Japanese Media "Apple's High-Profit Secret"
A survey revealed that the cost of Apple's wireless earphones 'AirPods Pro 2,' sold domestically for 359,000 KRW, is only about $54 (approximately 70,000 KRW).
Japan's Nihon Keizai Shimbun published the results on the 31st of last month after dismantling and investigating Apple's flagship models in collaboration with Formalhaut Technosolutions, a company specializing in electronic device teardown and analysis.
The estimated component cost of the AirPods was only about $54 (around 70,000 KRW), accounting for about 22% of the retail price. The domestic price of the AirPods Pro 2 is 359,000 KRW, which is about 30,000 KRW higher than its predecessor. Nihon Keizai stated, "This is the secret behind Apple's incredible profits as a hardware manufacturer that is unimaginable."
The component cost of Apple's new product, the 'Apple Watch,' which sells for $399 (approximately 520,000 KRW), was analyzed to be $100 (about 130,000 KRW). The cost ratio is 25%.
Apple's smartphone, the iPhone, is also known for its high price compared to component costs. For example, the 'iPhone 14 Pro' released last year was sold at twice the component cost, meaning the component cost ratio was 50%. However, it was revealed that the profit margin relative to cost is much higher for smartwatches and wireless earphones than for iPhones.
Nikkei reported, "Although Apple is behind South Korea's Samsung Electronics and Chinese companies like Xiaomi and Oppo in smartphone market share by shipment volume, it still maintains a high market share in smartwatches and wireless earphones." This means that despite fierce competition in the smartphone market, Apple is generating enormous profits in the smartwatch and wireless earphone markets.
According to Hong Kong research firm Counterpoint Research, Apple's smartwatch market share (by shipment volume) in 2022 was 30%, leading by about 20 percentage points over second-place Samsung Electronics. The shipment volume is estimated to be around 40 million units.
In terms of value rather than quantity, Apple's share of the Apple Watch market is even more dominant. Apple's market share in the global smartwatch market by value reaches 60%.
Apple also holds the top position in wireless earphones with about a 26% market share, selling approximately 80 million units annually.
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