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Comment by skywhopper | Hacker News Reader

Note that this data is all just made up. The components listed are probably close to right (though I don't see anything about the haptic device--could be I overlooked it) but the cost for each is just a random guess. I'm guessing they also well undershoot the assembly cost, given the extreme care Apple puts into its manufacturing process.

And even if all the per-unit costs are correct, the fact that they leave out R&D and logistics costs is very misleading, especially given that this is not just a new revision of a well-understood product like a new Mac or iPhone. This is a new product altogether, and that overhead is significantly higher. So in the end the number is misleading and ultimately pointless, except to Apple's cost accountants.

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I wouldn't call them 'random' guesses as they seem to be based on actual information to some degree. I also wouldn't call the end number pointless, it just doesn't mean what people who only read the headline might assume it means. I believe the article does a pretty good job explaining the caveats about other costs which are not taken into account. And the numbers are still useful for comparing against other product launches by apple. R&D for products is generally left out of the production cost, as it is a fixed price regardless of the number of units they produce, and therefore has no unit price, and is simply recouped over time (hopefully).

Over all its an interesting article I think, and while reading it I felt they were doing adequate cautioning of the reader to not go 'OMG Apple is gauging us even more' which the number really has no relevance to as you point out, however it does not mean the number is misleading or pointless.

The article is only concerned with unit costs, not overall cost with various amortizations built in.

Is that a meaningful analysis?

No.

>And even if all the per-unit costs are correct, the fact that they leave out R&D and logistics costs is very misleading,

That would mean Apple has a small profit margin out of the total price of the product. I guess you don't read their financial statements. Apple is ALL about high profit margins.

At this point, for almost every Apple product you purchase, a large chunk of your money is never going to be used for any kind of R&D, logistics, or even used to compensate their brilliant designers. It simply ends up in a pile of cash.

Ya, I can't imagine they can actually assemble the watch for $2.50/unit.

"but the cost for each is just a random guess"

Component prices are not a secret, and even for things like the Apple processor they can be estimated with high confidence.

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