Written by Nick Heer.

Margin of Error

Dawn Chmielewski, Recode:

Teardown Shows Apple Watch Sport Costs Just $84 to Build

Adrian Kingsley-Hughes, ZD Net:

Apple Watch Costs Under $85 to Make

Shaun Nichols, the Register:

What Is Apple’s Idiot Tax on Watch These Days? ‘About $265 or 80%’

All of these reporters simply echoed IHS iSuppli’s suspect claims as fact, or nearly so. They really think that the profit margin on the Apple Watch Sport is 70-80% — never mind the margin on the higher-end models. Not one of them seriously questioned the estimate; the closest any got was acknowledging that R&D costs are not included in the estimate. Everyone knows these estimates are a crock of shit, but this takes the cake.

Tim Cook:

“I’ve never seen one that’s even close to accurate,” Cook said of the oft-quoted estimates. His relatively strong reaction was prompted by a question regarding perceived weakness in launch margins for the Apple Watch.

Cook, continued:

On why Q3 Apple Watch margins may be smaller than people outside Apple expected

In the first quarter of any kind of product you would always have learning and these sorts of things. We’ve had this with every product we’ve ever done. And so, again, we’re not guiding to what it will be over time. We’re talking about what it is now. I would keep in mind that the functionality of the product that we’re making is absolutely incredible, the power of it. I haven’t even seen those, but generally there are cost breakdowns that come out around our products that are much different than the reality.