Gruber: Apple is selling HomePod at a loss

From The Talk Show with John Gruber “The Butts Incident” with special guest John Moltz:

One thing I’ve heard from reliable little birdie [usually Phil Schiller] 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. [laughter] I can’t prove it. I don’t think it’s a big loss…

I’ve always thought, I don’t have any source on this other than the oddity of the price of AirPods… that AirPods probably cost like—or did when they debuted—were like a $160 product.

“Or did when they debuted” takes some of the wind out of this scoop, since as Gruber acknowledges everything get cheaper to make over time. He continues:

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.

My take: Apple can afford to sell a few wearables and accessories at a loss because they sell in such (relatively) small numbers. But “too good of a product” doesn’t sound good. It sounds like an invitation to be disrupted. Paging Prof. Christensen.

Thanks to MacRumors‘ Juli Clover for the tip.

7 Comments

  1. Chris Ferebee said:

    That’s not how disruption works—HomePod is not the incumbent. There are plenty of less-capable wireless speakers already.

    Apple is a master of self-disruption: the iPod nano disrupted the iPod mini at the peak of its success, the iPhone obsoleted the iPod. The Apple Watch is poised to spread its wings and become independent of the iPhone just as the iPhone became independent of the Mac, and even AirPods will eventually grow at least some autonomy.

    I don’t understand HomePod yet, and maybe even Apple doesn’t. But then nobody understands home automation yet, either.

    1
    February 2, 2019
    • Jonny Tilney said:

      Excellent comment, thank you!

      0
      February 3, 2019
  2. Sean Callahan said:

    Selling wearables at cost or slight loss may be part of a long term strategy of owning the user’s ear and wrist. With AI and Heath apps still in their infancy Apple may be preparing a receptive platform — and therby setting the standards — for what Walt Mossberg calls “ambient computing” where the phone remains in your pocket and you have a hands-free dialog with the services that facilitate your daily life.

    3
    February 2, 2019
  3. Jonny Tilney said:

    Imagine AirPods that are invisibly tiny and like unseen contact lenses. I agree that Apple is a few steps ahead working towards this miniaturisation…

    0
    February 3, 2019
  4. Dan Scropos said:

    This is a perplexing article, considering that experts have pegged the components cost at $215-$-230. Why would Apple sell HomePod at a loss? Buying the customer (selling at a loss) is the Amazon model. Has Apple ever done that before?

    HomePod has been out long enough that the component costs have certainly gone down. There’s virtually no doubt that Apple is selling HomePod at a profit.

    1
    February 3, 2019
  5. victor castroll said:

    next they’ll be selling iPhones at a loss. fold up shop and become a friggin’ charity

    0
    February 4, 2019

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