32GB Apple iPad Mini for $329

pruhawk · Oct 25, 2012

What If Apple had sold the base model as a 32GB iPad mini for $329 (and for an iPad, I suggest that 32GB is probably the minimum amount of memory required if you are going to use it as a media device)?

No one would be complaining about the price (even without the A6 chip or the Retina display) and Apple still would have made hugh profits.

Apple traditionally has a 37% profit margin for iPad base models, accordingly, the 16 GB iPad mini cost approximately $207 to make.

In a report issued in September 2012, RBC Capital Markets points out that the cost to device makers of flash memory used in tablets has declined 46% since the beginning of the year. Doug Freedman, the analyst at RBC who wrote the report, points out that while the cost of the chips has fallen, the final cost to the consumer has barely decreased at all. The report states that Apples memory costs is about 40 cents a gigabyte, so 16GB costs Apple about $6.40 far less than the $100 customers pay to upgrade.

16 GB iPad mini cost $207 to make then a 32GB iPad mini only cost Apple approximately $214 to make.

If Apple had just made the 32GB iPad Mini its base model for $329, Apple would probably have sold an additional 5 million units that will now go to the 32 GB Kindle and the 32 GB Nexus 7 (both which sell for around $250).

Yes, Apple needs to make a profit but this is NUTS

haruhiko · Oct 25, 2012

pruhawk said:
What If Apple had sold the base model as a 32GB iPad mini for $329 (and for an iPad, I suggest that 32GB is probably the minimum amount of memory required if you are going to use it as a media device)?

No one would be complaining about the price (even without the A6 chip or the Retina display) and Apple still would have made hugh profits.

Apple traditionally has a 37% profit margin for iPad base models, accordingly, the 16 GB iPad mini cost approximately $207 to make.

In a report issued in September 2012, RBC Capital Markets points out that the cost to device makers of flash memory used in tablets has declined 46% since the beginning of the year. Doug Freedman, the analyst at RBC who wrote the report, points out that while the cost of the chips has fallen, the final cost to the consumer has barely decreased at all. The report states that Apples memory costs is about 40 cents a gigabyte, so 16GB costs Apple about $6.40 far less than the $100 customers pay to upgrade.

16 GB iPad mini cost $207 to make then a 32GB iPad mini only cost Apple approximately $214 to make.

If Apple had just made the 32GB iPad Mini its base model for $329, Apple would probably have sold an additional 5 million units that will now go to the 32 GB Kindle and the 32 GB Nexus 7 (both which sell for around $250).

Yes, Apple needs to make a profit but this is NUTS

Apple actually made most profits from storage upgrades, so they won't offer a 32GB @ $329. Do you think that 16GB more of flash storage really costs $100? I think it's less than $30.

pruhawk · Oct 25, 2012

I think that is my point, it cost apple $6.40 for 16GB of memory.

Yes they need to make a profit but at some point you are just ripping off the consumer.

At $214 cost to Apple they would still make $115 per 32GB Ipad Mini at $329.

That is a great profit. Plus if you sold 5 million more units it helps the bottom line and hurts your competition.

You also add more fanboys to buy more products as the mini is an entry level product.

raccoonboy · Oct 25, 2012

If they make Base Ipad mini 32GB for 329 then no one would buy Ipod touch 5G at 299, 32GB.

Eventhough, those two are quite diff. in purpose but the bigger, the better idea might come into mind.

pruhawk · Oct 26, 2012

I don't think it would take away that many ipad touch sales if 32GB was the standard mini model, that is not the deciding difference in the products

mantan · Oct 26, 2012

I thought the model storage bump would have been an even better move for iPhone 5. Storage prices have dropped so much that it would've been a nice bone to throw to their customers. Especially since they still squeeze $100 out of each $6 memory jump.

But when they are moving 15 million units that's $90 million of extra gravy.

Apple makes great products but they will always, I mean always, find a way to squeeze every last nickel out of you.

Chupa Chupa · Oct 26, 2012

"What If" doesn't matter much. Apple priced the mini as it was comfortable doing. Apple has plenty of more than competent analysts to set price to sales goal. It's silly for any of us to second guess before Apple has announced any sales #s (which BTW Amazon and Google never have).

We all would have loved a lower price and/or more RAM or other features. Kids prefer double scoops of ice cream to one. Let's wait and see if Apple has an announcement next week on pre-sale sales and also if there is the traditional Apple line before we start doing the "told you so" routine.

----------

mantan said:
Apple makes great products but they will always, I mean always, find a way to squeeze every last nickel out of you.

Heh. And those are products in the $100s and $1000s. It gets even more ridiculous when you go into luxury cars costing 2x the price of the avg car. iPod connectors...just the b/t and hard wire connection to the stereo system costs as much as the actual iPod and you know it costs manufacturers all of $20, if that.

poloponies · Oct 26, 2012

People here are just plain goofy. Since when do loss-leader sales establish the standard for pricing for all devices?

The Kindle and Nexus pricing levels are established solely to grab sales from Apple. Period. They is no long-term growth strategy in those pricing structures.

This is like a gas station giving away free coffee mugs. Does that automatically require coffee mug manufacturers to give away products also?

Consumers will ultimately decide what works best for them but saying "Apple should have satisfied my expectations which are based on unrealistic pricing models" is misguided.

mantan · Oct 26, 2012

poloponies said:
People here are just plain goofy. Since when do loss-leader sales establish the standard for pricing for all devices?

The Kindle and Nexus pricing levels are established solely to grab sales from Apple. Period. They is no long-term growth strategy in those pricing structures.

This is like a gas station giving away free coffee mugs. Does that automatically require coffee mug manufacturers to give away products also?

Consumers will ultimately decide what works best for them but saying "Apple should have satisfied my expectations which are based on unrealistic pricing models" is misguided.

The 'they can't give it away' is the lazy straw man argument that a people who defend Apple's pricing strategy always pull out.

Of course they need to make a profit. Their model is based on healthy margins off hardware. But margin always involves some sort of compromise. A storage bump in the Mini (or I still say iPhone) would have been very much appreciated...probably more than the latest greatest camera specs. And it would have easily been made at the expense of another component. Flash memory is dirt cheap these days. But as long as people are willing to spend $100/$200 for 32 gig jumps...that's probably too much cash for Apple to just leave on the table.

I do agree with you that people will decide if the value proposition makes sense for them. For me it didn't. I own a lot of Apple products and was very excited about the Mini. But for what it was offering at the price, I wasn't interested. I know there are millions of people who feel differently. It's all up to what makes sense for each individual consumer.

I would hope enough people hold off buying it to give Apple pause about the price, but I highly doubt that will happen.

poloponies · Oct 26, 2012

mantan said:
The 'they can't give it away' is the lazy straw man argument that a people who defend Apple's pricing strategy always pull out.

My argument is not about defending Apple's pricing strategy just the folly of using a "no-profit" model as a pricing benchmark.

Apple doesn't just randomly apply prices, they take a lot of factors into consideration - including their customer service and the fact that they sell a broad range of products and each new introduction needs to somehow fit in that range without de-valuing other products. Here's a news flash - the cup of soda you pay $2 for costs pennies to produce, the DVD/navigation system that tacks on $1,600 to your car's purchase price probably costs them $300 to manufacture and install. Pricing involves a whole lot more than "how much did we pay for the parts?"

BillyHoyle · Oct 26, 2012

companies do this - think about coffee shops, do you think the large cup actually costs 30-50 pence more to produce? no, it's about getting as much money out a consumer as possible.

Another example which is more appropriate here is fair-trade coffee. It actually only costs the company negligible amount more to buy, but the cost to the consumer is substantially higher - reason being, companes know that the type of person that buys fair-trade coffee tends to also have more money or at least values the cup of coffee at a higher price - apple knows that heavier users (32gb, particularly 64gb) value their ipads higher than the people who opt for the entry level one - they've exposed us!

poloponies · Oct 26, 2012

BillyHoyle said:
companies do this - think about coffee shops, do you think the large cup actually costs 30-50 pence more to produce? no, it's about getting as much money out a consumer as possible.

Another example which is more appropriate here is fair-trade coffee. It actually only costs the company negligible amount more to buy, but the cost to the consumer is substantially higher - reason being, companes know that the type of person that buys fair-trade coffee tends to also have more money or at least values the cup of coffee at a higher price - apple knows that heavier users (32gb, particularly 64gb) value their ipads higher than the people who opt for the entry level one - they've exposed us!

A smart man once told me to never judge my happiness in buying a car by what someone else paid for theirs. If you believed it was a fair transaction when you entered into it, don't second-guess yourself later on. I have yet to regret an Apple purchase (but I also don't immediately upgrade to the newest version of everything -- e.g. I just moved up from a iPhone 4 to a 5).

seajewel · Oct 26, 2012

It really irks me that the jump to 32GB is $100 for a $300 device. I know that's how apple prices all the storage increases and I guess they weren't going to change it for the mini, but I really think 16GB will force me to manage my storage a lot, and yet I'm still not willing to pay $100 to go up to 32. I was for the iPad 3, but very grudgingly. It seems even more of a ripoff with the iPad mini. I also feel that way about applecare too and the smart cover. Applecare itself is not a ripoff, it's a great program and it gets abused by a lot of people, but I don't think I'm going to shell out for it. I plan on upgrading the mini in a year anyways and my calculations say chances of my breaking it accidentally and having to pay $50 to get a replacement.. at that point the replacement is $150 and I'll just try to be more careful and not break it. if i do, a used or refurbished would prob only run about $250 anyways...

dacreativeguy · Oct 26, 2012

I'm not sure why so many people are shocked by the premium price for the mini. Every other Apple product is at least 50% more expensive than comparables from other manufacturers. MacBooks are $1k+++ when similar WinBooks are $500. The cinema display is $1K when similar 27" monitors are under $500. Heck, even Apple keyboards and mice cost over $50!

They've become the most valuable company on the planet selling premium products at premium prices. Why the shock and outrage now???

versentgroup · Apr 22, 2013

Ha!

Winbooks, hahaha.

itjw · Apr 30, 2013

Jokes on Apple... they sure had a tough time selling those mini's didn't they?

If only they would have put in 32GB they may have been sold out through the holidays. It could have even been the hardest gift of the year to find. They sure look foolish for pricing the 16GB model where they did. What reality were you in for Christmas 2012???

Face it, Apple could put in 128GB and still make a "profit". They have ABSOLUTELY no reason to. Why? Just to make you happy? They make more than enough people happy to sell out their products at the price points they select.

Good for them. They should gouge for every penny they can possibly get away with. This isn't the Red Cross, it's a publicly traded company ffs...

Are they overpriced? Yep. Will everyone still happily pay it anyway because of what it is? For now, absolutely. IF that changes in the future your point may have some validity.

They don't HAVE to beg borrow and steal to get people to buy their products like other tech companies do. They maintain that (in part) by not being bleeding edge at the cheapest price point.

DesertEagle · May 1, 2013

Apple sets the prices according to what the market is willing to pay. If the market accepts paying $100 for doubling the storage, then that's what Apple will charge, even if it costed them less than $1. They know you can't upgrade it after purchase.

silverblack · May 1, 2013

This is Economics 101:

DesertEagle said:
Apple sets the prices according to what the market is willing to pay. If the market accepts paying $100 for doubling the storage, then that's what Apple will charge, even if it costed them less than $1. They know you can't upgrade it after purchase.

OP - You'll never buy anything if you keep thinking about how much it only costs to make the product, period.

pruhawk said:
If Apple had just made the 32GB iPad Mini its base model for $329, Apple would probably have sold an additional 5 million units that will now go to the 32 GB Kindle and the 32 GB Nexus 7 (both which sell for around $250).

Wrong. Some people are just anti-Apple, and they will not buy iPads no matter what. Some others will just buy the cheapest 'tablets' out there without caring specs too much.

mantan · May 2, 2013

itjw said:
Good for them. They should gouge for every penny they can possibly get away with. This isn't the Red Cross, it's a publicly traded company ffs...

I love this...though I bet if it's your insurance company, a pharmaceutical company or big oil, you suddenly change your tune a bit.

But yeah, Apple sells entertainment products. Their products are a 'want' not a 'need'. They owe it to themselves and shareholders to maximize profits.

32GB Apple iPad Mini for $329

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