Why Does the Vision Pro cost so much?
TLDRThe transcript discusses a research firm's estimate of the bill of materials for Apple's Vision Pro, highlighting the high cost of its micro-OLED displays and the overall expense of its components. It emphasizes that the $542 figure does not include marketing, packaging, or R&D costs, which are substantial. The conversation also touches on manufacturing failures, the impact of retail costs, and the necessity of covering these expenses in the final product price. The speakers argue that the Vision Pro's $3,500 price tag is justified given its features and the costs involved in its development and production.
Takeaways
- 📈 Research firm Oma has estimated the bill of materials for Apple Vision Pro at $542, excluding marketing, packaging, and R&D costs.
- 💰 The micro-OLED internal displays are the most expensive component, costing $228 per eye, which accounts for 35% of the total bill of materials.
- 🔍 The main display alone costs $456, which is a significant portion of the overall cost.
- 🛠️ Manufacturing failures and yield rates are factored into the bill of materials, which can affect the final cost of the product.
- 🏢 Apple emphasizes the high cost of R&D and the use of 5,000 patents in the design of the Vision Pro.
- 📊 The retail price of the Vision Pro is likely at least double the bill of materials cost due to additional expenses like retail overhead and potential manufacturing defects.
- 💼 The structural member of the Vision Pro costs $120, reflecting Apple's investment in high-quality materials.
- 📉 Poor product yields, such as the 40% shattering rate for glass lenses, are incorporated into the cost of premium or difficult-to-manufacture products.
- 💡 The discussion suggests that the $3,500 price tag for the Vision Pro is justified given its component parts and the associated R&D costs.
- 📱 The speaker argues that the Vision Pro is not overpriced, considering the costs and the value it provides to the consumer.
Q & A
What is the estimated bill of materials cost for Apple Vision Pro?
-The estimated bill of materials cost for Apple Vision Pro is $542.
What is included in the $542 cost estimate?
-The $542 cost estimate includes the materials and components of the Apple Vision Pro, but does not include marketing, packaging, or research and development costs.
How does the cost of the micro OLED internal displays contribute to the total bill of materials?
-The micro OLED internal displays are the biggest single contributor to the bill of materials, costing $228 per eye.
What percentage of the total bill of materials do the Vision Pro displays make up?
-The combined costs for all of the Vision Pro displays make up around 35% of its build materials.
How does the cost of the main display of the Vision Pro compare to the overall bill of materials?
-The main display alone costs $456, which is a significant portion of the overall bill of materials.
What factors contribute to the retail price being higher than the bill of materials cost?
-The retail price is higher due to additional costs such as marketing, packaging, research and development, retail overhead, and potential manufacturing failures.
What is Apple's stance on the cost breakdown of the Vision Pro?
-Apple has declined to discuss the exact breakdown behind the Vision Pro's price but emphasized the cost of R&D and the use of 5,000 different patents in its design.
How does the cost of manufacturing and assembly affect the final price of the Vision Pro?
-Manufacturing and assembly costs, including potential failures and the need for automation, contribute to the final price of the Vision Pro.
What is the speaker's opinion on whether the Vision Pro is overpriced?
-The speaker believes that the Vision Pro is not overpriced, considering the R&D and other costs involved, and that the retail price is uncharacteristically low for Apple.
How does the speaker address the issue of Apple's storage upgrade pricing?
-The speaker finds Apple's pricing for storage upgrades to be egregious, especially when customers are essentially beta testers for the technology.
What is the speaker's perspective on the relationship between employment and product creation?
-The speaker views employment as essentially selling one's own company through the products they create, emphasizing the importance of generating profit from one's work.
Outlines
💰 Apple Vision Pro's Bill of Materials
The script discusses the cost breakdown of Apple Vision Pro, highlighting the $542 bill of materials, which excludes marketing, packaging, and R&D costs. The micro OLED internal displays are the most expensive component, costing $228 per eye, and account for 35% of the total materials cost. The main display alone costs $456. The discussion also touches on the challenges of manufacturing and the potential for product failures, which may be factored into the materials cost. It's noted that the retail price is likely at least double the bill of materials cost due to various additional expenses.
📈 Cost Analysis and Market Position
This paragraph delves into the cost analysis of the Vision Pro, comparing it to other products like the PSVR 2 and the Quest 2. It mentions the high R&D costs and the use of 5,000 patents in the design. The speaker argues that the $3,500 price tag is justified given the component costs and does not seem overpriced. The conversation also addresses the high profit margins in certain industries, like clothing, and the impact of manufacturing processes on product costs.
💼 Employment and Capitalism
The final paragraph reflects on the nature of employment in a capitalist system, where creating products essentially means selling your own labor. It discusses the concept of being a good salesman to make a profit from your work and the consequences of not being able to do so. The conversation also briefly touches on the challenges of setting up a film studio in a residential area due to zoning restrictions, which is a separate but related issue to the broader discussion on business operations and market realities.
Mindmap
Keywords
💡Bill of Materials (BOM)
💡Cost of Goods Sold (COGS)
Highlights
Research firm Oma estimates the bill of materials for Apple Vision Pro at $542.
The cost does not include marketing, packaging, or research and development expenses.
Micro OLED internal displays are the biggest single contributor to the bill of materials, costing $228 per eye.
The combined costs for all Vision Pro displays make up around 35% of its build materials.
Apple has emphasized the cost of R&D and claims 5,000 different patents were used in the Vision Pro's design.
The main display alone costs $456.
The retail price is typically double the bill of materials cost due to additional expenses.
Manufacturing failures are factored into the bill of materials costs.
The structural member and frame of the Vision Pro cost $120.
The glass lenses of the Vision Pro shatter at a rate of 40% when thinned.
The Vision Pro's $3,500 price tag is considered reasonable given its component parts.
The Vision Pro is not overpriced considering the R&D and other costs involved.
Apple's profit margins are comparable to other tech companies like Oracle and Nvidia.
The discussion emphasizes that the Vision Pro's price makes sense and is not uncharacteristically low for Apple.
The conversation also touches on the challenges of manufacturing larger TVs and the associated costs.
The transcript discusses the costs of environmentally friendly packaging and production processes.
The conversation highlights the importance of R&D costs in determining the final price of a product.
The transcript also addresses the concept of employment in relation to the value of the products one creates.
The discussion concludes with a reflection on the current state of capitalism and its implications for product pricing and employment.