All iPads: Apple's expensive iPad Mini mistake

[poloponies]

Originally Posted by Phil A.

So, how did Apple resize all those 9.7" screens to 7.9"?

I've read some crazy comments about the Mini, but this one might be the craziest yet!

Haven't you seen the display punch? It's just like the device that cuts regular SIMs to nano size.

[xofruitcake]

Originally Posted by ZBoater

Gross profit, maybe, but not net profit or "real" profit. Still, $400 million pays for a lot of R&D and overhead....

not quite.. The BOM analysis did not take into account of a bunch of manufacturing cost: profit to manufacturer, Parts broken in manufacturing, rework cost, warranty cost, shipping cost (from supplier to assembly plant and from assembly plant to our house. Anyone pay for an Fedex shipping lately would know it is costly), profit margin for reseller like Walmart, Target (and cost of running Apple store if they are sell through Apple). Then you throw in the marketing cost, design cost, regulatory approval (every country has a different approval process for electronics) and corporate overhead..The base Mini will hardly make any money. The high end unit will do better but they won't be at a profit level of Ipad 3 or Ipad 2, let alone Iphone 5.

[poloponies]

Originally Posted by xofruitcake

not quite.. The BOM analysis did not take into account of a bunch of manufacturing cost: profit to manufacturer, Parts broken in manufacturing, rework cost, warranty cost, shipping cost (from supplier to assembly plant and from assembly plant to our house. Anyone pay for an Fedex shipping lately would know it is costly), profit margin for reseller like Walmart, Target (and cost of running Apple store if they are sell through Apple). Then you throw in the marketing cost, design cost, regulatory approval (every country has a different approval process for electronics) and corporate overhead..The base Mini will hardly make any money. The high end unit will do better but they won't be at a profit level of Ipad 3 or Ipad 2, let alone Iphone 5.

Never ceases to amaze me how everyone suddenly becomes an armchair accountant (50 cents for flour, dollar for cheese, 75 cents for sauce -- why are they charging me $12 bucks for a pizza?) without taking the time to consider what it actually costs to develop, manufacture, market, distribute, sell at retail and support a product.

[d123]

Originally Posted by Zimmy68

It's brilliant.

Let the sheep and early adopters buy up all their old hardware parts (ipad 2 screens).

The only brilliant thing in your post was your "comedy".

Thank you, it gave me a laugh on a horrible grey day.

[Deasnutz]

Originally Posted by poloponies

Never ceases to amaze me how everyone suddenly becomes an armchair accountant (50 cents for flour, dollar for cheese, 75 cents for sauce -- why are they charging me $12 bucks for a pizza?) without taking the time to consider what it actually costs to develop, manufacture, market, distribute, sell at retail and support a product.

Well we do know that stores make very little off idevices. Make most their rev from accessories. Chinese manufacturing labor is the among the cheaper options. Apple was found to spend relatively low R&D last quarter, with respect to its competitors. Distribution can't fluctuate too much across competitors.

That leaves marketing.

They have persuaded you to pay more for their gadget than other gadgets.

Oh, and legal fees. You pay for that too.

[poloponies]

Originally Posted by Deasnutz

Well we do know that stores make very little off idevices. Make most their rev from accessories. Chinese manufacturing labor is the among the cheaper options. Apple was found to spend relatively low R&D last quarter, with respect to its competitors. Distribution can't fluctuate too much across competitors.

That leaves marketing.

They have persuaded you to pay more for their gadget than other gadgets.

Oh, and legal fees. You pay for that too.

Ah, only marketing. So when you get the device shipped to you at no cost that's marketing? And when someone returns it for service (with free shipping both ways) at no cost that's also marketing? And Apple's cost of retail sales and support is also marketing? Distribution? General overhead?

So virtually every other major manufacturer sells electronics at a similar markup but their costs are supportable, but with Apple it's just "marketing"?

[racer1441]

Originally Posted by poloponies

So does your local grocery - your point makes little sense with either example.

I make more than the local grocery. That place is a dump.

I'm sorry my example was too complicated.

[sweetbrat]

Originally Posted by Deasnutz

Apple was found to spend relatively low R&D last quarter, with respect to its competitors.

R&D for the iPad Mini would have been done long before last quarter. There's no way you can use last quarter's R&D budget to figure our how much was spent on R&D for the mini. We have no way of knowing when they started working on it or what part of the R&D budget goes towards it...it's total and complete speculation. Besides marketing, distribution and R&D, you have ongoing costs for support. That first year of Applecare is included. Not only do they have to take into account expected repairs and replacements, but staffing costs.

People seem to think it's a simple equation, but it's not. There's a lot that goes into the cost of a device that people don't tend to think about.

[poloponies]

Originally Posted by ChrisCC

I agree. theyre using outdated internals and a un-retina sceen and still charging a premium over other higher spec-ed tablets. I agree that Apples app ecosystem is way ahead of the competition but does that justify the price? Dont get me wrong i love the mini but the price is just not right.

It's not a premium, it's what they need to charge.