A larger screen at the same PPI doesn't magically require a higher flux density.
Actually, in a sense it does, because in order to get the same brightness in the middle of the display on a much larger, edge-lit screen, you need to pump much more light in because there is a lot of loss in the light guides. In other words, in order to get the same flux density on a bigger display, you need to pump proportionally more power into it.
If both versions were offered mini @ 329 and Retina @ 379 I believe that the retina would have outsold the one currently offered.
No doubt. And they'd have sold even more at $199. But that's just not the way it works. There is absolutely no business reason why they would not have released a retina mini at $399 or even $499 if they were able to do so now. They gain nothing by not doing it. The reason is that no such product can justifiedly exist in November 2012, even at those prices.
If they offered just the Retina Mini @ $350 all of you still would have bought one plus all of those people that aren't because it doesn't have one.
Let's pretend that $246 is indeed the magic number for a moment (more on that below), and let's also be generous to you and use fixed dollars for operating margin instead of percentages, assuming the mini is expected to toe the line at 20% net (Apple has actually told investors that the mini doesn't meet the corporate average, so again, another generous concession). That's $65.80 in net profit on the $329 base model, meaning that their per-unit overhead is $75.20 on top of the $188 components bill.
His pretend retina mini costs $58 more in parts. At $379 retail and holding the same 20% profit, that leaves $303.20 to pay for everything else. 246+75.20 is $321.20.
You're $18 short at $379 and $42 short at $349. $399 is the price point that is closest to breaking even costwise assuming a $58 parts increase. And that also lowers the gross margin from 43% to 38% in the process, which is an unrealistic expectation.
$429 is the match at 43%, again assuming that the parts increase is only $58.
They would not sell four times as many units by going to a retina display and pricing it at $350--in fact, they might not net
any more units, since the number of people who won't buy it without a retina display might easily be the same size as the number of people who absolutely wouldn't pay more than $330 for an iPad mini. That would cost them $37 million for every million units sold.
the profit loss would have been made up in volume
You can't make up a net loss in volume; you can only lose more by selling more. Even discounting your net profit to a smaller, but still positive number, is only worthwhile if it results in a much bigger volume increase. In other words, in most cases, it's better to sell fewer units at higher margin than more at a lower margin.
Apple should have discontinued iPad 2 and sold only the Mini retina for $379.
There is no way that $379 would work, even assuming the parts actually existed in the first place. Cult of Mac is just plain wrong. The article understates the cost math and relies on completely arbitrary fantasies about Apple taking a lower margin. And his math doesn't even add up.
He's looking at the total display cost rather than the touchscreen and LCD separately, which skews the results. The iPad mini uses a much more expensive touchscreen than the phones, accounting for a much larger share of its $80 price ($25-35). The LCD component estimate from his sources for the 3GS is $19 and $28.50 for the iPhone 4. Even if 326ppi costs have now fallen to ~$23 based on his cost projections over time, the resulting display is at least $117 for just the LCD, or an absolute minimum of $142 with touchscreen. Quite a bit more than the $123.62 he claims. Given that, even with his fantasy "slim" margin of 37%, that's a retail price of $415+. With the same 43% it has now, that's $463+.
It's also odd that he didn't use the iPhone 5 as the basis of his math (but again, this is because doing so would highlight how big the price gap actually is). Using his flawed methodology on the $44 iPhone 5 display runs to $191 on the mini, an additional $67 over his "estimate" pushing that "$246" to a staggering $313 (for a retail price of $491 using his fantasy 37% margin, or $548 using the mini's actual margin.
I don't know if he's being intentionally misleading to drum up page hits or if he just doesn't know what he's calculating, but either way, even using his own sources and assumptions, there is no support for a $379 retina mini.
I'm facepalming at all of the replies.
BTW, price is a HUGE factor in deciding what to produce and push into market. It's obviously not as simple as cutting these panels to whatever size the resulting product demands otherwise we'd have 326 dpi 80" Ultra HDTV's because it's possible.
Also, making up numbers is not the same as providing numbers just like putting random letters together doesn't form words.
Exactly.