13" rMBP's profit margin and low Retina display yields

Discussion in 'MacBook Pro' started by pgiguere1, Oct 27, 2012.

  1. pgiguere1 macrumors 68020

    pgiguere1

    Joined:
    May 28, 2009
    Location:
    Montreal, Canada
    #1
    The 15" cMBP wasn't selling that much compared to the 13" cMBP and MBAs, mainly because it was too expensive at its $1,800+ price point. Around 15% of Mac notebooks sold were 15" MBPs. Then Apple released an even more expensive model, the 15" rMBP, starting at $2,200+. It sold out extremely fast. The day of the announcement, shipping dates slipped to 2-3 weeks to later slip to 3-4 weeks. That usually doesn't happen, even for much more popular models. This shows how low the initial supply was.

    According to analyst Ming-Chi Kuo (that guy that was right so many times this year), the reason the release of the 13" rMBP was pushed back to October was due to even lower yields with the 13" Retina display. He later reiterated that 13" rMBP yields were going to be low:

    [...] However, as supply is limited due to panel and assembly yield rate issues, shipment of the 13” Retina MacBook Pro won’t be able to satisfy demand. And we think consumers’ budgets will transfer to new iOS products after Apple launches them, which suggests that overall MacBook shipments will not grow meaningfully on the 13” Retina MacBook Pro.

    Demand for the 13" cMBP was around 3 times that of the 15" cMBP, so if you extrapolate that trend to rMBPs and factor in the fact that yields of 13" rMBPs were going to be even lower, you do the math: it was going to sell out super fast. And how can you make more money when you know sales are going to be limited by supply? If you know demand is going to be strong anyway, you just raise the price. Basic supply and demand. We know by comparing rMBPs to their respective cMBPs that Apple makes around $400 more in profits on a 256GB 13" rMBP than on a 15" rMBP, which is just insane, that's a whole 20% more in profits. It's like Apple doesn't want to sell too much of them, and that's probably what it is. They know they can't produce much of them anyway.

    My hypothesis is that the 13" rMBP's price will be reduced once Retina display yields are good enough. Obviously not mid-generation though, that would generate too much negative reception, but rather when the next specs bump (Haswell) occurs. By the time that happens, they'll be able to produce lots of 13" Retina displays in advance given low sales of the 13" rMBP at $1699+, and be prepared for the 13" rMBP to actually sell.


    tl;dr: Ming-Chi Kuo says yields of 13" rMBPs were way too low for demand. He's always been right so far so it's probably true. Apple had no point in pricing it aggressively since it would be limited by supply anyway. Expect a better price next year when yields are good.
     
  2. iLukeJoseph macrumors 6502

    Joined:
    Dec 20, 2011
    #2
    And where exactly did you get the $400.00 increase in profit from? Profit is net. You cannot just compare the selling price of a cMBP to a similar rMBP and assume whatever the price difference is profit.
     
  3. pgiguere1 thread starter macrumors 68020

    pgiguere1

    Joined:
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    #3
    Let's assume both the 13" cMBP and 15" cMBP had similar profit margins. Knowing the approximate costs of components they had, they pretty much did.

    A 15" rMBP with 256GB flash is $400 more than a 15" cMBP with a 500GB hard drive.

    A 13" rMBP with 256GB flash is $800 more than a 13" cMBP with a 500GB hard drive.

    Assuming that increased costs due to the Retina display is similar on both models, proportionally to the total price of the laptop,

    $800-$400 = $400.

    Since I threw in two "Assuming" here it may not be exactly $400, but you get my point. Profit margin is much, much higher on the 13".
     
  4. thejadedmonkey macrumors 604

    thejadedmonkey

    Joined:
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    Pennsylvania
    #4
    The retina macbook pro is a very funny place for Apple. They used to have the 13" classic as the poor-man's 15" Macbook Pro.

    Now the retina lineup is the new "pro", and the macbook pro (aka classic) is the cheap macbook. It's like Apple is transitioning the macbook pro line into the macbook line, and the retina lineup is the new pro, with new pro prices.
     
  5. NT1440 macrumors G4

    NT1440

    Joined:
    May 18, 2008
    #5
    ....

    Thats quite an assumption to begin with.

    And do you really think that HDD's and SSD's are going to have approximately the same costs to apple? Come on.
     
  6. pgiguere1, Oct 27, 2012
    Last edited: Oct 27, 2012

    pgiguere1 thread starter macrumors 68020

    pgiguere1

    Joined:
    May 28, 2009
    Location:
    Montreal, Canada
    #6
    Where did I say that, and why should costs of a HDD relative to a SSD for Apple matter in my math?

    EDIT: You probably read it as "Let's assume both the 15" rMBP and 15" cMBP had similar profit margins." You might want to read my last post again.

    All I said is that:

    A 13" rMBP with 256GB of flash is $800 more than a 13" cMBP with 500GB hard drive.
    A 15" rMBP with 256GB of flash is $400 more than a 15" cMBP with 500GB hard drive.

    Therefore, assuming costs of the "Retinisation" excluding storage (adding a better display, bigger battery, dual thunderbolt, hdmi, removing optical drive, etc.) was similar for both the 13" and 15", there's a $400 difference in profit between both models.
     
  7. iLukeJoseph macrumors 6502

    Joined:
    Dec 20, 2011
    #7
    But it is more than likely (and all we can do assume) not similar. The 15" r is not the same as the 13" r. You seem like a reasonably smart guy. But I would bet the 13" rMBP actually costs Apple just as much or more money to R&D and make than the 15". Even without the discrete GPU.

    I think people downplay how large of a technical feet both the 13" and 15" retina display is. And I am not talking about how good it looks. Purely on the technical level.
     
  8. DVD9 macrumors 6502a

    Joined:
    Feb 18, 2010
    #8
    Mr. Kuo was wrong.

    Mr. Kuo said "priced aggressively below $1,300".

    Mr. Kuo apparently thought Apple would drop the prices of those "classic" MacBook models by $400 and chop another $200 off the Air. Apple is run by fat hungry Wall Street bloodsuckers, not artistic hippies living in a commune.

    Apparently many cannot accept what Apple is, exploiting third world slave labor to a level never witnessed before.
     
  9. pgiguere1 thread starter macrumors 68020

    pgiguere1

    Joined:
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    Montreal, Canada
    #9
    Mr. Kuo is an analyst. He does have contacts within Apple's supply chain, but the price estimation was that, an estimation, not a leak of any kind, since the supply chain has no clue what the retail pricing will be.

    I always thought his "below $1,300" estimation was overly optimistic, but I didn't expect $1,699 for 128GB either. I would have said $1,399 or $1,499.
     
  10. Purant macrumors 6502

    Joined:
    Aug 26, 2012
    #10
    I am more amazed that people can't accept the possibility that Apple may have raised their profit margins a lot for this one. OPs theory makes a lot of sense.

    Remember the first Macbook Air and its ridiculous 1799$ price originally?
     

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