High cost of new iPad components drives down profit margins

2456

Comments

  • alexkhan2000alexkhan2000 Posts: 185member
    Quote:
    Originally Posted by Postulant View Post


    Is iSuppli privy to what Apple pays for components? With Apple's massive economy of scale, there's no telling what they are paying for components.



    I was thinking the same thing. How do they know what Apple is paying their suppliers when Apple is buying huge quantities and paying cash upfront?



    That being said, I'd have to agree that the components should definitely cost at least a little more than what they did for the iPad 2 last year.
  • tooltalktooltalk Posts: 766member
    Quote:
    Originally Posted by Tune View Post


    ...



    or maybe in Dell / HP for that matter.
  • vadaniavadania Posts: 425member
    Quote:
    Originally Posted by alexkhan2000 View Post


    I was thinking the same thing. How do they know what Apple is paying their suppliers when Apple is buying huge quantities and paying cash upfront?



    That being said, I'd have to agree that the components should definitely cost at least a little more than what they did for the iPad 2 last year.



    I may agree on the display, but...



    So, all of my schooling about "bleeding edge technology" and you think they're paying the same as they did LAST year?



    I don't have time to post the references like Sol, and I wish I could match Tallest's pics...



    Can you show me a link please of where the costs are "at least a little more", besides the new display...
  • carmissimocarmissimo Posts: 837member
    Apple is going to sell a lot more iPads with 32GB of memory and a lot fewer with 16GB. I bought an iPad 2 a few days ago and opted for the additional memory because apparently application sizes are going to increase as a result of having to upgrade graphics to accommodate the new high resolution display. Without much effort I ended up using up a lot of that memory.



    So whatever Apple loses in having to pay more for the Retina display, it makes up in selling a larger percentage of the versions with additional memory. Next year I think we'll see the 16GB models discontinued and a 128GB model added to the high-end version. That, a weight reduction, and some additional processing speed will be what we see in the next upgrade.
  • drdoppiodrdoppio Posts: 1,132member
    Quote:
    Originally Posted by AppleInsider View Post


    ...



    Because Apple maintains a static pricing strategy when new versions of existing product lines are released, the company will see a drop in profit margin that varies depending on the model.

    ...



    Oh, noes! What is Apple going to do! The profit margin is slipping!



    /s
  • uguysrnutsuguysrnuts Posts: 459member
    Gee. Apple's competitors has always seem to be about market share at the expense of any actual profits. I suppose that is the brilliant strategy Apple should be using.
  • jayrodojayrodo Posts: 12member
    Quote:
    Originally Posted by Red Oak View Post


    My hope is that the new retina display sets a new standard that consumers will expect. And in turn, sets a new hurdle that many of Apple's competitors cannot clear. This could really widen Apple's lead in tablets over the next 1-3 years



    While I agree with you that I hope the retina display set a new standard for consumers, I hope that Apple's competitors do clear that hurdle. That's when Apple will have to make something even better like holographic iPad screens!
  • minnesota_steveminnesota_steve Posts: 109member
    Prediction: Average margin will be roughly unchanged because a higher percentage of 4G & 32+ GB models will be sold than were for the iPad 2.



    Statement: iSuppli and other cost estimators have significant errors in their estimates.
  • neilmneilm Posts: 445member
    I had to read almost to the end of this article's fifth paragraph before the word "estimate" finally made its long-overdue appearance.



    And once again we have iSuppli estimating costs, including for proprietary parts whose prices aren't knowable, to 5 significant figures.



    So…pretty much rubbish then.
  • jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by maccherry View Post


    Damn! That is pretty technical. But we see now what has to be taken into consideration when you make stuff.



    Really? That information is so oversimplified as to be useless.



    First, I doubt if any of the components are within 15% of what Apple actually pays.



    Second, it doesn't include any of the non-component manufacturing costs (shipping, assembly, quality control, rework, overheads, packaging, testing, etc). It also doesn't include any of the non-manufacturing costs (tech support, development, design, marketing, sales, distributor discounts, etc).



    So if you consider that 'analysis' to be 'pretty technical', I'd suggest that you stay away from any careers in manufacturing or management.
  • lkrupplkrupp Posts: 4,200member
    Quote:
    Originally Posted by Macky the Macky View Post


    This is actually o-l-d news. Apple will lose some profit points overall, but with the iPad2 in the mix it will be minimal.



    Wall Street, however, will have a cow over this.
  • digitalclipsdigitalclips Posts: 15,553member
    Quote:
    Originally Posted by BUSHMAN4 View Post


    Nobody knows the real prices that Apple is paying for components. Naturally with the volume Apple is ordering they must get a great discount.



    That was my first thought. This is pretty much speculation based on guess work. I bet Tim got some pretty good deals.



    The good news is that with out the sort of volume Apple can buy at, no one else can make a tablet that comes close. The price of these components is even worse news for the Android clones and even for Microsoft's Win8 tablet.



    As I see it, by the time the Win8 tablet sees the light of day, supposedly Fall of 2012 we will already be reading the rumors of the upcoming iPad 4 due out, no doubt, March 2013. IMHO Microsoft are between a rock and a hard place in trying to get into this market.
  • digitalclipsdigitalclips Posts: 15,553member
    Quote:
    Originally Posted by lkrupp View Post


    Wall Street, however, will have a cow over this.



    These types of stories are probably manufactured by stock manipulators shorting AAPL.
  • dasanman69dasanman69 Posts: 12,512member
    Quote:
    Originally Posted by mstone View Post


    We'll make it up on volume



    Many here will argue against that business model.
  • dunksdunks Posts: 1,168member
    Quote:
    Originally Posted by AppleInsider View Post




    Although it was not plainly demarcated, the battery cell package is thought to be a Samsung product as well, which brings the company's share of BOM to nearly 50 percent.




    And yet Samsung tablets are 1/4 of the experience of using an iPad. \
  • dasanman69dasanman69 Posts: 12,512member
    Quote:
    Originally Posted by Dunks View Post


    And yet Samsung tablets are 1/4 of the experience of using an iPad. \



    Well in defense of Samsung its not the HW at fault but the OS and the lack of useful tablet specific apps.
  • quadra 610quadra 610 Posts: 6,566member
    Quote:
    Originally Posted by dasanman69 View Post


    Well in defense of Samsung its not the HW at fault but the OS and the lack of useful tablet specific apps.



    In defense of Samsung??



    There is no "defense of Samsung" possible, or any defense of anyone else who had every opportunity to change the game in 2007, and then again in 2010, but instead ended up trying to ape Apple.



    Where was Samsung's big January 2010 tablet unveiling? You know, the one where it would be the Samsung CEO sitting comfortably in that easy-chair giving the keynote and astounding the tech world. Or Samsung's opportunity in 2007 to say via their CEO in a landmark keynote "It's an iPod (well, not for Sammy), a phone, and an internet communicator . . . an iPod, a phone, and internet communicator . . ."



    What happened? All these game-changers, after which competing devices all began to look like them, (with some people not even being able to tell them apart: http://www.macrumors.com/2011/10/14/...axy-tab-apart/) have Apple logos on the back.
  • stelligentstelligent Posts: 2,680member
    Quote:
    Originally Posted by mstone View Post


    We'll make it up on volume



    Not totally sure about that (although such a statement can never be wrong either). Apple is not Amazon. Furthermore, these 3rd party estimates have been known to be way off. Does anyone remember a notable drop in GM when iPhone 4 with Retina Display (not to mention superior camera, faster processor, more RAM, etc.) came out?
  • suddenly newtonsuddenly newton Posts: 13,115member
    Quote:

    A teardown of the third-generation iPad reveals that the device costs at least $316 for Apple to build, more than the previous-generation iPad 2, which means lower margins for the company as the tablet's retail price point hasn't changed.



    It won't placate the "Apple is greedy" trolls.
  • dasanman69dasanman69 Posts: 12,512member
    Quote:
    Originally Posted by Quadra 610 View Post


    In defense of Samsung??



    There is no "defense of Samsung" possible, or any defense of anyone else who had every opportunity to change the game in 2007, and then again in 2010, but instead ended up trying to ape Apple.



    Where was Samsung's big January 2010 tablet unveiling? You know, the one where it would be the Samsung CEO sitting comfortably in that easy-chair giving the keynote and astounding the tech world. Or Samsung's opportunity in 2007 to say via their CEO in a landmark keynote "It's an iPod (well, not for Sammy), a phone, and an internet communicator . . . an iPod, a phone, and internet communicator . . ."



    What happened? All these game-changers, after which competing devices all began to look like them, (with some people not even being able to tell them apart: http://www.macrumors.com/2011/10/14/...axy-tab-apart/) have Apple logos on the back.



    Yea Samsungs lawyer screwed that up, the Galaxy Tabs aspect ratio is different form the iPad and that should've been evident in picking it out. HW hasn't been Samsungs strong suit for awhile but lots of what they've done in other areas can be argued has helped Apple build excellent devices.
Sign In or Register to comment.