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iPad Component Costs Estimated to Begin at $219.35

iMLo said:
Too bad you didn't invest $2,000 eh? ;)
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I'm afraid it's even worse than that. I had about $12,000 to invest, and put it in real estate and some other things that have worked out ok, but I try not to even think about what could have been. :rolleyes: I'm definitely no Warren Buffett.
 
I never like these kind of analysis, because while they're innocent (how much does this thing cost to make) it's really ridiculous to do a margin calculation out of this - and everyone seems to say that.

We're fooling ourselves if we think that simply a BoM (Bill of Materials) and a rough $10 figure for per unit costs for manufacturing is anywhere near accurate.

What about:
-Marketing
-R&D
-Warranty Costs
-Distribution
-SG&A
-Insurance

Drawing conclusions like "it appears they have a lot of margin" is ridiculous, a BoM like this can't give anyone the kind of insight they need to make those statements. Hell, most companies have accounting staffs with hundreds of MBAs to slice and dice the data to see if programs as big as the iPad are profitable and they still sometimes can't come out with the right answer.

Not sure us arm chair Apple CFOs can make the statements we try to make using a simple 3rd party BoM (I'm pretty suspect of this, because do you *really* believe the NAND flash scales linearly in capacity vs. cost? Don't think so.).
 
So iSupply pulls a guestimate out of their asses based on reported features, and the cows start immediately mooing about Apple rip-offs?
As Gruber says, at least iSupply used to tear down an actual unit before spewing ridiculously low-ball estimates.
BTW, do they ever include labor, marketing and R&D costs into their model?
Doesn't seem that they do.
 
JGowan said:
I remember back when you actually would read about a company tearing an honest-to-goodness unit before telling you what the thing cost to build. Seems we're treading into some murky waters, guys.
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There's been years worth of speculation, rumors, and old wives tales foretelling the Advent of the Jesus Tablet and now we're suddenly concerned about only dealing with facts? :eek:
 
A bunch of made-up numbers may LOOK impressive, and gives iSuppli their customary PR boost... but they haven’t even taken one apart yet!
 
Oh Oh

Please don't let the current administration know. They might want to redistribute the profits to the windows 7 guys...:confused:
 
Marksman Hits The Bull's Eye!

marksman said:
I will throw this out there as we will continue to be faced with ignorant comments that talk about Apple overcharging or making too much money. …
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Thank you Marksman for writing a comment that will hopefully open the eyes of those certain commentors in this thread who seem to think they have the inborn "right" to buy an iPad at $10 over the price of the pile of components, etc etc etc.

And in case my comment is buried pages away from Marksman's intelligent words, I post it here again for the benefit of any ingrates that may be lurking nearby.

marksman said:
continued… 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.
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3g Upgrade

I still don't understand the price point for the 3G model. Almost like they don't want you to get it or they are charging for it to be unlocked? But wouldn't that be AT&T's concern and not Apple's??

I am selling my MacBook and getting the WiFi version (I don't use the camera on my MacBook at all and its mostly a email/internet surfing machine) because I can't justify the price for the 3G version, can anyone explain that? Has Apple explained it?

Why wouldn't it be like a $30 upgrade?

Lame
 
batmccoy said:
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.
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It's hard to say where the difference comes from without having all the facts. It could be that Apple just knows they can charge that much of a premium for 3G and get away with it, or maybe some of that $$ is going to at&t as a subsidy for data costs...who knows at this point.
 
tito2000 said:
A couple of splits handled that nicely. :) I forget the dates, but it split twice 2-1.
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Sorry, but that's not correct. The lowest AAPL was in 2001 was about $7, CORRECTED for splits. Besides, it only split once since the beginning of 2001. I know... I've held several hundred shares since then. :D
 
LOL! I have to say, I never seen so many people vote Negative on a Article. iPad truly does not look good for Apple. iPad feels like a Beta or a half ass finished technology. I heard the next iPad might also have Mac OS X which would be nice rather having to use the iTouch or iPhone os where I still have to pay to get Internet. Lets wait until March and see how many people will buy the iPad if they like there **** without Flash working or no cameras and few other important missing things. I know Flash will soon have a update for a iPad but seriously come on now, I know flash sucks but really? No Flash?:rolleyes:
 
Corruptitudes said:
Im all for a company to make profit. However gouging the customer is not the way to do so.

For instance, Im interested in the 16gb with 3g Ipad, according to this article it only cost $257.65 to make, yet the retail is $629.00. Thats $371.35 in profit. Now Id be wiling to let them have half that profit which totals $185.68. Add that onto the cost of the device, which would come out to $443.33. Round it up to $450 bucks for marketing purposes and you would be selling them till their out of stock and still taking money to the bank. R&D? please...There are minor tweaks to the OS to allow for the new hardware since this is an Iphone OS. Development costs would be included in the manufacturing costs..which if this article is correct, its $10.
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Well, I suppose you can always wait for Dell to make a tablet and buy that. Enjoy.
 
Wait....
Are you suggesting that Apple sells an item for more than the cost of the parts??
They actually figure labor, R&D, shipping, warehousing, staffing, PR, advertising, legal contracts ect.. into their price plans??

HOLY STEVO, I new they were up to no good...:D
 
gnasher729 said:
Well, I suppose you can always wait for Dell to make a tablet and buy that. Enjoy.
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In case you haven't noticed yet, but Apple was the last one to show up on the Slate party. And unlike most of the other guests, they haven't even brought a real computer with them.
 
localoid said:
Don't fret. They took the all the cameras to a big farm, where they'll be allowed to run free forever.
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You came this close --> [----------] to owing me a new bluetooth keyboard :mad:

Oh boy I laughed so hard.
 
Winni said:
In case you haven't noticed yet, but Apple was the last one to show up on the Slate party. And unlike most of the other guests, they haven't even brought a real computer with them.
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Where are the Dell and HP slates?
 
TsMkLg068426 said:
iPad truly does not look good for Apple. iPad feels like a Beta or a half ass finished technology. I heard the next iPad might also have Mac OS X which would be nice rather having to use the iTouch or iPhone os where I still have to pay to get Internet.
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I'll tell you what doesn't look good -- trolls underneath bridges. And as for the iPad feeling like a beta, look you guys gotta make up your mind. It's either nothing but a big Touch or its a "beta/half assed finished technology." It can't be both... unless you think the Touch is half assed too.

Oh, and you heard the next iPad might have OS X? I heard Bill Gates is looking to buy a new computer with OS X. What a coincidence.
 
All I can say is if this component cost breakdown is indeed true, then we know why Apple subliminally was showing us the 64GB memory iPad (either wifi or 3G) Seductive marketing at its best....buy the 64GB iPad and they'll make between $381.15 and $482.85/unit respectively....talk about milk the cow, split the growth :(

Personally, I've been on the fence between the 16GB and 32GB 3G iPad anticipating future media consumption and productivity needs - if that makes any sense. It's very likely that someone going 32GB sees that for only $100 more they get 2x the memory but doesn't see that they are paying roughly 2.5x the cost to build the damn thing.

I still plan on getting one, but man it definitely gives me pause.
 
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