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iPad Component Costs Estimated to Begin at $219.35
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Apple did their R&D on the iPhone and charged a premium for it. They then spent very LITTLE R&D (in relative terms) for the iPod Touch which was more or less the same device running the same software... then they moved that winning combination over to the MaxiPad and again am running the same software. Hell, for the most part the shell of the hardware is even the same, with an exception for a more or less scaled up version on the Maxi.
I 100% agree with you guys on making a profit to cover R&D but in this case I believe the Apple fans have been duped if they think this is a revolutionary device. The other companies that are playing catch up, well, they can probably cry R&D on us as they'll likely be coming out with something new that wasn't subsidized by the previous Touch and iPhone profits.
I 100% agree with you guys on making a profit to cover R&D but in this case I believe the Apple fans have been duped if they think this is a revolutionary device. The other companies that are playing catch up, well, they can probably cry R&D on us as they'll likely be coming out with something new that wasn't subsidized by the previous Touch and iPhone profits.
WHO ARE YOU CALLING A TROLL?
First off I have a Mac and a Dell Notebook I like the Mac more so before you try to PWN3 me about being a Microsoft troll I would be careful what you say. First off I don't care about the iPad at this moment because I ****ing expected this just like every first generation Apple items okay. Another thing wtf is your ****ing problem on the last sentence? Why don't you go back to ****ing Neowin ASS!
The main memory is the "NAND Flash" line, ranging from $29.50 to $118.00. The $17 is for the A4 processor, with an additional $11 for the fast chip memory. $17 for the A4 seems ridiculously cheap, whether Apple made it themselves or not, though.
EDIT: corrected flash price.
Well, I don't think this device is "revolutionary" but having some software engineering experience I can tell you that it's not trivial either.
OK, so maybe hardware-wise it was "pretty simple", all they had to do was take the existing iPod touch, design a bigger case, wire up a bigger touchscreen, replace the CPU with a whole different chipset, you know, trivial stuff, right?
But software doesn't write itself. Those apps that you saw are not the same as the iPhone/iPod touch apps. Someone had to rewrite all of them. That's several months worth of effort for a team of programmers and testers each probably making $60-80K. And those new iWork apps? That's another several months of effort by a team of people. New API's, a new SDK, all of that needs to be designed, coded, tested, debugged, and so on.
Even if you assume the hardware R&D was "free" there's at least 6 months to a year's worth of software coding effort for an entire team of developers.
You'd be surprised how much energy and effort goes into even the simplest sounding things in big companies. For example, my team at work was tasked with a trivially simple job: receive one piece of hardware from a customer, upgrade the version of our software installed on it, test it, give it back. The actual meat of the job, "upgrade the software", took me just a few hours. The final estimate we gave to the customer was 3 weeks of effort by 3 different people. Why? Because we had to set up their hardware in our lab environment (1/2 day), test it (1/2 day), quash a few little integration bugs here and there (1 day), then once I was satisfied that it seemed to be working, a team of testers had to re-run an entire set of established test procedures (3 days), then write a new set of test reports (3 days), push them through the document review system, get the sign-off from the customer, ...
I'd be very surprised if Apple wasn't the same way.
Products are priced to maximize profits and sales.An item is worth what someone is willing to pay,not how much profit they are"willing"to let them have.In this case,Apple has a product for which there is no serious competition,and they feel their pricing will bring the best return on the stockholders'(Bosses)investment through unit salesxunit profits.If people(including)you feel it's not a good value and don't buy,the price will be adjusted to compensate.
Basically it's not up to you or me to approve the profit margin on an item.If it seems worth it to us we buy it,if not we don't.
Actually, the fanboi-to-rational ratio has been alarmingly low here for a while now...
Seriously, stop this @#$% talk. I think once you do some reading, you will find out that communism is NOT like you described!
So much cost goes unaccounted for here. R&D, marketing etc. Have to look deeper than what is itemized.
software
brian
what is costs of Iworks? MS words standalone cost an arm and leg, right. That is no hardware. Some phones cost that much.
brian
ipad price should have room for reduction as the ipad's release disappointed many apple fans.
Then explain why theaters do not check stubs when you enter the individual room. When I saw Avatar in 3d Imax, the did not ask for my stub, even though it was the most expensive ticket. Why can I go hop screens for the price of the cheapest ticket. They make their money on concessions, not on tickets. The ticket sales do go almost directly to Hollywood.
Sure "Dollar Theaters" do not pay the same as first run movies, but they usually have movies that are already on DVD or are about to be on DVD.
I see all of this nonsense about R&D being a justification for the pricing.
Please. That would fly IF AND ONLY IF there wasn't huge markups on things such as hard drive space. It's flash memory...not solid state memory. This is no different than anything else Mac does with respect to their pricing schemes. For their base models, ok fine...I get it and I don't really argue against their pricing. But once you start upgrading, that's when the price gouging begins.
For example, I see the value in a base model Mac Pro. But look at the price of RAM upgrades. Look at how much it costs to go from a 2.2 to a 2.8 Xeon. Then go to an online dealer and try to justify for the cost of components that Mac has NO HAND in developing that they (Mac) will resell to you for double or triple (or higher) what an online vendor will charge.
Most of the R&D is already figured into the prices of the components since Mac sources out most, if not all, of its components to the lowest bidder that meets their design specs like any other company. And if someone will argue about the processor, get ready for reality, and said reality is that it's not solely for the iPad. We'll see it in other products so unless ALL of these products are a flop, Mac will EASILY get their ROI within 12 months.
Even the OS is just an interpolation between Mac OSX and iPhone OS.
In other words if you subtract the 30% standard markup from the iPad you get $350. $350-$230 and there's your $120 per unit for R&D. For those who don't understand, "R&D" pays for staff wages, materials, and Steve Jobs' hipster doofus sneakers. Now multiply that by even 2 million units, a "failure" by industry standards, and you have nearly a quarter of a BILLION Dollars of gross revenue to compensate for your R&D. Sell 2 million more, and it's all gravy.
So please, someone, justify $840 for me for stuff that costs about $100 more. Again, Mac does this with nearly all of their products and only a few allow someone to avoid said "Apple Tax" and upgrade it themselves, such as the Mac Pro and save themselves $10,000. Again, price upgrades with the Mac store, then on newegg, and find out who Apple actually contracts out to make their products. Again, the lowest bidder who meets their specs. On that note, I dare anybody to say that the generic components Mac uses are superior to OCZ, GSkill, Mushkin, etc, using RAM as an example and see how far that argument gets you when talking to someone with a clue. Seeing that excuse so many times is what motivated me to join this forum.
Finally to those who say, "If you don't like it, don't buy it." I agree with you as I did plan to buy the base model until I found out about how little hard drive space they include, how I cannot listen to iTunes in the background when doing something else in the foreground, and no USB support on the unit itself (a cheap ploy to make you upgrade your hard drive IMO). The beauty of seeing these components broken down is just the exact argument I need to show it to those who keep whining for me to buy them one
Ok I'm done...come get me fanboys heh heh
Please. That would fly IF AND ONLY IF there wasn't huge markups on things such as hard drive space. It's flash memory...not solid state memory. This is no different than anything else Mac does with respect to their pricing schemes. For their base models, ok fine...I get it and I don't really argue against their pricing. But once you start upgrading, that's when the price gouging begins.
For example, I see the value in a base model Mac Pro. But look at the price of RAM upgrades. Look at how much it costs to go from a 2.2 to a 2.8 Xeon. Then go to an online dealer and try to justify for the cost of components that Mac has NO HAND in developing that they (Mac) will resell to you for double or triple (or higher) what an online vendor will charge.
Most of the R&D is already figured into the prices of the components since Mac sources out most, if not all, of its components to the lowest bidder that meets their design specs like any other company. And if someone will argue about the processor, get ready for reality, and said reality is that it's not solely for the iPad. We'll see it in other products so unless ALL of these products are a flop, Mac will EASILY get their ROI within 12 months.
Even the OS is just an interpolation between Mac OSX and iPhone OS.
In other words if you subtract the 30% standard markup from the iPad you get $350. $350-$230 and there's your $120 per unit for R&D. For those who don't understand, "R&D" pays for staff wages, materials, and Steve Jobs' hipster doofus sneakers. Now multiply that by even 2 million units, a "failure" by industry standards, and you have nearly a quarter of a BILLION Dollars of gross revenue to compensate for your R&D. Sell 2 million more, and it's all gravy.
So please, someone, justify $840 for me for stuff that costs about $100 more. Again, Mac does this with nearly all of their products and only a few allow someone to avoid said "Apple Tax" and upgrade it themselves, such as the Mac Pro and save themselves $10,000. Again, price upgrades with the Mac store, then on newegg, and find out who Apple actually contracts out to make their products. Again, the lowest bidder who meets their specs. On that note, I dare anybody to say that the generic components Mac uses are superior to OCZ, GSkill, Mushkin, etc, using RAM as an example and see how far that argument gets you when talking to someone with a clue. Seeing that excuse so many times is what motivated me to join this forum.
Finally to those who say, "If you don't like it, don't buy it." I agree with you as I did plan to buy the base model until I found out about how little hard drive space they include, how I cannot listen to iTunes in the background when doing something else in the foreground, and no USB support on the unit itself (a cheap ploy to make you upgrade your hard drive IMO). The beauty of seeing these components broken down is just the exact argument I need to show it to those who keep whining for me to buy them one
Ok I'm done...come get me fanboys heh heh
Prices are set by markets. They have nothing to do with what a thing costs to make.
If prices are not in line with the market, they don't sell.
The trick is to make a product that the market values MORE than the cost of production. In that way companies make something called "profit".
C.
If prices are not in line with the market, they don't sell.
The trick is to make a product that the market values MORE than the cost of production. In that way companies make something called "profit".
C.
WHO ARE YOU CALLING A TROLL?
Hey, I call 'em like I see 'em. And from your original post, you read like a old fashion troll. I understand a certain sect have issues with the iPad, and that some people wish it has more features. But when one outright trashes it as "beta...half ass technology," my friend, and fails to back it up with fact, those are the incendiary words of bored troll. You just state it as fact, as if you spent hours playing with the iPad already. (In fact, those did spend some time with the iPad a few weeks ago -- Leo Laporte, Andy Inatko, Mossberger, etc., have said its a solid device - but will live/die on s/w support).
As for the last sentence in my post, it's called satire. I poking fun of your statement you heard then next Apple tablet will have OS X. From Jobs' lips to your ears. Reality is you read that on a rumor site posted by someone else that doesn't have clue and can't afford to buy one either.
You are right its worse.
http://en.wikipedia.org/wiki/Holodomor
http://www.youtube.com/watch?v=fb7B1fHB_0I
http://www.dominicantoday.com/dr/local/2010/1/2/34363/Missing-Dominican-boatpeople-doing-forced-labor-in-Cuba
http://www.asianews.it/news-en/Olympics:-an-entire-village-arrested-for-protesting-against-pollution-12954.html
Would you quit deflecting
mad: !!!!) and face the issue at hand: The huge profits for Apple when you buy this product.Maybe you need some other POVs:
http://news.cnet.com/8301-13924_3-10450987-64.html
by TX-Sunset February 10, 2010 1:48 PM PST
Or do you want this just quietly swept under the carpet because it's your precious Apple we're talking about.
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!!
Or warranty replacements for the people obsessing over the one dead pixel in the upper left corner, or light leakage, or gray areas where it should be black.....
How much do people pay for software upgrades? $29 SL,$179 win 7.... How much does that media cost? 25 cents tops? That's a far higher mark up than an iPad.
Or warranty replacements for the people obsessing over the one dead pixel in the upper left corner, or light leakage, or gray areas where it should be black.....
How much do people pay for software upgrades? $29 SL,$179 win 7.... How much does that media cost? 25 cents tops? That's a far higher mark up than an iPad.
In fairness, light leakage and grey areas are unacceptable for media/graphic arts professionals but either way, is it really "demanding" to expect your product to be free from defects within the period of warranty? A defect is a defect and the warranty exists to rectify said defect. No more no less.
Also, in fairness, to upgrade from Tiger to Leopard is still in the mid $150 range on average. The $29 Snow Leopard revision is basically 10.5.9-10.5.11 since no Mac natively boots into 64 bit mode and the only application that functionally takes advantage of the 64 bit expansion is Logic 9.1. Most pro users have downgraded to Leopard and I'm getting to the point where I might follow suit if all of the nightmares of 10.6.2 aren't fixed with 10.6.3. Finally, I'd bet the farm that 10.7 will NOT be $29. It will probably be in the range of $129-$179 since Snow Leopard is, again, a "refinement" of Leopard with "0 new features" that is buying time for the next TRUE upgrade in 10.7.
Wow. The iPad is cheaper than Photoshop CS4. I wonder how Adobe gets away with marking that up to $699.
/sarcasm
I doubt there are more than a few posting here that are qualified to decide what a proper retail markup would be.
The reality is that Apple doesn't have to justify their prices. They can set it wherever they like and see what happens. Their financial reporting the last several years demonstrates their strategies and pricing are working very well.
/sarcasm
I doubt there are more than a few posting here that are qualified to decide what a proper retail markup would be.
The reality is that Apple doesn't have to justify their prices. They can set it wherever they like and see what happens. Their financial reporting the last several years demonstrates their strategies and pricing are working very well.
What about all of the other costs such as marketing, distribution, patent licensing, overhead, and retail cuts?
The numbers presented here aren't even gross margins because they don't include licensing and overhead. Let alone profit margins.
Apple's profit margins are historically under 15% with gross margins around 30%.
In the last couple years gross margins have skyrocketed over 40%. This jump is likely completely associated with the large revenue from iPhones which seem to have gross margins of 50% or more as a result of subsidies. All indications seem to be that margins still remain in the 30% range for other hardware products, if not less.
Look again at the numbers. It's all there in what I wrote. Note that I stopped at 30% standard markup to give them a gross (not net) profit of $120,000,000 per million units. That's IF they sold them at $350.
But they're selling them at $499. So that's an additional $150,000,000 per million.
Again I'm not saying that's a "bad" price. If it wasn't for the lack of certain fundamental capabilities that are not expensive and likely left out for a deliberate (and frankly ingenious reason for a marketing perspective) purpose of pushing future upgrades I'd be more than willing to pay a premium of 20-30%. But what I'm saying here is that they screw you when you start upgrading.
Look at Best Buy. They face all of the things that you mention and the standard markup rate is about 20-30% for a reseller. Now look at Mac who has their own storefronts. They have the 20-30% markup that boils down to a 5-7% net profit.
Add that on top of the $120,000,000 for "R&D" which is a generic term for all of those things that you mentioned rolled into one (Steve Jobs wearing casual wear onstage is a form of marketing to win the hearts and minds of those who trust him more because he looks like a "regular guy" and that's why I made the sneakers comment) neat package of marketing, depreciation, research, etc.
Remember that Apple doesn't build any of their own components. The LCD screens, 3G chips, flash drives, etc are all sourced out to the lowest builder that meets their specifications. Apple also keeps a very efficient and low inventory so turnover is fast and depreciation is low. Also, many components are usable in other systems. Ever notice how apple will use something and then phase it out without notice? Even now they use Firewire when eSATA is far faster. Now that SATA III and USB 3.0 is out, firewire is a joke. 6gig vs 800mb. The only reason anybody even uses firewire is because of Mac. Otherwise it's obsolete. Do you have any idea how hard it is for me to find a firewire cable these days? Yet in Mac (only) firewire is still the standard. But for how long? The point is that Mac dictates the value of their products and the only time something truly depreciates or becomes obsolete is when they decide it does.
Don't get me wrong. I use Mac more than I use PC. In fact I have several Mac Pros. There are certain things about Mac that I love since I use them as a pro. But everything else about the company turns my stomach...and the most staunch defenders of Mac (the people who use Mac as a fashion statement in a coffee shop or as furniture in their home) usually get lubed up and screwed the worst by the Company...well these days they don't even bother with the lube.