A teardown by IHS Technology has found that the Apple Watch offers the firm’s highest profit margins with the lowest ratio of hardware cost to retail price.
IHS found that the combined hardware cost of $83, or £54, for the device is the lowest of all Apple products. This is a stretch from the retail cost, which is anywhere from £299 to £13,000.
The Apple Watch comes in a range of price options, and the closest to its build price is the £299 Sport version, which is the one that IHS broke down.
The rest of the range extends from £479 to £949 for the standard Watch versions, and £8,000 to £13,000 for the Apple Watch Edition.
The smartwatches have already come in for criticism, and Apple has admitted that tattoos and physical exercise can affect performance.
“It is fairly typical for a first-generation product rollout to have a higher retail price versus hardware cost,” said Kevin Keller, senior principal analyst for materials and cost benchmarking services at IHS.
“While retail prices always tend to decrease over time, the ratio for the Apple Watch is lower than what we saw for the iPhone 6 Plus and other new Apple products, and could be of great benefit to Apple’s bottom line if sales match the interest the Apple Watch has generated.”
The Watch materials include some new Apple technologies, such as Force Touch sensors and ‘Taptic Engine’ feedback, and IHS said that it expects some of this to inform future hardware decisions and potentially help to hold down costs.
“While these features have been promoted by Apple none are necessarily revelatory. It is noteworthy that many features are appearing for the first time, in combination, in one device. It could be a bellwether for other future Apple products,” added Keller.
The combined hardware cost of the Watch is $81.20. The additional costs, which include manufacturing, add an extra $2.50.