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iPad Component Costs Estimated to Begin at $219.35
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He's not crazy, just selfish and thinks everything should be handed to him on a silver platter
I was just reading about a Tegra 2 tablet, let me copy and paste, since I don't know if we can post links to other sites.
The Adam is powered by NVIDIAs Tegra processor, and runs on Android--off the shelf technology that allows open-source possibilities. It also provides full 1080p HD output (better than the 576p of the iPad), contains a GPS, a digital compass, speaker, microphone, 3 megapixel camera, up to 32GB of memory, and an SD card slot. Battery life, for Internet use, is estimated to last up to 16 hours. And, yes, it will support Adobes Flash.
Also interesting is the Adams 10-inch touch screen display. It is a new low-power display from Pixel Qi that uses natural light to aid brightness, reducing the need for backlighting. The display uses 0.2 watts of power, or about 50 percent less than a regular backlit LED screen.
The Adam is expected to retail for $325. An announcement on availability is expected next week at the Mobile World Congress in Barcelona.
Sounds like good catch.
The Adam is powered by NVIDIAs Tegra processor, and runs on Android--off the shelf technology that allows open-source possibilities. It also provides full 1080p HD output (better than the 576p of the iPad), contains a GPS, a digital compass, speaker, microphone, 3 megapixel camera, up to 32GB of memory, and an SD card slot. Battery life, for Internet use, is estimated to last up to 16 hours. And, yes, it will support Adobes Flash.
Also interesting is the Adams 10-inch touch screen display. It is a new low-power display from Pixel Qi that uses natural light to aid brightness, reducing the need for backlighting. The display uses 0.2 watts of power, or about 50 percent less than a regular backlit LED screen.
The Adam is expected to retail for $325. An announcement on availability is expected next week at the Mobile World Congress in Barcelona.
Sounds like good catch.
Who cares how much Apple is price gouging users again? It's worthless without a camera and support for the entire Internet.
Gasp! They're trying to make a profit? Say it ain't so, Steve!
/Though I think Apple messed up. They should have had this thing go on sale the moment it was announced. I would have had my credit card out. The longer It's been since the announcement, the more likely I am to wait to see if the high end versions drop in price.
/Though I think Apple messed up. They should have had this thing go on sale the moment it was announced. I would have had my credit card out. The longer It's been since the announcement, the more likely I am to wait to see if the high end versions drop in price.
Granted
Ridiculous stats, yes. There's so much more involved with the product than the cost of it's parts.
However...The difference between the cost of the 3G vs non 3G is outrageous. It would be easy enough for Apple to include 3G on all of them and still make money for R&D, marketing, etc.
Ridiculous stats, yes. There's so much more involved with the product than the cost of it's parts.
However...The difference between the cost of the 3G vs non 3G is outrageous. It would be easy enough for Apple to include 3G on all of them and still make money for R&D, marketing, etc.
Yes, the iPad is WORTHLESS without a camera! Haha...for real? I have hardly ever used the iSight on my MBP. There are tons of people who don't use Skype video chat on a daily basis. As for the full internet, check out this new link. Apparently Hulu is coming to iPad and iPhone. That should satisfy 70% of you flash lovers. The rest--don't buy one. See if Apple cares, lol.
I will throw this out there as we will continue to be faced with ignorant comemnts that talk about apple overcharging or making too much money.
Even if these lower cost estimates for production are accurate, and I have no reason to actually believe they are, since nobody else has built a device like this before, the likely fact is with all real costs factored in the iPad for $499 is likely being sold at a loss to Apple. Best case it might be break even or a miniscule profit.
The other devices will be profitable and the back end on content sales will help. However just because some analyst who has never built anything in their life says the components cost 218 or 283 or whatever number they come up with... does not mean apple is making 280 or 200 dollars a unit. It means by the time you pay for research and development, administrative overhead, retail and marketing, the product probably loses money.
That is actually a pretty low gross margin for a product like this... so Apple has had to work really hard to be able to sell it for that 499 price point. For a brand new product starting a brand new category of consumer electronics, to cut the margin so thin is a risk. However it also has the upside of making it very hard for competitors to get into the game.
As rumored before the announcement for the iPad, most competitors were believing the base model would be $999 and that they could come in 20%-30% underneath that and still make money. With the base model on an ipad being $499 there is no room for anyone to make a comparable device at that pricepoint and make any money.
The 3G models and the higher memory models are charging a premium because people will pay the premium for those features, and it subsidizes the cost of the $499 device, which allows Apple to sell it so cheap.
Even if these lower cost estimates for production are accurate, and I have no reason to actually believe they are, since nobody else has built a device like this before, the likely fact is with all real costs factored in the iPad for $499 is likely being sold at a loss to Apple. Best case it might be break even or a miniscule profit.
The other devices will be profitable and the back end on content sales will help. However just because some analyst who has never built anything in their life says the components cost 218 or 283 or whatever number they come up with... does not mean apple is making 280 or 200 dollars a unit. It means by the time you pay for research and development, administrative overhead, retail and marketing, the product probably loses money.
That is actually a pretty low gross margin for a product like this... so Apple has had to work really hard to be able to sell it for that 499 price point. For a brand new product starting a brand new category of consumer electronics, to cut the margin so thin is a risk. However it also has the upside of making it very hard for competitors to get into the game.
As rumored before the announcement for the iPad, most competitors were believing the base model would be $999 and that they could come in 20%-30% underneath that and still make money. With the base model on an ipad being $499 there is no room for anyone to make a comparable device at that pricepoint and make any money.
The 3G models and the higher memory models are charging a premium because people will pay the premium for those features, and it subsidizes the cost of the $499 device, which allows Apple to sell it so cheap.
Yes, other electrical items, such as extension cords and lightbulbs, typically have much lower margins.
Since the development costs, etc. for all models are "fixed", I think it is fair to say that the 16gb no 3G model is the "best deal". That's the one I'll be investing in until the product is updated.
The numbers are misleading...but...
While I agree the numbers are misleading - there are two important points:
1. All the other costs that went into the iPad (R&D, etc.) are called fixed costs. You can't just move fixed costs into a per unit price unless you know how many items Apple will sell. (If R&D = 100million, and Apple sells 100million iPads, all you need to do is add $1 to the variable cost to add in R&D, but if Apple sells 5million, than R&D cost them $20 per unit)
The chart is just listing the variable costs for each iPad vs. selling price.
2. When Apple reported their quarterly earnings last month, they said their gross margin overall was something like 43% (So, yes they do get huge margins, it is a fact. But it's also their right and their responsibility to get those margins for their shareholders)
While I agree the numbers are misleading - there are two important points:
1. All the other costs that went into the iPad (R&D, etc.) are called fixed costs. You can't just move fixed costs into a per unit price unless you know how many items Apple will sell. (If R&D = 100million, and Apple sells 100million iPads, all you need to do is add $1 to the variable cost to add in R&D, but if Apple sells 5million, than R&D cost them $20 per unit)
The chart is just listing the variable costs for each iPad vs. selling price.
2. When Apple reported their quarterly earnings last month, they said their gross margin overall was something like 43% (So, yes they do get huge margins, it is a fact. But it's also their right and their responsibility to get those margins for their shareholders)
"We have movies just to get people in to buy popcorn and candy, where we make our money." (Howard Edelman, proprietor of Movieland Cinemas)
I agree completely. $130? Where does that number even come from? You would think that they would save the difference by simplifying their product line. I think there should have been one model, with 32gb and 64gb sizes, all with 3g and GPS. $599 and $699. Bam.
I see the 16gb getting phased out quickly, like the 4gb iPhone. Didn't it get canned after like 7 months and they added a 16gb model? For something so media focused, 16gb isn't a whole lot of space. I was pretty well settled on 32gb, but I've been thinking about the 64gb version lately. Though that would give me more incentive to upgrade to a 256gb version with 4g in two years.
Who cares how much it costs to make?
What this doesn't cover is
- the amount of R&D that went into creating this thing
- the salaries of all the people who have worked on it (creation, development (both hardware and software), testing, marketing, support, training)
- costs of shipping, packaging creation
- while it covers what the stuff inside the box costs, it doesn't cover their overheads either,
If Apple just charged the raw amount of money that it takes to buy the bits they wouldn't make a profit and things like this wouldn't exist.
How about I give you $300, and you go and create one of these?
What this doesn't cover is
- the amount of R&D that went into creating this thing
- the salaries of all the people who have worked on it (creation, development (both hardware and software), testing, marketing, support, training)
- costs of shipping, packaging creation
- while it covers what the stuff inside the box costs, it doesn't cover their overheads either,
If Apple just charged the raw amount of money that it takes to buy the bits they wouldn't make a profit and things like this wouldn't exist.
How about I give you $300, and you go and create one of these?
it's a giant iPod with ultimately the same internals as the iPod save for the not-so-expensive new processor. Is this a shock that this didn't really cost too much to build?
So, knowing the cost of 3G radio and GPS chips, imagine the profit margins Nokia, Sony Ericsson, HTC, etc have for selling their phones for $400-$800 (especially Android phones, considering the OS is free). It's easy to criticize Apple for making a profit, but that's the name of the game. It is expensive, thus more reason to wait for 2nd gen. I mean haven't we learned anything from the iPhone pricing?
Yes, other electrical items, such as extension cords and lightbulbs, typically have much lower margins.
For the off-topic movie theatre/soda discussion:
It's true, movie theaters keep almost none of the money they make on ticket sales. Something around the mid 90's % goes back to the movie companies while all the theaters revenue comes from soda, popcorn and candy. That $5.50 medium soda costs them about 32 cents to produce, package and sell to you. Similar markup on popcorn and candy a little less but still admirable.
I used to work in the theater industry.
It's true, movie theaters keep almost none of the money they make on ticket sales. Something around the mid 90's % goes back to the movie companies while all the theaters revenue comes from soda, popcorn and candy. That $5.50 medium soda costs them about 32 cents to produce, package and sell to you. Similar markup on popcorn and candy a little less but still admirable.
I used to work in the theater industry.
Well, if everyone's so upset at greedy Apple for wanting to charge $499 for a device that supposedly only costs them $220, then the easily solution is to just buy one of the myriad of other similar 10" multitouch tablet devices priced much more reasonably, say, $300 for the 16 gig version.
Oh, wait...
Oh, wait...
Why everyone base all arguments on hardware only?
Ok so you got all that parts on your desk assuming that you got that knowledge to assemble it. Now what can we do with all those parts? Hmmm...I don't know what I can do with all that. So Apple steps in and tell you iPad and charge you for it. So you build you iPad and then you have realized that there is no OS in it. Well....you got the idea now?