s a problem that these products are so expensive compared to their competition, that too few people buy them, it’s not because Apple is charging too much, it’s because Apple engineered and designed too good of a product.”
Do you agree with this statement?
Gruber shared the information on his podcast, The Talk Show, episode 242.
Update: Bloomberg’s Mark Gurman has shot down this claim from Gruber with his own sources, citing HomePod is sold at a profit, and not st a loss. Gruber has traditionally downplayed Gurman’s scoops, so it’s good to see Mark reply with his own sources.
I’m told Apple is selling HomePods at a profit, not a loss, which wouldn’t make any sense. If it’s losing money, that’s only because it built too many speakers people don’t seem to want, and is now sitting on unsold inventory. https://t.co/ne9HrNZOcY
— Mark Gurman (@markgurman) February 3, 2019