Omdia has calculated the cost of components for the Apple Vision Pro

[creat0r]

Summary

According to research firm Omdia, the Apple Vision Pro's bill of materials is $1,542. The most expensive part is the 1.25-inch Sony Semiconductor display, which enhances the virtual experience with high pixel density and lifelike colors. Apple pays approximately $228 for each Micro OLED display used in their Vision Pro headset. The second most expensive part in the Vision Pro is the main processor, the Apple M2 chip.

 

Quotes

Quote

"One estimate from research firm Omdia puts the “bill of materials” for the headset at $1,542, and that doesn’t include the costs of research and development, packaging, marketing or Apple’s profit margin." - Kif Leswing, CNBC News

 

My thoughts

The high price of some components doesn't surprise me since there's some very high-end hardware in this product. It would be interesting to know what Apple's profit margin for the Vision Pro is, after things like R&D becomes part of the calculation.

 

Sources

 https://www.cnbc.com/2024/02/24/apples-vision-pro-why-its-so-expensive.html 

[leadeater]

28 minutes ago, creat0r said:

It would be interesting to know what Apple's profit margin for the Vision Pro is, after things like R&D becomes part of the calculation.

That will be really difficult to know, mainly since I doubt Apple wants anyone to know, commercially sensitive information yada yada.

 

What we do know is Apple's Gross Margin is ~45% and their Operating Margin is ~30%, operating margin includes things like R&D but both are overall business metrics not a per specific product like the Vision Pro. Being a new product of a new type gross margin on the product is going to be higher than a MacBook for example since way more R&D cost is involved for the Vision Pro comparatively. that'll go down each generation presumably but could stay relatively high for the first through third 

 

That said I doubt the ~$1500 is all that accurate. This product requires all new molds and tooling, entirely new manufacturing all of which is actually damn expensive. Like many hundreds of thousands for each new mold alone, not including the original product design just the manufacturing design and engineering required to make the part.

 

P.S. Nvidia's Gross Margin is ~73% and Operating Margin ~49%, AMD ~47%/~5% respectively.

[Brooksie359]

7 minutes ago, leadeater said:

That will be really difficult to know, mainly since I doubt Apple wants anyone to know, commercially sensitive information yada yada.

 

What we do know is Apple's Gross Margin is ~45% and their Operating Margin is ~30%, operating margin includes things like R&D but both are overall business metrics not a per specific product like the Vision Pro. Being a new product of a new type gross margin on the product is going to be higher than a MacBook for example since way more R&D cost is involved for the Vision Pro comparatively. that'll go down each generation presumably but could stay relatively high for the first through third 

 

That said I doubt the ~$1500 is all that accurate. This product requires all new molds and tooling, entirely new manufacturing all of which is actually damn expensive. Like many hundreds of thousands for each new mold alone, not including the original product design just the manufacturing design and engineering required to make the part.

 

P.S. Nvidia's Gross Margin is ~73% and Operating Margin ~49%, AMD ~47%/~5% respectively.

Yeah I think most won't bother to account for tooling as that is alot like R&D and is mostly an upfront cost. That said I wouldn't doubt that the tooling wouldn't be a significant cost if they don't do large volume sales as tooling tends to be more economical the more you produce. 

[OddOod]

TBH, that's probably undershooting the first round BOM cost. 

[HenrySalayne]

On 2/27/2024 at 2:13 PM, leadeater said:

That said I doubt the ~$1500 is all that accurate. This product requires all new molds and tooling, entirely new manufacturing all of which is actually damn expensive.

Every product they bring to the market require this. Maybe the Air and the Pro share the same common components nowadays, but that's mostly it. Most products are unicorns in their own realm.

 

I'm aware that they probably had a few challenges designing processes and mechansims for mass manufacturing so they won't have alignment issues for sensors and the lens system. But AFAIK they don't use any exotic or novel manufacturing methods.

[leadeater]

3 hours ago, HenrySalayne said:

Every product they bring to the market require this. Maybe the Air and the Pro share the same common components nowadays, but that's mostly it. Most products are unicorns in their own realm.

No they aren't like this, design iterations are cheaper, that should be obvious.

 

3 hours ago, HenrySalayne said:

But AFAIK they don't use any exotic or novel manufacturing methods.

I didn't say exotic or novel. You can't use a production line that makes MacBook chassis or sunglasses to make the Vison Pro, you actually have to install equipment, program and calibrate it to do this aka new manufacturing.

 

You can use 2021 MacBook Pro chassis production line to make 2022 MacBook Pro chassis even with chassis design modifications. You can use 2021 MacBook Pro chassis production line to make 2021 MacBook Air chassis even with chassis design modifications. You can use 2021/2022 Vision Pro chassis production line to make 202[x] Vison Pro chassis even with chassis design modifications.

 

It isn't about can't, but you would not make Vision Pro chassis in the same lines as MacBook chassis, that's asking for a long list of potential problems that would effect massive amount of Apple products which can be entirely avoided by not doing that. It isn't "just CNC milling".

 

 

You're comparing existing manufacturing knowledge versus unknown, you shouldn't be down playing the complexity of introducing a completely new product like the Vision Pro is.

[creat0r]

On 2/27/2024 at 2:13 PM, leadeater said:

Nvidia's Gross Margin is ~73% and Operating Margin ~49%, AMD ~47%/~5% respectively.

I'm curious why AMD's operating margin is so low? I know NVIDIA is at the front of the AI hype train, but still, it's insane that NVIDIA's operation margin is ≈10x AMD's. And I thought Apple's margin was high...

[leadeater]

10 minutes ago, creat0r said:

I'm curious why AMD's operating margin is so low? I know NVIDIA is at the front of the AI hype train, but still, it's insane that NVIDIA's operation margin is ≈10x AMD's. And I thought Apple's margin was high...

AMD is spending a ton of money on product development right now, since they have CPUs in all product categories, GPUs and ASICs. Nvidia does a bit less, still a lot but certainly not as broad as AMD.

 

I'd have to dig in to the quarterly reports more and look for things like paying off debt because that would also influence the operating margin, but I cbf 

[GoStormPlays]

4 hours ago, leadeater said:

It isn't about can't, but you would not make Vision Pro chassis in the same lines as MacBook chassis,

what're you talking about i tape my macbook to my face all the time

 

 

I think it'd be interesting to see some of the cost of materials list of other headsets at a similar price. Might be a good reference point.

[HenrySalayne]

On 2/29/2024 at 10:27 AM, leadeater said:

I didn't say exotic or novel. You can't use a production line that makes MacBook chassis or sunglasses to make the Vison Pro, you actually have to install equipment, program and calibrate it to do this aka new manufacturing.

 

You can use 2021 MacBook Pro chassis production line to make 2022 MacBook Pro chassis even with chassis design modifications. You can use 2021 MacBook Pro chassis production line to make 2021 MacBook Air chassis even with chassis design modifications. You can use 2021/2022 Vision Pro chassis production line to make 202[x] Vison Pro chassis even with chassis design modifications.

 

It isn't about can't, but you would not make Vision Pro chassis in the same lines as MacBook chassis, that's asking for a long list of potential problems that would effect massive amount of Apple products which can be entirely avoided by not doing that. It isn't "just CNC milling".

 

Apple doesn't have manufacturing lines (at least to my knowledge). The components are made by independent manufacturers (under stringent control from Apple) and assembled by yet another contractor. The machines making the parts require moulds, tooling and set-up time, but they also require these for any other component in an Apple product or if an order is fulfilled and the parts for the next customer are on the line. It would be quite rare that a workshop is only set-up to make a single component and nothing else. The CNCed frame of the headset is probably made in a workshop along other components like frames for mobile phones or CNCed parts for machines.

 

Assembly is a different story. But from what we can tell from tear-downs of the Apple Vision headset, it has many similarities to the assembly of mobile phones, tablets and notebooks. It's probably mostly built with tool-assisted manual labour like all the other devices (except for the cool display glue application robot). Are the required tools expensive? You might get a feeling for the cost of these tools by taking a look at Apple's DIY repair program. The tools used for final assembly are most likely very close to the tools used for repairs.

 

 

Another hint is the plethora of electronic devices in general that bringing new products to the market isn't very expensive if the products follow certain design criteria. There are currently thousands of phone and notebook models manufactured every single year. Some of these devices are only sold to a few thousand customers and it's still worth to set-up shops to make these things.

 

I'm not trying to say it is cheap to build the Apple headset and the complex components probably take some additional time on the machines. But in the grand scheme of things, this is nothing extraordinary.