According to a recent report, the hardware components of the Apple Watch are the cheapest of any product in comparison with the retail price of the product.
All of the chips, sensors, metals and so on add up to $81.20 in the 38 mm version of the Apple Watch Sport.
"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-materials and cost benchmarking services for IHS Technology. "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 most expensive component in the device is the display, which costs $20.50, which is followed by the processor, costing $10.20. After all the components are added up, the total cost of the device is $81.20. With $2.50 for manufacturing costs, the watch costs Apple a total of $83.70 to make. This is only around 24 percent of the suggested retail price for the device, which comes in at $349.
IHS did not perform the same teardown for the regular Apple Watch and the Apple Watch Edition, both of which are likely to be a little more expensive to make due to the sapphire display covers and the gold found in the Apple Watch Edition. Other websites have, however, taken a look into the regular Apple Watch and found that it includes mostly the same parts as the Apple Watch sport.
The report comes only a few days after Apple CEO Tim Cook dismissed these types of cost teardowns as inaccurate.
"There are cost breakdowns around our products that are much different than the reality," said Cook. "I've never seen one that is anywhere close to being accurate."
Perhaps the most interesting part of the teardown is the battery of the device, which reportedly costs Apple a minuscule 80 cents. It's a little ironic that the part causing Apple arguably the most headaches is also the part that it spent the least on. The battery itself lasts users only around 18 hours, which is not enough for many who don't charge their devices every single night.
It's important to note that the teardown does not take into consideration other costs like licensing, which are not directly related to hardware but will still affect Apple's overall profit margin.