Apple Vision Pro is unsurprisingly expensive to produce

AppleInsiderAppleInsider
Posted:
in Apple Vision Pro edited February 25

The Apple Vision Pro is a costly item for Apple to manufacture, with nearly half of its $3,499 price tag covering its expensive components.

Apple Vision Pro
Apple Vision Pro



Compared to other headsets on the market, the Apple Vision Pro offers high performance and ships with an equally high price tag. While eye-watering to consumers, the $3,499 Apple charges is high, but Apple does have to pay component suppliers a considerable slice of the pie.

An estimate of the so-called "bill of materials" for the Apple Vision Pro by researchers at Omdia, shared with CNBC, prices the components at around $1,542 per headset. This accounts for approximately 44% of the price of the headset.

This figure only covers the manufacture of each headset, and doesn't take into account other costs Apple may incur, such as recouping research and development budgets, or marketing the headset to the public.

At over $1,500, the bill of materials is also higher than the retail cost of many current headsets, including the Meta Quest Pro at $999, or $1,499 at launch.

Omdia reckons the most expensive element of the headset are the two micro OLED displays, sourced from Sony, which cost $228 per display. At around 3,380 pixels per inch, the displays are arguably the most important parts, providing the high resolution and picture quality Apple needed for the product.

The displays are also more expensive than the chipsets used to power the experience. In second place, the chipset includes the M2 chip as well as the custom sensor-managing R1 chip.

The thoroughly high cost to produce each headset does make sense for Apple despite the prospect of minimal profit for the first-generation device. With refreshed models expected in the future, as well as refinements in component production and the benefit of economies of scale, Apple will eventually be able to reduce the per-device cost of the hardware.

It probably won't earn much of a profit from the initial Apple Vision Pro, but Apple stands a good chance of doing so with later models.



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Comments

  • Reply 1 of 10
    XavalonXavalon Posts: 14member
    If the bill of materials is over 1500 dollars, then I don't see that they can come with a way cheaper version soon. I mean one that cost less than 1500 bucks.
    watto_cobrawilliamlondon
  • Reply 2 of 10
    jas99jas99 Posts: 162member
    If there’s one thing Apple knows how to do better than anybody else, it’s introduce new products successfully. 
    As someone who has worked in product development for 30 years, what they do is nothing less than amazing. 

    From understanding the current marketplace to envisioning new possibilities, to successfully managing the complexities of technological innovation, they are unmatched. 

    There is no other company in the world that could do better.
    baconstangwatto_cobrabadmonkjony0
  • Reply 3 of 10
    XedXed Posts: 2,806member
    Xavalon said:
    If the bill of materials is over 1500 dollars, then I don't see that they can come with a way cheaper version soon. I mean one that cost less than 1500 bucks.
    The displays are very new tech and it will drop in price once production can be ramped up. They could also replace an Apple Vision Air in a year or two which could use the current M2 and R1 chips, this gen μOLED displays, remove components, like the front facing display, and/or other savings that allow for products to drop in price over time. The MacBook Air is a great example of bleeding edge tech that was able to halve its price, and it did so while also getting much faster and more feature rich.
    retrogustoavon b7baconstangwatto_cobrawilliamlondonStrangeDayschasmdewme
  • Reply 4 of 10
    ciacia Posts: 267member
    Once they combine the M2 and R1 into a single chip (by the time that happens probably M6 and R3) and reduce other chips by consolidation the price will drop dramatically.  It's a ways out but we all know it's coming.  SoC specifically for VisionPro.

    /edit. No getting around those $$$ displays though.  It will always be expensive to be on the bleeding edge there.  Perhaps AppleWatch will be the first with MicroLED displays, but VP will likely be second.
    edited February 25 watto_cobra
  • Reply 5 of 10
    retrogustoretrogusto Posts: 1,128member
    Since they only sell AVP directly to consumers, with no other current retail distribution, at least they don’t have to share any small margins with third parties, so they can afford to sell at a smaller mark-up. It makes sense for other reasons too, of course. 
    watto_cobrawilliamlondonbadmonk
  • Reply 6 of 10
    macxpressmacxpress Posts: 5,903member
    Xavalon said:
    If the bill of materials is over 1500 dollars, then I don't see that they can come with a way cheaper version soon. I mean one that cost less than 1500 bucks.
    As technology advances it will get cheaper to build. This is how Apple can sell a cheap(er) iPhone SE with newer components. The tech gets cheaper over time to produce. Also, Apple doesn't need to release every headset with the best it can either so they can do little things to cut costs while AVP may have the latest of everything as much as it can as the technology is available. 
    baconstangwilliamlondonwatto_cobraStrangeDays
  • Reply 7 of 10
    jdwjdw Posts: 1,409member
    Follows what I've been saying.  People who think VISION PRO will soon drop to AliExpress prices are delusional.

    In 1984, the Macintosh made its debut for $2,495.  Later that year, the Macintosh was upgrade with a decent amount of RAM.  Cost?  $3195 initially, because RAM was expensive in those days.  The Mac 128K dropped to $2,195, but is that really an AliExpress drop? LOL.  No.  What about the Mac 512Ke?  Oh look!  A price drop! Now only $1,999.  That's sure to please the AliExpress price lovers!  Oh wait...  The 512Ke came out in 1986 when the Mac Plus also came out, selling for $2,600 -- more than the original 128K Mac.  How about the Mac SE in 1987?  Nope. $2,898, unless you wanted a 20MB hard disk, and then $3,698. (Admittedly, the Mac Plus still sold during the SE years.) Surely the 1989 compact Macs must have been cheaper, you say?  Nope.  The SE/30 came out for $4,369 for a mere 1MB of RAM and no hard disk, rising to $6,569 for 4MB of RAM and an 80MB HDD.

    I could go on, but you get the picture.

    When newer models include even better, cutting edge tech inside as compared with the original model, the price doesn't go down.  Traditionally, it has gotten more expensive.  And certainly, inflationary pressures will drive that too.  And while older models like the Mac Plus continued to be sold alongside better and more expensive models like the SE, the Plus was never AliExpress cheap.

    Even if you argue that the cost of the current cutting edge tech will go down over time, and even if you argue that increased sales volumes will drive the price down as compared to now, I simply don't see VISION PRO becoming a $500 product that competes with META.  Strip out all the expensive features that make VISION PRO unique and better, sure.  But Apple would be stupid to do that.

    So let's get our expectations adjusted in accordance with reality, folks.
    baconstangwatto_cobraforegoneconclusionkiwimachead
  • Reply 8 of 10
    baconstangbaconstang Posts: 1,142member
    A VP 2 will have updated components and specs and sell for the same price as the VP 1. 
    They will figure out how to cut a few corners, optimize what's selling and benefit from price drops and put out a VP (SE?) with a similar experience to the VP 1 for $2499.
    That's according to my cracked crystal ball...
    watto_cobra
  • Reply 9 of 10
    chasmchasm Posts: 3,495member
    Xavalon said:
    If the bill of materials is over 1500 dollars, then I don't see that they can come with a way cheaper version soon. I mean one that cost less than 1500 bucks.
    Well, a) that’s not their goal for the second gen, and b) as product demand scales up, the cost per unit scales down.
    edited February 26 dewmebaconstang
  • Reply 10 of 10
    dewmedewme Posts: 5,654member
    This makes for a pretty slim margin by Apple's (and many other company's) standards. Like others have said, Apple will come up with ways to reduce costs, streamline manufacturing and delivery, and if the VP1 demand ramps up enough, potentially negotiate better prices with their suppliers by locking them into larger order quantities with greater frequency. Additionally, if Apple follows the product family (or product line) engineering they've used with iPhone, iPad, and MacBook Pro, where they build around a common architecture, diversify at different feature, capacity, component grade, and price points, and keep their n-1 versions around and relevant for a little longer, they can reduce overall costs, improve time to market, and reduce manufacturing costs. 

    All of these things take time to develop and may not come to fruition for a few releases down the road. It's not like flipping a switch. To make any of this possible Apple needs to focus on doing everything they can to sustain and grow the demand for the products in the mix. I'm kind of surprised at the level of scrutiny that's being applied to a product that is still taking its first few baby steps. It still has to reach the running stage before we try to project too far on its future success at the levels of minutia that some people are pretending to be privy to. Only Apple has anything approaching a real road map, and they're going to adapt, tweak, and fine tune that map as needed to react to both hard and soft data and feedback coming in from their customer base, customer support crews, industry experts, and trusted partners. 
    muthuk_vanalingam
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