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Do you think Apple now makes a smaller profit margin on the MBA?

pgiguere1

pgiguere1

macrumors 68020
Original poster
May 28, 2009
2,172
1,247
Montreal, Canada
Like a lot of people, I expected the new MBA to go more mainstream this generation. But this much? I was blown away by the price of the new MBA considering its specs, and this is not usually what Apple is good at. People buy Macs for a variety of other good reasons that matter as much as the specs for your buck. But now the new MBA seems a winner in about every category.

Apple doesn't make much money with software (iLife is bundled and they now sell their OSes for 30$), so they have to make hardware more expensive to compensate for the software development cost. Plus, they don't make deals with other software editors to load new Macs with free trials and crappy shovelwares like most PC manufacturers, so their revenue is really pretty much with the machine itself.

Now I see that MBA alternatives right now are actually more expensive for worse specs. Take the Samsung Series 9, for the same price, you get a worse processor, worse graphics, half the RAM, half the SSD storage, it doesn't have Thunderbolt, it doesn't look as good and it's made of cheap plastic and is thicker.

Sony's Vaio Z is even more expensive, and if you look at the future, it's not looking too bright either:

Engadget - Ultrabooks to start arriving in September, more expensive than expected.

To make matters worse, it seems those promised sub $1,000 price points were a bit optimistic. ASUS told the Taipei Times that its UX line would only be able to hit such a price using slower Core i3 chips -- upgrading to a Core i5 and sticking in an SSD would push the price towards the $2,000 mark.
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So, what has Apple done to have such prices? Do you think it's just a matter of buying in very large volume, or have they cut margins (possibly making no profit) just to gain popularity and get a head start in a promising new market?

Getting a polished product ready at a mainstream price a year or so before anyone else can make a hell of a difference in the long run, see the iPad. What do you think?
 
Well, assuming they made a profit with the 2010 model, I'll think they would too with this one?

Addding the backlit keyboard is hardly something that is that expensive.
I think removing the 4GB BTO option is what costs the most for them, really but not having to buy the Nvidia 320m could save them the money, assuming the processors cost the same as the core 2 duos.

To be completely frank I have no idea, but it's not like they have added free 1TB SSD's, they havde made 256GB ram available for the 11" model, but as a BTO option, which probably gets them their money back, and I'd think that not having to pay for 320m would pay for the BL keyboard and some of the missing earnings from RAM upgrades, so really I'd think they're only a few bucks down in profit, if at all.

- Pure speculation.
 
I think gross margin on the Air is probably the same, probably about 50%. Apple was able to this and reduce the selling price of the Air by using the Intel Sandy bridge chip with IGP, thereby eliminating the cost of the Nvidia 320M graphics chip.
 
I doubt it. Remember, Apple buys so much flash memory that they negotiate good prices on it. I've heard they make nearly as much on it as the manufacturers. Also, consider that they charge $100 for the upgrade from the 1.7GHz i5 to the 1.8GHz i7, when it costs them about $67 (or less). That's a pretty nice margin.
 
You are probably right about the margin being similar to the last model. The 2010 model actually had a pretty good price at its time too considering its innards (SSD and ULV processor) were even more unusual a year ago. However, most people don't care about about how "rare" and "expensive to make" they were, it's the end result that mattered and the 2010 MBA was just too limited of a computer for its price.

But if you compare the 2011 MBA to other Macs, not just the 2010 MBA, I still wonder if they strategically priced the MBA. Look at the white MacBook that just got replaced, even previous iterations at the time they were released. Its specs sucked for the price, compared to a PC laptop.

Now look at the MBA and compare it to PC ultraportables. It's cheaper and better. I understand that they buy in high volumes, but if you look at teardowns, you'll see that a lot the the hardware is made by Samsung, which sells its own ultraportable with a much worse value. What's the deal?
 
pgiguere1 said:
Now look at the MBA and compare it to PC ultraportables. It's cheaper and better. What's the deal?
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Apple's been doing it longer, and they have already invested in the design. The others are still doing the research. Plus, Apple shares extensively between the MacBook Air, MacBook Pro, and Mac Mini lines. They also don't need to pay royalties for their operating system since it's in-house. Most importantly, they buy so much that they negotiate good prices.
 
rds said:
I'll leave this here.
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This is the answer I was looking for. I understand now. Thanks.

On a side note, maybe it's just me, but it seems weird that I get downvoted for asking a serious, new, well-written question. May I ask why? Since I was asking a question, not taking a position, you can't really "disagree". Was the answer obvious? Or the question useless?

It seems that most posts getting attention on this forum are useless duplicates like "MBA as primary computer?", "What's your case?", "i5 vs i7" and such that get repeated several times only on the first pages. Seems a bit unfair to me, unless I've missed something, but whatever.
 
I think the current gen MBA is a good deal too. Apple did reduce a bit from it's crazy margins but don't forget that they make crazy profits on mbp and macpro, those are crazily expensive machines!
 
You're worried for Apple's profit margins?

Corporations like Apple will never release any products if it is not capable of receiving expected margins. Their balance sheets are fit as fiddles!
 
I think if you compared "new to new," as in the profit margins from the 2010 MBA when it was brand new, to the profit margins of the 2011 MBA now, they are probably pretty close to the same.
 
Most probably their profit margin will be smaller, but they do sell at a greater volume with a lower price. IMO their aim might be to increase their pc market share with a lower price for their hardware and software. They are already profiting a lot from iphone and ipad sales anyway.
 
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