iPad Mini Component Costs Estimated to Begin at $188

[blackhand1001]

So production cost is 90 dollars for an extra 16GB flash memory? I paid the eq of 50 dollars for a class 10 (though 30MB/s read) microsd card capable of 64GB.. What's the deal with apple's flash memory for it to cost so much for them?

Yeah. I am not buying these so called cost estimates. It sounds more like propaganda to try to justify the price point of the iPad mini. The best flash around used in the 830 series samsung drives which are 10 times faster than the crap apple uses in its ios devices are under a dollar per gb. Apple also is certainly not paying retail prices for any of these components. They are paying the much lower negotiated wholesale price which these analysts have no idea what that really is.

 

[Popeye206]

There are A LOT more costs in bringing a product to market then just the build costs.

Correct and the people who think Apple should take the road of selling products for less and break even or take a loss on the product don't have a clue.

Amazon and the other tablet makers are either betting on content sales or trying to get market share by playing the loss-leader game of under pricing their products to attract the discount players. Both are risky and some will make it and many will fail.

Either way... if you don't think it's worth it... don't buy it. Simple.

Personally... I think you get what you pay for in most cases and so far all my Apple product purchases have been worth it.

 

[ajvizzgamer101]

iPad mini should cost $299 and have a retina.

 

[Patriot24]

You didn't really think they were going to sell the iPod Touch, iPad 2, and iPad Mini at the same $299 price point, did you?

 

[Dorfdad]

iPad mini should cost $299 and have a retina.

it might next year when sales die off..

 

[thiagos]

I call that BS. The iPad 2 which has the same processor (or close on speed) is selling for $299. No one truly knows what Apple pays for their components, it is just an estimate.
The Nexus tablet sells for $199. I agree, it has cheaper materials but it uses a much much faster quad core processor and the same amount of storage. The aluminum casing does not add $130 increase in price.
Apple has their own retail stores which most people usually buy it directly from which gives them a huge huge profit.
The iPad Mini is a rip off, in my opinion. It is a 2 year old iPad 2 cramped into a smaller case.
I am an Apple fan but I also know how to differentiate when I am being robbed by a company.

 

[Patriot24]

I call that BS. The iPad 2 which has the same processor (or close on speed) is selling for $299. No one truly knows what Apple pays for their components, it is just an estimate.
The Nexus tablet sells for $199. I agree, it has cheaper materials but it uses a much much faster quad core processor and the same amount of storage. The aluminum casing does not add $130 increase in price.
Apple has their own retail stores which most people usually buy it directly from which gives them a huge huge profit.
The iPad Mini is a rip off, in my opinion. It is a 2 year old iPad 2 cramped into a smaller case.
I am an Apple fan but I also know how to differentiate when I am being robbed by a company.

I'm not going to argue with you regarding Apple's margins, but it is important to note that both Google and Amazon have admitted that they sell their devices at a loss and intend to make up the difference in content sales. So, comparing those devices to Apple's iPad Mini in a 1:1 does not work.

To really understand the value, you would have to forecast out a year or more and factor in content value, app ecosystem value, etc. It isn't as simple as saying "this one costs less than that one, therefore _______".

 

[LagunaSol]

The Nexus tablet sells for $199. I agree, it has cheaper materials but it uses a much much faster quad core processor and the same amount of storage. The aluminum casing does not add $130 increase in price.

GOOGLE SELLS THE NEXUS AT COST SO THEY CAN SELL YOU TO ADVERTISERS.

Why is this fact so hard for some people to grasp?

I am an Apple fan but I also know how to differentiate when I am being robbed by a company.

Indeed comrade, how dare a company sell a product with a margin of profit! Capitalist pigs! The Google Collective loves you and gives you their products at cost. They subsidize your hardware needs because they exist only to advance the human race. Google is our benevolent dictator. Our Dear Leader. Join the hive! FORWARD!

/barf

 

[Will do good]

Just can't help shaking my head at this.

edit: I totally get why they do this. Honestly, the iPad mini doesn't really surprise me. But the iPhone 5? Wow are they selling that for a profit...Would it really kill them to ease off just a little, you know?

I could ask the same of BMW or Rolex...

----------

You know, that makes me sick... With the huge amount of product they sell, does the profit margins really need to be so high? 47% profit alone on the 16gb model. And what are they doing with the billion dollars they're getting from Samsung?

You know you don't have to buy it.

 

[blackhand1001]

GOOGLE SELLS THE NEXUS AT COST SO THEY CAN SELL YOU TO ADVERTISERS.

Why is this fact so hard for some people to grasp?



Indeed comrade, how dare a company sell a product with a margin of profit! Capitalist pigs! The Google Collective loves you and gives you their products at cost. They subsidize your hardware needs because they exist only to advance the human race. Google is our benevolent dictator. Our Dear Leader. Join the hive! FORWARD!

/barf

No they make a profit on the nexus 7. Look up the NVIDIA Kai. Asus was already building this tablet before google decided to make it a nexus device. NVIDIA specifically designed the kai tegra 3 platform to be able to make sub 200 dollars tablets that don't suck. These number that these analyst are throwing out are clearly inflated and simply propaganda to try to justify the price point of the iPad mini. Apple is not paying that much for flash. Samsung 830 series are under a dollar per gb and that flash is 10 times faster than the flash in the iPad. Not to mention the other components Apple is not paying retail prices for. They are paying their negotiated wholesale prices which these analysts don't have access to. The display certainly does not cost apple 80 dollars either. I replace lcd panels on all sorts of electronics and there is no way that a 7 inch lcd of the grade that apple is using costs that much regardless of some so called fancy process they say they use.

 

[thiagos]

GOOGLE SELLS THE NEXUS AT COST SO THEY CAN SELL YOU TO ADVERTISERS.

Why is this fact so hard for some people to grasp?



Indeed comrade, how dare a company sell a product with a margin of profit! Capitalist pigs! The Google Collective loves you and gives you their products at cost. They subsidize your hardware needs because they exist only to advance the human race. Google is our benevolent dictator. Our Dear Leader. Join the hive! FORWARD!

/barf

Ok Shakespeare. Your arrogance is almost blinding. If you choose to pay for an outdated item for the price of an up to date one, it is your choice but I am not buying this profit margin. Apple makes ton of money from the App store for each item they sell, if they want to continue on top of the game, they ought to make their customers happy.
So saying that Google sells your info to advertisers, it is the same thing as Apple making money on the App store PERIOD.
I think Apple products have to be more expensive than the other manufacturers because of the build quality and great software, I am not saying it would have to be the same price BUT $130 increase in price is absurd.
Now go back to the cave you came out of...

 

[Belly-laughs]

…

So saying that Google sells your info to advertisers, it is the same thing as Apple making money on the App store PERIOD...

if so, the extra $130 is a bargain.

 

[iGrip]

You know, that makes me sick... With the huge amount of product they sell, does the profit margins really need to be so high? 47% profit alone on the 16gb model. And what are they doing with the billion dollars they're getting from Samsung?

The profit margin is only one piece of the puzzle. Apple will charge whatever price, with whatever margin which will produce the greatest total amount of profit.

If Apple could make more money by charging less and selling more, that is what they would do. If they could make more money by charging more and selling less, that is what they would do.

Apple does not price its products in order to "be fair" or to "be good" or to "help people". They price their products in a manner so to funnel as much profit to the institutional investors on Wall Street as possible.

They don't care about value. They don't care about bang for the buck. They don't care about margins, except and to the extent that these factors help them to rake in total profits for their institutional owners.

They are a business. They are a huge megacorporation. They do not exist to make the world a better place. They do not exist to advance technology. They do not exist to make people's lives better.

They exist to take money out of your pocket and to give that money to Hedge Funds. As much money as possible, as often as possible.

Nothing more, nothing less.

 

[uknowimright]

and still people don't understand

Google does not sell your info

 

[Tech198]

Lol... What a profit.

Hey,, can't blame them for trying

The term of "people don't think about what goes into production" is barly holding any water.
The same can be applied to everthng else.

I would have said a $50 extra selling point would be ok,, but not this.

As people have already said "Too much" but Apple knew what they were doing.. They don't go into this blindly.

 

[iGrip]

Anyone who is freaking out about not having a retina display has likely not even held an iPad mini in person. The screen is actually pretty good.

When the most ringing endorsement you can muster is "actually pretty good", I think Apple can be glad that you are not a major media product review writer.

 

[BulletToothTony]

Or a rip-off.

it's only a rip off if Apple tells you you're getting something different than what you're getting.

If you know exactly what you're getting and you pay for it how is that a rip off?

Now it's a totally different story if you want one but you can't afford one so you say silly things on the internet.

 

[Bubba Satori]

It's a bargain at $329.

Hi Phil.

 

[Tech198]

"The report notes that approximately 43% of the device cost is related to the display, which adopts an expensive new process known as GF2 to reduce the part's thickness"

Think yourself lucky then it DIDN'T include a Retina display.

Maybe that's why.. The cost would be too high to produce.....

The iPad 3 never had this much trouble... Or did it wth cost?

Maybie Apple's not telling us the whole story.

 

[notjustjay]

I'll relate it in terms of a premium tequila. "Agave is just a plant that doesn't cost anything and the bottle only cost pennies! How dare they sell this for for $70? They're ripping off the consumer!"

Your example also called to mind that there are times when we don't seem to mind paying a huge markup for things. For example, ordering a bottled water or a soft drink from any restaurant or bar will cost you multiple times what it would cost you to buy one yourself from the grocery store. We're willing to pay for the service and within the context of the event (e.g. having a meal out, usually with friends or loved ones).

Likewise, we're paying for more than silicon and plastic parts when we buy a finished product like an iPad or any device, really.

As for the retina display: I went to have a look at an iPad mini this weekend at the local Apple Store. I didn't buy one (already have an iPad 3) but honestly don't think I would miss the retina screen on a display that small. As it was, I had to squint to see the pixels. It's sort of in a middle ground where you're not holding it inches from your face (like the iPhone) and the pixels are smaller than they would be in a full-size iPad.

 

[futbalguy]

A lot of comments in this thread are ridiculous. Apple sells at a price they think their product is worth and that people will pay. This has always been true. There have been very few cheap apple products in the last decade, if any. However, people generally pay it because the user experience is so good. If you think it is worth it then buy it, if not then dont buy it. They have always had products much more expensive compared to the competition but it generally works well and people find value. I wish they would have included a retina screen because it would make this product perfect for me. However, Apple knows this and is making a judgement that enough people will buy it without retina and then maybe purchase an updated model when retina comes out. I have a Mini and it is fantastic. I may return it because I do miss the clarity of the retina screen. I am surprised at all the bickering over pricing because this is Apple's normal pricing structure in my opinion.

 

[mrsir2009]

memory is so expensive these days.

Well, memory prices in all areas (HDD, SSD, RAM) are falling every day... But that doesn't stop Apple from applying the same huge markup they always do

 

[xofruitcake]

No they make a profit on the nexus 7. Look up the NVIDIA Kai. Asus was already building this tablet before google decided to make it a nexus device. NVIDIA specifically designed the kai tegra 3 platform to be able to make sub 200 dollars tablets that don't suck. These number that these analyst are throwing out are clearly inflated and simply propaganda to try to justify the price point of the iPad mini. Apple is not paying that much for flash. Samsung 830 series are under a dollar per gb and that flash is 10 times faster than the flash in the iPad. Not to mention the other components Apple is not paying retail prices for. They are paying their negotiated wholesale prices which these analysts don't have access to. The display certainly does not cost apple 80 dollars either. I replace lcd panels on all sorts of electronics and there is no way that a 7 inch lcd of the grade that apple is using costs that much regardless of some so called fancy process they say they use.

heh heh, if you don't believe Google will loss money on Nexus 7, I have a bridge to sell you. All this BOM analysis does not take into account for a lot of cost associate with manufacturing and selling of a device.

- Profit to the manufacturer
- broken parts during manufacturing
- rework cost - QA find a problem with the unit, off to rework which mean new part and labor. Workers make mistake along the manufacturing line, who is paying for their mistake both in term of time, material and fixing it?
- customization of the device - LTE in US is different than UK, Austrilia, Japan etc.. Who is paying for building different set of device for different country and make sure that they follow the local regularion and get approval from the local regulator?
- inventory cost - you know it cost money to stock all these components from the point that you supplier sent it to you to the point that you get money from your customers
- transportation cost - components from your suppliers to you assembly plant and the final product from the assembly plant to your home. How much do we need to pay Fedex or UPS like Apple did that ship the device to your home.
- Warranty cost - if someone want to return a device, who is paying for the repackaging of the boxes and sell the device as a refurb unit and at a lower price? What about replacing defective part down the road.
- Design cost - who is paying for the salary of the design engineer.
- what about reseller profit? Is Target or Walmart going to work for free in selling an Ipad mini or Nexus 7? Don't they need at least 15-20% margin to cover their cost in selling? What about Apple store? who is paying for the salary for those poor sales guy and genius who has to handle the customers.

The BOM is just part of the cost and every manufacturer has tons of other cost for selling a product. If Nexus 7 is priced only 15-20% above BOM cost, they can't even pay for the reseller profit + shipping. How do they break even?

----------

Well, memory prices in all areas (HDD, SSD, RAM) are falling every day... But that doesn't stop Apple from applying the same huge markup they always do

And this is from Apple earning conference call a couple weeks ago:

http://seekingalpha.com/article/952...arnings-call-transcript?page=5&p=qanda&l=last

We also added the iPad Mini to our iPad line-up. The iPad Mini has the full iPad experience, and we priced it aggressively at $329, delivering incredible value to our customers. Its gross margin is significantly below the corporate average.

So in summary, we expect our gross margin to decline by about 400 basis points sequentially

 

[Westacular]

So production cost is 90 dollars for an extra 16GB flash memory? I paid the eq of 50 dollars for a class 10 (though 30MB/s read) microsd card capable of 64GB.. What's the deal with apple's flash memory for it to cost so much for them?

I'm pretty sure the quote article was worded poorly, and the numbers quoted are the PROFITS, not the costs, for the extra memory. I.e., the incremental cost for 32 GB is $10, and 64 GB is $38.

 

[keeponwaitin]

This makes for next year update leading to a last-gen price drop of $229 very feasible for Apple considering prices of production would be much cheaper as time passes. Big IF they give $100 discount like the bigger ipad.