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Old Nov 5, 2012, 08:56 AM   #1
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iPad Mini Component Costs Estimated to Begin at $188




AllThingsD reports on an iPad mini teardown from research firm IHS iSuppli estimating the component costs for Apple's new iPad mini at $188 for the 16 GB model.
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The base model, a Wi-Fi-only 16 gigabyte iPad mini, which sells for a starting retail price of $329, costs about $188 to build. Adding additional memory -- the options are 32GB and 64GB -- adds only incremental cost but a fair amount of profit, amounting to an additional $90 for the 32GB version and $162 per unit on the 64GB model.
The report notes that approximately 43% of the device cost is related to the display, which adopts an expensive new process known as GF2 to reduce the part's thickness, although costs are expected to come down as the production process is refined.

The bill of materials estimate provides support for Apple CEO Tim Cook's claim that the iPad mini has been priced aggressively with a profit margin significantly below the company's average. While the entry-level iPad mini is priced at $329 for a product that costs Apple $199 to build, the iPhone 5 costs Apple just $10 more to build but sells for $649. The iPad mini is, however, more in line with the full-size iPad, which IHS iSuppli estimated to carry a bill of materials of $306 for the entry-level third-generation model at its launch earlier this year.

Article Link: iPad Mini Component Costs Estimated to Begin at $188
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Old Nov 5, 2012, 08:57 AM   #2
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If it had a retina display, I'd pay $400 for baseline.
For now, no sale.

edit: Yes, I went and held it. Hogged one at the Apple store for a good 10 minutes.

Last edited by bpcookson; Nov 6, 2012 at 07:47 AM.
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Old Nov 5, 2012, 08:59 AM   #3
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memory is so expensive these days.
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Old Nov 5, 2012, 09:00 AM   #4
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Anyone know what the component cost is for the MBA?
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Old Nov 5, 2012, 09:01 AM   #5
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Just can't help shaking my head at this.

edit: I totally get why they do this. Honestly, the iPad mini doesn't really surprise me. But the iPhone 5? Wow are they selling that for a profit...Would it really kill them to ease off just a little, you know?
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Old Nov 5, 2012, 09:03 AM   #6
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329,- is a strange price

I'm sure Steve would have priced it 299,-. Just for the shock-and-awe feeling and a more attractive communication.
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Old Nov 5, 2012, 10:25 AM   #7
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Quote:
Originally Posted by mr jnvii View Post
Just can't help shaking my head at this.

edit: I totally get why they do this. Honestly, the iPad mini doesn't really surprise me. But the iPhone 5? Wow are they selling that for a profit...Would it really kill them to ease off just a little, you know?
I could ask the same of BMW or Rolex...

----------

Quote:
Originally Posted by FooMan2011 View Post
You know, that makes me sick... With the huge amount of product they sell, does the profit margins really need to be so high? 47% profit alone on the 16gb model. And what are they doing with the billion dollars they're getting from Samsung?
You know you don't have to buy it.
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Old Nov 5, 2012, 01:20 PM   #8
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Quote:
Originally Posted by mr jnvii View Post
Just can't help shaking my head at this.

edit: I totally get why they do this. Honestly, the iPad mini doesn't really surprise me. But the iPhone 5? Wow are they selling that for a profit...Would it really kill them to ease off just a little, you know?
Why would they? with so many ***** and mongrels filling their wallet
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Old Nov 5, 2012, 09:01 AM   #9
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Before everyone starts crying "So why isn't Apple selling it for $199?" remember that these are prices for the components only and do not cover costs such as research, engineering, testing, labour, warehousing, etc, etc, etc.
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Old Nov 5, 2012, 09:09 AM   #10
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Quote:
Originally Posted by notjustjay View Post
Before everyone starts crying "So why isn't Apple selling it for $199?" remember that these are prices for the components only and do not cover costs such as research, engineering, testing, labour, warehousing, etc, etc, etc.
And your point is?

Google and Amazon sell their tablets at these prices and probably with a loss because they expect to generate revenue through their content supply chain. That's a business model that is not alien to Apple; after all, they've also sold subsidized products in the past (like the original iPhone) and many of those billions that they have in the bank were made through the iTunes store and Apple's 30% tax on everything that's being sold in it.
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Old Nov 5, 2012, 09:15 AM   #11
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Old Nov 5, 2012, 09:33 AM   #12
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Quote:
Originally Posted by Winni View Post
And your point is?

Google and Amazon sell their tablets at these prices and probably with a loss because they expect to generate revenue through their content supply chain. That's a business model that is not alien to Apple; after all, they've also sold subsidized products in the past (like the original iPhone) and many of those billions that they have in the bank were made through the iTunes store and Apple's 30% tax on everything that's being sold in it.
My point is not that they couldn't go to such a subsidized business model. My point is simply that every time these iSupply threads show up, there are always people who complain that "here we go, this right here is PROOF that Apple is ripping us off!" without taking into consideration all of the other costs involved but not listed.

On the whole though I think you are right, and I think we're starting to hit the point where either the Apple Tax is simply too high now. I don't know if it's because perceived "greed" from Apple is higher than ever (especially in light of all these patent lawsuits, highest share prices and profit reports ever, obvious marketing decisions like not letting iPhone 4 users get Siri, the Google Maps fiasco, etc.) or simply because, hey, the competition ain't so bad now and it sure looks like other companies have figured out how to produce very capable products at lower prices.

Personally, I'm starting to wonder if my next phone won't be an Android. From what I can tell, it will play nice with my iTunes library, even Airplay to my Apple TV, let me have the best of all the apps I'll need, ... and it'll be much cheaper.
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Old Nov 5, 2012, 09:44 AM   #13
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Quote:
Originally Posted by Winni View Post
And your point is?

Google and Amazon sell their tablets at these prices and probably with a loss because they expect to generate revenue through their content supply chain. That's a business model that is not alien to Apple; after all, they've also sold subsidized products in the past (like the original iPhone) and many of those billions that they have in the bank were made through the iTunes store and Apple's 30% tax on everything that's being sold in it.
What are you talking about? iTunes store and App Store don't give billions to Apple, iTunes break even and probably App Store has little profit. You can check this for youself (maybe next time before posting?). It's hardware that makes the billions. Amazon sell at loss hoping to generate revenue from selling books etc. and in fact their profit are ludicrous.
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Old Nov 5, 2012, 09:46 AM   #14
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Quote:
Originally Posted by Winni View Post
And your point is?

Google and Amazon sell their tablets at these prices and probably with a loss because they expect to generate revenue through their content supply chain. That's a business model that is not alien to Apple; after all, they've also sold subsidized products in the past (like the original iPhone) and many of those billions that they have in the bank were made through the iTunes store and Apple's 30% tax on everything that's being sold in it.
true, you clearly missed his point. and just because they deliver a package that creates a profit with all parties involved doesn't mean they need nor should give you anything for free. i'd be more pissed with amazon trying to lure you into a subsidized model, knowing that the content you end up buying should have been cheaper. also; apple's initial business model for the iphone was not through subsidy.
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Old Nov 5, 2012, 02:31 PM   #15
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Quote:
Originally Posted by Winni View Post
Google and Amazon sell their tablets at these prices and probably with a loss because they expect to generate revenue through their content supply chain.
So far so good.

Quote:
Originally Posted by Winni View Post
That's a business model that is not alien to Apple; after all, they've also sold subsidized products in the past (like the original iPhone) and many of those billions that they have in the bank were made through the iTunes store and Apple's 30% tax on everything that's being sold in it.
Here's where I think you got it wrong. First of all, AFAIK Apple did not subsidize the original iPhone, AT&T did. The ASP for the original iPhone and all others indicates that Apple has always made a lot of money from iPhone.

There was an unusual situation the first year where you could buy the iPhone subsidized in an Apple Store without signing a contract, because you could only activate it with AT&T anyway (in practice, you could jailbreak and unlock though).

Second, I don't think subsidized hardware has ever been Apples business model. In fact it's the opposite. Apple subsidized cheap software (like OS X) and services (iTunes Store was only break even in the beginning) to get people to buy the money making hardware.

Now, they do make some money on the App Store cut, and on the music business as well, but that's nothing compared to the money from hardware. Especially the iPhone with it's ASP over $600.
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Old Nov 6, 2012, 10:22 AM   #16
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Quote:
Originally Posted by Winni View Post
And your point is?

Google and Amazon sell their tablets at these prices and probably with a loss because they expect to generate revenue through their content supply chain. That's a business model that is not alien to Apple; after all, they've also sold subsidized products in the past (like the original iPhone) and many of those billions that they have in the bank were made through the iTunes store and Apple's 30% tax on everything that's being sold in it.
Selling a carrier-subsidized product is a different thing entirely - it simply moves the cost paid to the carrier who then (more than) recovers it through service plans. So Apple still ends up with the same profit, it's just paid out differently.

Apple's "30% tax" goes to maintaining and serving electronic content. You cannot truly believe that it costs nothing to support the iTunes store? In 2011 Apple generated about $6 billion in revenue from content. It retained 30% or $1.8 billion and had at least $1.3 billion in expenses (it costs as much to market and serve free downloads as it does paid ones). So Apple generated at most $500 million in profit from the iTunes Store for the entire year of 2011. That's hardly an argument for selling iPads at cost.
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Old Nov 5, 2012, 09:58 AM   #17
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Quote:
Originally Posted by notjustjay View Post
Before everyone starts crying "So why isn't Apple selling it for $199?" remember that these are prices for the components only and do not cover costs such as research, engineering, testing, labour, warehousing, etc, etc, etc.
Thank you for pointing this out quickly.
It always blows my mind that people don't seem to comprehend everything that goes into production.

I'll relate it in terms of a premium tequila. "Agave is just a plant that doesn't cost anything and the bottle only cost pennies! How dare they sell this for for $70? They're ripping off the consumer!"

Maybe a bad analogy, but far more goes into the price of tequila than the cost of components.
Advertising, shipping, labor, insurance, licensing ... in addition to a host of other things mentioned by @notjustjay and others.
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Old Nov 5, 2012, 11:04 AM   #18
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I'll relate it in terms of a premium tequila. "Agave is just a plant that doesn't cost anything and the bottle only cost pennies! How dare they sell this for for $70? They're ripping off the consumer!"
Your example also called to mind that there are times when we don't seem to mind paying a huge markup for things. For example, ordering a bottled water or a soft drink from any restaurant or bar will cost you multiple times what it would cost you to buy one yourself from the grocery store. We're willing to pay for the service and within the context of the event (e.g. having a meal out, usually with friends or loved ones).

Likewise, we're paying for more than silicon and plastic parts when we buy a finished product like an iPad or any device, really.

As for the retina display: I went to have a look at an iPad mini this weekend at the local Apple Store. I didn't buy one (already have an iPad 3) but honestly don't think I would miss the retina screen on a display that small. As it was, I had to squint to see the pixels. It's sort of in a middle ground where you're not holding it inches from your face (like the iPhone) and the pixels are smaller than they would be in a full-size iPad.
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Old Nov 5, 2012, 09:01 AM   #19
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It's a bargain at $329.
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Old Nov 5, 2012, 09:06 AM   #20
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It's a bargain at $329.
Or a rip-off.
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Old Nov 5, 2012, 10:45 AM   #21
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Or a rip-off.
it's only a rip off if Apple tells you you're getting something different than what you're getting.

If you know exactly what you're getting and you pay for it how is that a rip off?

Now it's a totally different story if you want one but you can't afford one so you say silly things on the internet.
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Old Nov 5, 2012, 09:08 AM   #22
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It's a bargain at $329.
No, it really isn't at all.

Not with the screen that it has, and especially not when you consider the non-iOS competition.
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Old Nov 5, 2012, 01:28 PM   #23
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No, it really isn't at all.

Not with the screen that it has, and especially not when you consider the non-iOS competition.
But, but, but .. It’s thinner and lighter!
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Old Nov 5, 2012, 09:13 AM   #24
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Quote:
Originally Posted by RawBert View Post
It's a bargain at $329.
$329 is a strange price

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Originally Posted by crankmotion View Post
I'm sure Steve would have priced it 299,-. Just for the shock-and-awe feeling and a more attractive communication.


Always with the 9 huh?...how about a 7?

$327....sounds better already.
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Old Nov 5, 2012, 09:50 AM   #25
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Originally Posted by RawBert View Post
It's a bargain at $329.

Unless you want to like actually see what your reading.. Saw the Non-Retina Mini at my brother in laws he bought one and immediately was turned off. Apple should be ashamed at this launch.

Really an A5 with non retina screen?? Apple is ensuring this thing isnt an iPad killer they will constantly keep it behind the newest ipad by a generation. When instead they should offer it as an equal but they wont.

Next version ipad 3 chip with retina at same cost. Next ipad 5 a7 with higher retina. cycle continues.
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