Why do you think 3G is an extra $130? Is installing the 3G radio that expensive?

Discussion in 'iPad' started by Luba, Jan 30, 2010.

  1. Luba macrumors 6502a

    Luba

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    Apr 22, 2009
    #1
    I would have guessed an extra $50. An extra $130 seems like an odd number, perhaps $30 goes to at&t for not imposing a contract?? Even though it's unlocked, I read we can't use T-mobile's 3G because their 3G is on another frequency (1700 Ghz?).

    Europe and Asia have already 4G, and I think it's as fast as Wifi, wonder why there won't be a 4G version available for them?
     
  2. flopticalcube macrumors G4

    flopticalcube

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    #2
    Unsubsidized 3G USB sticks go for about $100 so its not out of line. Too bad Apple didn't make it a slot in the back or something so you could upgrade a non-3g to a 3g or 4g.
     
  3. goobot macrumors 603

    goobot

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    #3
    well i think it att's antenna so they make a lil $
     
  4. JoshJosh117, Jan 30, 2010
    Last edited: Feb 17, 2016
  5. alent1234 macrumors 603

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    #5
    patent royalties to GSM, qualcomm, nokia and others
     
  6. SnowLeopard2008 macrumors 604

    SnowLeopard2008

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    #6
    That would have terrible aesthetics. It'll be so easy to accidentally snap off. I think the reason it's $129 more is because of 1) AT&T 2) 3G hardware is ~$100 3) 3G model has A-GPS.

    One question, what's the difference between a normal GPS chip and the A-GPS I keep hearing about in newer netbooks (Nokia Booklet)?
     
  7. wikoogle macrumors 6502a

    wikoogle

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    Jun 12, 2009
    #7
    3G hardware is NO WHERE NEAR $130. Anyone that thinks it is doesn't have a clue.

    You can purchase 3G enabled phones overseas for the equivalent of $10 pretty much anywhere.

    Yes, a premium USB 3G stick will cost you $100 from Bestbuy.

    But guess what, bestbuy gets a $20-30 cut off of that price. The wholesaler who sold the product to bestbuy gets another $10 or so off of the price. The manufacturers gets another $20-30 dollars off of the price. The packaging costs, the shipping costs, the marketing costs for the USB sticks all that takes up the most of the rest of the costs. The actual 3G antenna itself costs a few dollars at most.

    The fact is, apple would be buying 3G antennas in bulk, millions of them directly from the factory, which means they would be getting them for probably less than a dollar each. The royalties might cost another dollar or so. To apple, a 3G iPad costs them no more than $4 more compared to an otherwise similarly equipped iPad.

    This is why 3G phones with those antennas inside them can be bought in Asia for $10.

    There is one reason and only one reason Apple is charging $130 for the 3G upgrade, because they want to milk the high end users with massive amounts of disposable income.

    Apple will only be making a $200 or so off of off each $499 iPad sold. This is no where near the profit margin Apple gets off of many of their other products. Apple probably gets close to a thousand dollars in profit for each $2000 Macbook Pro sold. Competing laptops will identical hardware sells for well under a $1000 (hell, I just picked up today a i5 processor laptop, with a hdmi port, a bluray player/drive and dvd burner, 4 Gigs of DDR ram, built in sd card reader, USB ports, wifi N, a dedicated graphics card, a 15.6 inch high res screen, a built-in webcam and a 320GB HDD (basically everything that people wanted the iPad to have and a crap ton more) for $499 from Best Buy) so saying that Apple only makes a $1000 off of each $2000 Macbook Pro they sell with far cheaper hardware inside is probably a significant low ball.

    Given that, the margins of a $200 they get from the $499 iPad is chump change. So how they make more margins? They offer a premium 3G version of the iPad for people with large amounts of disposable income who can afford another $30 per month for 3G data on top of what they already pay for 3G on their cellphone and mark that up by $130, and they offer a premium 64 gb version and mark that up another $200. Then a few months from now, they'll release a iPad Pro version with usb ports, a webcam, an sd reader, a hdmi out, double the ram to 512 mbs and charge $1500 for it, though it costs them no more than a few dollars to manufacture over a standard $499 iPad. And all the high end users who already bought the $829 iPad will throw those out and upgrade to the $1500 iPad.

    That's just how business works, makes the most money you possibly can, charge as much as you possibly can for your products, and mark up every upgrade as much as you can no matter how cheap it is for you to implement.
     
  8. hugodrax macrumors 6502a

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    #8
    The hardware is probably 15 bucks.

    What apple is doing is subsidizing the 499 model with the 3G profits.


    I suspect the 499 model is profit neutral since just the IPS LCD and components + software, distribution/packaging costs brings it up there.

    so they charge 130 bucks to make profits.

    I plan on getting the 64GB + 3G model though since I do not like carrying a laptop with me and I do not have a smartphone.
     
  9. Gav2k macrumors G3

    Gav2k

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    #9
    Your forgetting the remanufactured case factors in somewhat.
     
  10. bozzykid macrumors 68020

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    #10
    It has already been shown that the $499 iPad will profit Apple with close to $200. IPS is a lot more inexpensive than OLED, btw. They certainly aren't subsidizing the cheapest version.
     
  11. hugodrax macrumors 6502a

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    #11
    Where did you get the numbers? The R&D costs etc... do factor in the cost of hardware.
     
  12. Luba thread starter macrumors 6502a

    Luba

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    #12
    Which version do you think we would get the most value? Maybe the 64GB version with no 3G?

     
  13. MikeyTree macrumors 6502

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    #13
    The 3G version also has a GPS built in. 3G +GPS seems like enough added value to justify $130.
     
  14. jb1280 macrumors 6502a

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    Jan 13, 2009
    #14
    It's probably been mentioned elsewhere since Wednesday, but if you want mobile connectivity in a Dell Mini it's an additional $125...
     
  15. MikeyTree macrumors 6502

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    #15
    I'm curious about those numbers too. What does "$499 iPad will profit Apple with close to $200" mean? Does it mean that the manufacturing cost is $200 less than the sale price? If so, then Apple's costs will be much less than $200, especially if they sell through a retailer.
     
  16. samcraig macrumors P6

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    Jun 22, 2009
    #16
    Well here's a thought.

    Maybe Apple's deal with ATT is that in exchange for getting a no contract data plan - Apple is forking over XX per 3G device sold.

    So maybe ATT is getting $100 or even $50 per unit
     
  17. dukebound85 macrumors P6

    dukebound85

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    #18
    same reason that the mechanic charged me 400 on a part he paid 239 for....because they can

    Unfortunately, Apple will not negotiate the price like I did with my mechanic to get it cheaper
     
  18. ugp macrumors 65816

    ugp

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    #19
    I would rather pay the extra and have it the way they are doing the prepaid type service. I won't need to use the 3G all the time.
     
  19. Luba thread starter macrumors 6502a

    Luba

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    Apr 22, 2009
    #20
    I was thinking it's $29 they pay to att. $129 extra seems like an odd number when most of the time Apple charges in increments of $100 for upgraded features.

     
  20. colmaclean macrumors 68000

    colmaclean

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    #21
    I can imagine there will be some subsidised offers for the 3G model. Maybe not in the US, but Europe is used to this dynamic.
     
  21. StingerT125 macrumors 6502a

    StingerT125

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    #22
    I think both models have GPS according to the Tech Spec page:

    "Location
    Wi-Fi
    Digital compass
    Assisted GPS (Wi-Fi + 3G model)
    Cellular (Wi-Fi + 3G model)"
     
  22. colmaclean macrumors 68000

    colmaclean

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    #23
    Nope. There are two models...

    Wi-Fi
    Wi-Fi + 3G

    Only the Wi-Fi + 3G will have the last two features.
     
  23. paduck macrumors 6502

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    Jul 5, 2007
    #24
    Apple's gross margins (the cost of manufacturing a product compared with what they sell it for) is close to 40%. This is VERY good for the business they are in and something Apple has always striven for. They have lower gross margins on lower cost products and higher gross margins on higher cost products. Assume that they are hitting close to 45%-50% on the high-end iPad and about 30% or 25% on the low-end. They may even go lower since they are trying to drive this product's numbers.

    The $130 3G is probably something like $30-$50 up front to AT&T to get the good deal on product, plus chips, antenna, etc for another $40-$50 (installed) with the remaining $30 profit.

    Out of their profit, they fund overhead, admin, R&D, advertising, etc.

    The profit on the $499 iPad is probably no more than about $150 per unit. They may save some money since they are using their own processors. Which isn't too bad a deal for you, since Apple had to develop the thing and its software. I'm sure we'll see when the breakdowns inevitably come.
     
  24. StingerT125 macrumors 6502a

    StingerT125

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    #25
    Oh yeah, I was reading it wrong.
     

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