Apple Vision Pro's manufacturing cost is half its retail price
Apple Vision Pro is priced at a hefty $3,499 for 256GB of storage, making it considerably more expensive than rivals like Meta Quest 3 which starts at just $499. According to research firm Omdia, the "bill of materials" for the Vision Pro is roughly $1,542, not including expenses for research and development, packaging, marketing, and Apple's profit margin. The high cost can be linked to cutting-edge components in the headset, such as the 1.25-inch micro-OLED displays.
Micro-OLEDs are the most expensive component
The priciest part of the Vision Pro is the Sony-sourced 1.25-inch micro-OLED panel, which costs Apple $228 per unit. Since each headset needs two displays (one for each eye), the total cost for this component alone is $456 per headset. These high-resolution displays offer vibrant colors and a more immersive virtual experience compared to earlier consumer headsets.
Additional costs associated with the VR headset
The high cost of the Vision Pro headset can also be attributed to the cutting edge hardware it packs. The VR headset uses Apple's M2 processing chip, the same found on the 15-inch MacBook Air. Additionally, there's a brand new R1 chip, which is a custom processor designed to handle input from the 12 cameras, five hand-eye tracking sensors, and six microphones.
Apple's influence on display technology
Apple has a track record of adopting new display technologies sooner and on a larger scale than other electronics firms. Their use of LCD touchscreens in the first iPhone in 2007 and later switching to OLED displays with the iPhone X in 2017 had a significant impact on supply chains and lowered costs across the industry. Display manufacturers usually vie for Apple's business because it can significantly increase their business.
Cost beyond material expenses
While Omdia's research puts Vision Pro's material cost at $1,542, other production expenses like assembly, packaging, and distribution must also be considered. Apple collaborates closely with its suppliers and often finalizes component costs well in advance. The headset is expected to be a low-volume product for Apple, with projections of around 4,00,000 units shipping in 2024. As a first-generation product, its overall cost should be seen in light of its groundbreaking components and Apple's investment in R&D, sales, and marketing.
