Air quality hitting Apple overall gross margin?

Discussion in 'MacBook Air' started by Scott6666, Apr 24, 2008.

  1. Scott6666 macrumors 65816

    Scott6666

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    #1
    From Apple Insider:

    Do you think all the returns and re-returns are hitting the margins?
     
  2. aussieinrome macrumors regular

    aussieinrome

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    #2
    I think it may be built into the price...:rolleyes:
     
  3. arkitect macrumors 601

    arkitect

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    #3
    That is not what the article you quoted is on about though.
    The Air's margin "out of the box" so to speak is less than the average Apple product. That is what "investors" are objecting to… :eek:

    Quality of build and returns has nothing to do with it.
     
  4. dejo Moderator

    dejo

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    #4
    Huh? Where did Munster say anything about Macbook Air returns, re-returns, or even quality? :confused:
     
  5. Scott6666 thread starter macrumors 65816

    Scott6666

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    #5
    He didn't directly say anything about why the margins are lower.

    Obviously, the simple answer is that it costs more relatively to build an Air compared to its siblings. But being priced $700 more than a base MB this would mean that it would have to cost over $455 more to build an Air than a MB to lower the margin (assuming a 35% margin for this guesstimate).

    Swap 2.1GHz Penryn for 1.6GHz smaller Merom
    +1GB RAM
    -Combo Drive
    Swap backlighting; same size; same resolution
    Larger touchpad
    Aluminum case
    Smaller hard drive, probably cheaper
    Same graphics chips

    Unless the case is very expensive to build (and it's just stamped Aluminum I would guess) I don't see $455 of extra cost.

    Perhaps marketing (many commercials) but I don't think that's in the gross margin.

    So why is the margin down?
    (continued on next post)
     
  6. Scott6666 thread starter macrumors 65816

    Scott6666

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    #6
    So I'm wondering where does the cost of all the returns go? My accounting class is 15 years ago so I am very rusty on my T-accounts.

    Let's say you've been through 3 MBA's and kept one (you all know who you are). Parts were purchased for 3 and labor was expended for 3 but revenue can only be counted for one.

    I suppose the MBA could be put back into an inventory account because it will be sold later but is the expense of building it also put back into an cost of inventory account? I guess cost of goods would be appropriately reduced? Yes or no? Do we have an accountant on the board?

    Also, what about the extra shipping and other costs that Apple has to eat?

    Later they will have to take in the cost of refurbishment but I don't think that would have appeared on this statement yet.
     
  7. arkitect macrumors 601

    arkitect

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    #7
    I can see where you're coming from. But that would only be a concern if all the Airs were a disaster and there was a global recall on all sold Airs…

    There hasn't been. Yet. ;)
     
  8. Krevnik macrumors 68040

    Krevnik

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    #8
    The smaller Merom is unfortunately a custom part for now, which makes it a bit more expensive than the standard part. How much, we don't know.

    The LED backlighting is probably a fairly big source of cost, and that cost is the main reason they aren't already in the standard MacBooks.

    Smaller HDD doesn't mean cheaper. Usually, it actually means more expensive per GB (if you talk about small, physically). The retail price for the first iPods (250$) was the same retail price for the 5GB drive in it. While that pricing certainly doesn't hold today, an 80GB drive still costs buyers 120$ or more to get their hands on in the 1.8" form factor (and that is from sources that have razor thin margins).

    To know where the cost is coming from, you do have to price out the various parts, which I haven't seen anything from iSuppli on yet... and I don't really trust their estimates half the time when they pull numbers out of their ass before they have the product in hand. ;)
     
  9. Scott6666 thread starter macrumors 65816

    Scott6666

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    #9
    I tend to agree with you except for the HDD. $/GB is not so relevant when they just give you less GB. Also its such an old iPod part (I think) that I would think its as cheap as the 120GB drive. The economies of scale on the standard drives may contradict that but on at iFixit they'll sell you a replacement iPod 80GB drive for $180 and a replacement 120GB MB drive for $100. So iPod is at an 80% premium. Now at NewEgg you can get a 120GB SATA drive for $65 letting you know how expensive iFixit is. An 80% premimum on the NewEgg Sata price leads to $52 difference between the drives. Now I know Apple does not pay NewEgg retail prices but it leads me to believe that the drives cost difference $20-30 at most. Not much of the $455 necessary difference. (And I bet in reality there is almost no cost difference at all!).
     
  10. Scott6666 thread starter macrumors 65816

    Scott6666

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    #10
    Still, there have been so many complaints on this forum and the Apple support forums that the return rate must be 5-10x what it is on the standard Macbooks or MBPs. I don't know what a standard return rate might be but this has got to be costing some fair amount of money.

    jjahshik32 and I alone seem to be responsible for at least a few thousand returns. :D (Apologies in advance to JJ if I cause him any offense; just kidding).
     
  11. arkitect macrumors 601

    arkitect

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    #11
    Well without Apple supplying figures on the return rate it will remain speculation I guess. :)
     
  12. aristobrat macrumors G4

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    #12
    I'm not sure how long you read MacRumors before you created an account here, but the amount of folks complaining about the Air doesn't even begin to compare (even in the slightest) to the amount of complaints and returns for refund/repair that the first generation MacBook Pro (excessive heat, CPU whine and LCD buzz) and MacBook (Random Shutdown Syndrome issue) generated.

    Neither of those events were ever noted by Apple in regards to margin. :confused:
     
  13. Killyp macrumors 68040

    Killyp

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    #13
    Oh you don't know the half of it. The first generation MacBooks and MacBook Pros were unbelievable.

    The failure rate of first generation machines is always going to be much higher than normal, especially with laptops. I'd say that so far the MacBook Air seems to be holding out very very well in comparison to the first generation MB/MBPs.
     
  14. NC MacGuy macrumors 603

    NC MacGuy

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    #14
    Maybe that's why I appreciate my non-returned fairly trouble free week two Air. I returned two MBs and one MBP first editions.

    Things like video, fans, backlight bleed are small peanuts compared to the gen. one MB RSS. Or the incessant buzzing of the PS, screen and battery problems on the Gen one MBP.

    I'm sure Apple has built returns into their projections. I for one can't wait to pick up some of the returned Airs when they hit the refurb store.
     
  15. Killyp macrumors 68040

    Killyp

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    #15
    Oh and that's only the start of it. My 1st gen MBP had all of those issues, plus some more. Apple ended up replacing it outside of the warranty when it turned out the excessive heating was causing really major issues, and there was no way of resolving it without a new laptop.
     
  16. dejo Moderator

    dejo

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    #16
    You have to realize that the amount of complaints on the forums in no way is indicative of the actual return rate. People who are happy with theirs will tend not to post and so you get a skewed view. You're better off looking at reliability reports from Consumer Reports or PC Magazine. Those tend to include the happy customers more.
     
  17. Krevnik macrumors 68040

    Krevnik

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    #17
    Another catch, SATA vs PATA. SATA is more common these days, and SATA pricing is actually falling faster than PATA pricing due to this imbalance in demand. Unfortunately for us, Apple is using PATA in the first-generation Air, and that does affecting part pricing.
     
  18. aussieinrome macrumors regular

    aussieinrome

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    #18
    Good point, people come to these forums mainly for two reasons:

    1 - enthusiasm about their new purchase.

    2 - solutions to problems with their device.
     
  19. Scott6666 thread starter macrumors 65816

    Scott6666

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    #19
    Listening to these stories it's amazing Apple survived this long to get to this point. I don't know how you all lived with computers like that.

    I also understand that only the complainers and fanboys really end up here on these forums. I still think we are a representative sample of quality though because most people with complaints don't even know this place exists to come to.

    But overall I guess the answer is that quality is probably not driving margins any more than Apple is used to already - and may be considerably better than Apple is used to.

    Now off to unpack my MBP and wait until Rev b of the Air...
     
  20. Killyp macrumors 68040

    Killyp

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    #20
    Not at all. A lot of people would just enter 'mac forums' into Google, and MacRumors is one of the first websites which comes up.

    We really aren't a representative sample of quality, I've been here long enough to realise that.

    Apple's track record with reliability has been very high in comparison to other manufacturers.
     
  21. wordy macrumors regular

    wordy

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    #21
    I think you hit the nail on the head with that. I think it's logical that more people would seek out forums to solve problems or get help rather than simply to boast about the wonderfullness of their products!
     
  22. PDE macrumors 68020

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    #22
    I would also say that MOST people who have issues with their computers will not try to troubleshoot themselves by looking for an online forum other than perhaps Apple's own. Most people will either a) call Apple b)take it to the place they bought it or c) live with the issues because they don't have the time to deal with them or can't be without a computer while it's being repaired.


    I'm sure we're not representative and I'm also sure that the majority of problems are dealt with without coming to forums like this. In other words: nobody has an idea of how widespread problems are, but to assume that the problems are fewer just because macrumors is not representative doesn't make much sense either.
     
  23. jjahshik32 macrumors 603

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    #23
    Maybe this explains the instant I turned on my brand new mba it had white line problems.
     
  24. Scott6666 thread starter macrumors 65816

    Scott6666

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    #24
    I think you are just cursed.

    :(
     
  25. NC MacGuy macrumors 603

    NC MacGuy

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    #25
    I only use my replacement MBP as a backup because of the real heat and nonstop fans.:mad:

    Took it to 'geniuses" and they say its normal. POS.
     

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