Apple management simply spun the story, they are making a heavy markup on the iPad mini. Plus it's a model needs to have a very short run before being upgraded to the Retina display.
Not because I or others want one (I really don't care) but because the "pundits" have decided it's way over priced and has a bad display. Apple's beginning to soften and if they don't get a handle on it, they will regret it badly.
heavy mark up??? I take it that you have not hear Apple earning conference call a couple week ago when they cover the gross margin projection for 4Q12 and not familiar of what it take to build a product.
The BOM tear down cost for Ipad mini put the bom (bill of material) cost at around $188. But the bill of material does not cover profit to Foxconn, cost of borken part during manufacturing, rework cost in manufacturing, transportation cost (how much does it cost Apple to ship ipad mini through Fedex by air from China factory to your home? and what about moving parts between factories?), warranty cost (who pay for the 1 year warranty repair?? and what about those folk who use the ipad mini for 10 days and then return it??), distribution cost (profit to walmart, Target, ATT, Verizon etc for selling Ipad mini, what about cost to apple store employee??), inventory cost, design cost (who pay for the engineer who design the tablet??), regulatory cost (you have to submit the mini to each country that you want to sell and certify that it follow all local regulation), marketing cost (who pay for the advertisement ?) etc etc. There are a lot of cost to build a product other than the raw material.
If you add up all those cost and still think Ipad mini is a big money maker for Apple, I have a bridge to sell you. If you want to rant about high margin product, Iphone should be your target. Iphone has 50-60% gross margin (look up what gross margin mean, it is not the same as net profit margin), Ipad mini (the base model) will be lucky to have 15-20% gross margin and probably break even or loss money slightly after factoring in all the cost. High end model will do much better but most folk are buying the 16G wifi model..
http://seekingalpha.com/article/952...arnings-call-transcript?page=5&p=qanda&l=last
All of these products have higher costs than their predecessors, and therefore lower gross margins as they are at the height of the cost curve.
This has been the case with new products in the past, so nothing new. The difference this time is the sheer number of new products we are introducing in a very short period of time. Additionally, we lowered the price of the iPhone 4S and iPhone 4, delivering incredible value to our customer.
We head into this holiday quarter with the strongest iPhone line-up that we have ever had with the iPhone 4 starting at three in the subsidized markets. We also added the iPad Mini to our iPad line-up. The iPad Mini has the full iPad experience, and we priced it aggressively at $329, delivering incredible value to our customers.
Its gross margin is significantly below the corporate average.
