The Apple-watching part of the internet was all ablaze this week with stories about the cancelled product called AirPower. It seems that some prototypes of the charger made it out and there have even been YouTube videos already putting it to the test.
My problem with most of what I’ve seen is this, they all make the assumption that Apple cancelled the product launch because they couldn’t find a way to get it to work. As if Apple stumbled upon an engineering problem that was so difficult that no amount of problem solving by Apple could fix the issues. I don’t think that is what happened at all.
I’ve been working for Fortune 500 level companies all of my career calculating product line gross margins, giving sales price recommendations, and assessing manufacturing costs. I’ve been involved with many product launches and I can say that I’ve never…ever…seen a product announced before senior management was convinced that any engineering issues could be overcome. No well managed company does that. Of course, Tesla comes to mind when it comes to announcing stuff before it’s ready. But like I said, no well-managed company would do that.
I have, however, seen many products cancelled because the profit estimates turned out to be too low. There is no greater kiss of death in the halls of engineering than for the finance group to label your product a money-loser. And this is exactly what I think happened to AirPower. Apple probably could’ve produced the best all-in-one charger known to man. But how many people were ready to spend over $300 for fancy charger?
I’ve been working for Fortune 500 level companies all of my career calculating product line gross margins, giving sales price recommendations, and assessing manufacturing costs. I’ve been involved with many product launches and I can say that I’ve never…ever…seen a product announced before senior management was convinced that any engineering issues could be overcome. No well managed company does that. Of course, Tesla comes to mind when it comes to announcing stuff before it’s ready. But like I said, no well-managed company would do that.
I have, however, seen many products cancelled because the profit estimates turned out to be too low. There is no greater kiss of death in the halls of engineering than for the finance group to label your product a money-loser. And this is exactly what I think happened to AirPower. Apple probably could’ve produced the best all-in-one charger known to man. But how many people were ready to spend over $300 for fancy charger?
According to a Luke Miani YouTube video I saw, the AirPower prototype was using an $80 controller chip. That is hugely expensive for device at this price point. I use to work up sales price and income statement estimates for Gateway computers on proposed new laptop computers, MP3 players and digital cameras. Using some of my old assumptions on what labor and overhead might be in relation to material, it wasn’t hard to calculate a quick estimate on what something like AirPower would need to cost to get Apple-like gross margins. And it isn’t pretty.
AirPower was announced in 2017 only a few months after the original HomePod was announced. So all the while that Apple engineers were working on AirPower, Apple’s top management had a chance to watch a different $350 device languishing on the market. I’m sure that whatever profitability models Apple had for the HomePod were blown to smithereens by the much lower than expected volumes.
This meant that Apple was losing money on every HomePod sold and they were about to launch another $300+ device with even less functionality and allure. I mean a good charger is cool and all, but compared to an amazing audio speaker that you could control with your voice, it was a wall flower. And nobody wanted the cool speaker. I think Apple realized real quick that if you expect consumers to pay over $300 for something, it needed to make a real difference to your quality of living. And plopping your Apple Watch anywhere on a charging pad wasn’t going to cut it.
To be fair, AirPower would’ve been much better than all $100 - $150 chargers on the market today. Even with today’s chargers, you still have to daintily place your Apple Watch only on its designated puck. You can’t just lay it anywhere. And what is the last device that you typically set down just before bed when you’re all tired and can’t think straight? Yeah, probably your watch. And when you wake up the next morning and it’s not charged? You get a little upset.
But is laying your Apple Watch anywhere on a pad worth double what many consider are already expensive and over-priced chargers? I don’t think so. And apparently, neither did Tim Cook.
This meant that Apple was losing money on every HomePod sold and they were about to launch another $300+ device with even less functionality and allure. I mean a good charger is cool and all, but compared to an amazing audio speaker that you could control with your voice, it was a wall flower. And nobody wanted the cool speaker. I think Apple realized real quick that if you expect consumers to pay over $300 for something, it needed to make a real difference to your quality of living. And plopping your Apple Watch anywhere on a charging pad wasn’t going to cut it.
To be fair, AirPower would’ve been much better than all $100 - $150 chargers on the market today. Even with today’s chargers, you still have to daintily place your Apple Watch only on its designated puck. You can’t just lay it anywhere. And what is the last device that you typically set down just before bed when you’re all tired and can’t think straight? Yeah, probably your watch. And when you wake up the next morning and it’s not charged? You get a little upset.
But is laying your Apple Watch anywhere on a pad worth double what many consider are already expensive and over-priced chargers? I don’t think so. And apparently, neither did Tim Cook.
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