iPad Component Costs Estimated to Begin at $219.35

[Hberg]

Capitalism

I have a little problem with the statement "While the component cost calculations do not include such expenses as research and development, software, marketing, distribution, and patent licensing, the tally still suggests that Apple is set to make a healthy profit on its new tablet device."

No matter what the product is I think people truly underestimate the value of R&D and innovation. While some may argue that the iPad contains very little R&D and/or innovation, it is up to the individual to decide the actual value they place on the product, and we as individuals are allowed to vote with our wallets.

It is the marketplace that provides the measure of success. I applaud Apple for their products and their spirit of capitalism. I am sure the Apple Shareholders feel the same way.

 

[Yr Blues]

trust me, the markup is for early fa----adopters...

look at how many hundreds they knocked off the macbook air.

 

[Flavioparentiq]

I don't know the exact numbers, so I was being cautious.

I have no clue what i'm talking about.

My wild guess is that each of the member of the iphone os team earns at least 100k a year.. and they could be a dozen. So it would 1,2M a year only for them. Then there is the building of this prototype. How many lcd screen did steve jobs tried before choosin a 9.7"? take this choices to size, cost, durability, precisition, integration with software. (and i'm talking only about the screen, there are many other components)

Then there is the A4 chip, wich is created in the cupertino.
And building a chip is not chip.

(Sorry I had to type that.)

 

[NT1440]

Why in the world would the iphone OS team be making 100K a year? Those coders better have been there a good number of years to be pulling down those numbers.

 

[Mattie Num Nums]

I have no clue what i'm talking about.

My wild guess is that each of the member of the iphone os team earns at least 100k a year.. and they could be a dozen.

Apple doesn't pay as well as you think.

Why in the world would the iphone OS team be making 100K a year? Those coders better have been there a good number of years to be pulling down those numbers.

My friend works on the iPod team as an engineer (has since 2003) and he makes $31.00 an hour. Living in California thats average. Engineers at my company start at $35.00 an hour.

 

[Flavioparentiq]

Why in the world would the iphone OS team be making 100K a year? Those coders better have been there a good number of years to be pulling down those numbers.

Well, you pay for secrecy and they must be working quite a lot, with the top tech stuff availble. The question is why would the be paid less? 100k is 8000k a month, wich is not that impossible

 

[HiRez]

I strongly, strongly disagree. This isn't a pocket device. It's something that will be used at least 75% of the time (for me, personally, more like 98%) where there is wi-fi available. I want to pay ZERO for a cell chipset. Not $130, not $30. Many, many people will not use it. This isn't speculation... the iPod Touch far outsells the iPhone, because people want that thing but aren't willing to pay an up-front premium plus a monthly charge for the service for something they won't get much use out of.

Pricing the 3G model that much higher is a smart move on Apple's part... they know that most of the people who would pay $30 extra for that feature will just as soon pay $130 more. It's a fairly inelastic demand until the price gets much more outrageous. If you think that $30/month for occasionally using the cell radio is worth it for you, you're willing to pay a good bundle up-front also. Price is not your foremost concern.

OK well, I'm going to strongly, strongly disagree with your strong, strong disagreement. No doubt not everyone needs 3G, but first of all doubling the number of models in inventory costs Apple. How much I don't know, but that's basic business economics, more SKU variants makes manufacturing + inventory harder and more expensive to manage. And as I said, it's fragmenting the user base for developers, plus it makes it harder to sell and buy used devices (YOU may not need 3G, but maybe the guy who might want to buy one from you in a year does). That goes for other things too, I doubt I'd use a camera on an iPad much, but just the same I'd rather see them build it into all of them if the cost isn't extreme. So yeah, I think charging $130 to add 3G is excessive (> 500% markup), but it's the fragmentation aspect that bothers me more than the price.

 

[Flavioparentiq]

Apple doesn't pay as well as you think.



My friend works on the iPod team as an engineer (has since 2003) and he makes $31.00 an hour. Living in California thats average. Engineers at my company start at $35.00 an hour.

ok, let's say apple pay 40$/h, 8h(9?)/day, 5 days/week that would make 6400$ a month.. *12= 76,800. Plus some bonuses you get 80.000. ok. How many are they? I would say at least 10 only for the iphone os R&D... that is still 800.000$ a year only for one compartment of the R&D

 

[ARF900]

This gonna be just like the iphone, Apple will release it, people will buy it, apple will rework the pricing, and everyone who already bought one will freak out.

 

[Mackan]

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.

They only estimate the costs of the hardware parts, because that is what they really can estimate. And yes, Apple is ripping off people who buy the 3G version. Standard procedure by mr Steve.

 

[till]

My wild guess is that each of the member of the iphone os team earns at least 100k a year

The cost to Apple for employing a good engineer is probably at least $100k. Salary plus benefits and other things.

and they could be a dozen.

Honestly I have no idea either, but in a company of 35,000, I suspect the number of people just working on developing iPhone hardware and software is several times that.

It's very easy to see how iPad development likely cost tens of millions in labor alone.

If Apple were to sell the iPad for $350, they would still be losing money for a very long time. This should be ridiculously obvious to anyone who spends a moment thinking about it.

And building a chip is not chip.

Some jokes only work with an Italian accent
I know, my girlfriend from Napoli struggles with some of those annoying English vowel sounds. And the "th" sounds? Forget it.

 

[NT1440]

Well, you pay for secrecy and they must be working quite a lot, with the top tech stuff availble. The question is why would the be paid less? 100k is 8000k a month, wich is not that impossible

All I'm saying is that if they are code monkeys, and don't think they aren't, they probably aren't making quite that much but still a good chunk of change.

Speaking from a hopeful future code monkey

Note that there is a difference between a programmer and a software engineer, the latter who would probably be pulling down that 100k from a company like apple.

 

[diabolic]

Apple doesn't pay as well as you think.

Regardless of how they pay, the expenses of even the software design portion of the iPad run into the millions of dollars. These need to be recouped (along with costs of hardware design, prototyping, failed prototyping, materials and shipping, assembly, advertising, any legal work, packaging, retailing) before any profit is realized. Easily millions before a single unit gets to market. They'll probably need to sell a half million of them to break even.

I know several coders personally that make over $100K a year.

 

[diazj3]

It's a very misleading list. It doesn't include overhead, software development costs, QA, etc. Without that, all you have is a pile of parts that doesn't do anything.

Hate these threads. It's a feeding trough for mass ignorance. Few people know how to price things appropriately.

I dont think I'll get an iPad - personally I don't have a use for it at whatever the price... but I agree: this post is completely pointless and misleading.

 

[coleridge78]

OK well, I'm going to strongly, strongly disagree with your strong, strong disagreement. No doubt not everyone needs 3G, but first of all doubling the number of models in inventory costs Apple. How much I don't know, but that's basic business economics, more SKU variants makes manufacturing + inventory harder and more expensive to manage. And as I said, it's fragmenting the user base for developers, plus it makes it harder to sell and buy used devices (YOU may not need 3G, but maybe the guy who might want to buy one from you in a year does). That goes for other things too, I doubt I'd use a camera on an iPad much, but just the same I'd rather see them build it into all of them if the cost isn't extreme. So yeah, I think charging $130 to add 3G is excessive (> 500% markup), but it's the fragmentation aspect that bothers me more than the price.

I hear you. But. While Apple is far from omnipotent or infallible they have a pretty solid track record for the past decade. They know a lot more than either of us what is likely to work, particularly with regards to segmentation. Again, I'll just note that the Touch experience may be instructive.

 

[HiRez]

Since I want to develop for this thing, I'm going to need to buy one to test on. I think my plan is to just buy the barebones 16 GB Wi-Fi model for that purpose (which will be available first anyway), then wait for version 2 for all the stuff they couldn't add, more memory at the same price, and for 3G/4G addition prices to get a little less out of whack. I think Apple will sell a lot of the low end model for this reason, and very few of the high end models, with the highest model carrying a 67% price premium over the lowest.

 

[Chupa Chupa]

This gonna be just like the iphone, Apple will release it, people will buy it, apple will rework the pricing, and everyone who already bought one will freak out.

Well, its a little different. The problem w/ the iPhone was that it was $600 AND required a min. $70/mo contract x 2 years. But I do expect Apple will do some reshuffling (no pun) at the iPod event in Sept. Apple is ramping the iPad up to be THE holiday gift of 2010.

 

[tetravus]

The iPad development efforts spanned nearly a decade of research, probably even more. With that kind of a long development cycle, R&D costs could easily run into hundreds of millions or even $1billion. A high initial price isn't unreasonable given the other costs not accounted for by iSuppli. People always complain that this costs too much or what not. Try designing and buliding one for yourself and see how much that costs you.

 

[bobertoq]

Yeah, this is ridiculous. It's not like Apple has to pay workers in the factory or delivery costs... And it's not like research and development actually cost money... And it most certainly isn't like Apple needs to make a profit... Anger!!

 

[lw9090]

Changed my Mind

Well I was going to get the 32GB 3G but now after seeing this I will not be getting one at all. Thats like 260% markup. This is ridiculous

 

[Jelite]

Prepare to be amazed.

 

[LagunaSol]

BTW, I can't believe all the whining in these threads. Just unbelievable.

I'll tell you what doesn't look good -- trolls underneath bridges.

Welcome to the new MacRumors forums.

Oh, and where's the outrage for those Windows 7 Ultimate and Adobe Creative Suite discs that cost pennies to press yet sell for hundreds (or many hundreds) of dollars? Where's the outrage???

 

[pondie84]

Well I was going to get the 32GB 3G but now after seeing this I will not be getting one at all.

Sure you were

 

[NT1440]

Welcome to the new MacRumors forums.
[/B]

This happens after any and all Apple events. The forums ignite for a few weeks, then settle down again.

 

[PsykX]

Manufacturing costs - 10 dollars?

How is that even possible? If everything's automated, then you have to include the cost of the machines. Say you bought the machine a million and you're gonna produce a million iPads with it, it makes $1 per iPad. And if there are 100 machines like this and the iPad is ready to go, then the iPad has a manufacturing cost of $100.

Even with Chinese people assembling it, I can simply not believe this cost.

Also they're missing the cost of the factory that does the iPad and everything related to it. If the factory's on a terrain worth $100 000 and uses $10 000 of electricity per year and they produce 10 000 iPads per year, it makes $11 more per iPad.

So much for this cost analysis... they certainly didn't get the class I got at University, eh... but then again, it's pure logic. Nobody needs a class for that lol

And the processor worth like $20 ? How is that possible? I can buy a calculator with nothing for that price. A processor HAS to be more expensive than that...