I was thinking the same thing. But likely they can determine the delta between the new parts and the old, leaving the "lower margin" conclusion intact, even if the exact number is, at best, suspect.
Lower gross margin does not necessarly result in a lower net margin. The initial iPad development costs have already been amortized out of the picture, so all they need to carry is the cost of updates.
I was thinking the same thing. But likely they can determine the delta between the new parts and the old, leaving the "lower margin" conclusion intact, even if the exact number is, at best, suspect.
Lower gross margin does not necessarly result in a lower net margin. The initial iPad development costs have already been amortized out of the picture, so all they need to carry is the cost of updates.
If Apple’s profit share of the global cellphone market is around 75% with only 9% market share by units, you gotta think that the profit share in the tablet market is close to 100% considering that Amazon is selling the Kindle Fire at a loss and many other other tablet makers have been blowing out their tablets at a loss as well (HP TouchPad, RIM PlayBook, etc.). Samsung itself has also said that it isn't doing well with the tablets.
Apple could afford to absorb the higher cost on this one although I think Apple is probably getting a better deal than what's listed on this external BOM. Apple seems set on maintaining these price points. The iPad pricing structure seems like an impregnable wall for the competition. It's still an "uphill" battle for the iPhone and Mac businesses in terms of market share but the iPad business is looking more like defending the fort from the mountaintop - kind of like what the iPod business has been over the past decade.
Could absorb the higher costs their already at 45 percent margin. I swear you guys make it sound like the new iPad is breaking the bank or something. Like the Amazon Fire it's all about the content. The iPad is to expensive, I bought the 32GB iPad and with all the new apps taking up a lot more space I now have 12GB free. After I upload my Music and eBooks that number is now 6GB, when I start buying iBooks I shudder to think at the space they will take up. They should have added a MiniSD card for the price they charged, over 700 dollars.
This have to be wrong. I understand that BOM are guesses, but they need to have some logic.
The A5X is an gigantic SoC. Larger SoC = more expensive to manufacture.
The 23 dollar price is calculated on a Wafer price of 5000 dollars and that you get about 220 die candidates from a wafer.
At least 10-20% of the dies will fail validation. + design cost + license cost to ARM and PowerVR.
Compare it to Tegra3. Its 50% smaller on a smaller 40nm process. Nvidia charges up to 50 dollar for it.
A5X is almost 5 times larger then Tegra2. Tegra2 cost 25 dollar to buy.
The A5X is a mess. This is clearly a desperate plan B SoC. Same old process node as A5. 45m. Not 40. 32 or 28nm.
Memory that is not integrated into the SoC.
The size of A5X is like an Intel Sandy Bridge CPU. The only good thing about being so big is that Iphone NeXT wont get this SoC. It wont fit inside a Iphone.
I really hope that Apple does something that they never have done before: A mid year processor bump of Ipad when 28nm is online. Much lower power consumtion, can probably shave of 10-20% of the battery to have the same weight as iPad2.
Worst case scenario is that we have to wait one year for the real Ipad"3".
Fixed SoC. New CPU/GPU + processor node. Fixed retina display (the Sharp power saving retina displaY), double Flash memory, real Siri, NFC, iOS6, integrated memory into the SoC. This is a must buy tablet. The "new" Ipad is just a retina display. 4 times the pixels. 0 more CPU and double GPU = slower then Ipad 2.
If Steve was alive he would have gone to TSMC and screamed at them for hours. "you said you could do it. How can you accept this incompetence? I give you a chance to change the world. To make a dent in it, and you blew it. We (apple) designed a chip to be manufactured by you. We spent thousend of man hours to design the most elegant chip that the world would have seen. You made validation and test wafers in june 2011, and still you cant deliver 9 month later? What's wrong with you? No elegance. No class. You F-ed us. We will never work with you again"
Tim Cook: "To bad that you at TSMC could not deliver. Its ok. You now have 6 more months to get it working before the Iphone launch. Good luck. We will postpone our computer line with A class SoC."
This have to be wrong. I understand that BOM are guesses, but they need to have some logic.
The A5X is an gigantic SoC. Larger SoC = more expensive to manufacture.
The 23 dollar price is calculated on a Wafer price of 5000 dollars and that you get about 220 die candidates from a wafer.
At least 10-20% of the dies will fail validation. + design cost + license cost to ARM and PowerVR.
Compare it to Tegra3. Its 50% smaller on a smaller 40nm process. Nvidia charges up to 50 dollar for it.
A5X is almost 5 times larger then Tegra2. Tegra2 cost 25 dollar to buy.
The A5X is a mess. This is clearly a desperate plan B SoC. Same old process node as A5. 45m. Not 40. 32 or 28nm.
Memory that is not integrated into the SoC.
The size of A5X is like an Intel Sandy Bridge CPU. The only good thing about being so big is that Iphone NeXT wont get this SoC. It wont fit inside a Iphone.
That is, of course, ridiculous.
The A5X does its job very well. By all reports, it's at least as fast as Tegra 3 and faster in most things. You see, Apple is focused on the results, not geeky little spec battles. And the results are excellent.
Not to mention, of course, that your 'facts' are wrong. Tegra 3 is not a $50 processor. Nvidia says it's $15-25:
16$, 32$ and 64$ more dollars per device would have bumped the storage to 32, 64 and 128gbs respectively, and since more storage would give people a higher insentive to buy more content from apple, it's arguable they would be making this money back from the content anyway.
They are being dishonest here though. The ipad might have the same price points, but storages of 16 and 32gbs are not viable anymore given the maturity and posibilities of the platform, as well as the ever increasing content and size of content provided by apple itself, and the demands on storage by the retina display. They are essentially then pushing most people to buy the high end model(s) where their profit margin is also the highest if they want a device with decent life span and usage possibilities. I am very disapointed with them for doing this, and like I said it's a shame, they would have still kept the same margins and made it up on content sales anyway...
And I also feel strategically it's going to come back and bite them in the ass when in a couple of months time androids with retinas from samsung with sd card slots are going to be popping up and they are left with plenty of embittered customers who own ipads otherwise great but crippled in capabilities by their limited storage. They are abusing their dominant position in the market here and being careless and greedy. As much as I admire them for coming up with the ipad and finally revolutionazing the tablet to what it is right now, and as much as I dislike both google and samsung, I will be happy when (it's not an if for me, it's when) they get what's coming to them for crippling this generation of ipad in terms of storage.
While I agree that the 16GB model is no longer viable for the average iPad purchaser, if you are an average iPad owner and can't figure out how to manage with 32GB, that's your problem and not on Apple. What's going to happen is that most consumers are simply not going to be cheap about their purchase and simply buy an iPad with at least 32GB. Fact is that the onus is on the consumer to make an informed purchase. If, for example, you purchase a car that seats two and then complain that five passengers will not fit, doesn't that reflect poorly on the purchaser more than the manufacturer. Shame on you, not Apple, if you buy a product that doesn't meet your needs. I would think that even the 16GB versions, especially with the iPad 2 models, can be adequate for some consumers. Those consumers are not being asked to pay for capacity they don't need, which is as it should be. Why should such a consumer be forced to subsidize your purchase of a product with additional memory. For example, I just bought an iPad 2 with 32GB and so far I'm thrilled with the purchase. I'm not going to have any major issues working with the available memory. Yet do I resent that by not making 32GB the minimum standard, I'm paying a premium to upgrade capacity. Absolutely not. Even with the added cost of opting for the additional memory, the iPad 2 still represents by far the best value in a tablet of that size. I don't doubt that there are consumers who would be fine with 16GB and for them, $399 US for a decent tablet is a great deal.
It sounds like you couldn't figure out how to manage with even 32GB and all I can say is, if you have special requirements, stop whining and pay for the additional storage.
Apple had particular price points to consider. They wanted to add a high-resolution screen and that meant a beefier battery, more expensive screen technology, and more processing muscle. To deliver that without increasing the base price something had to give and that something this time around is that the memory capacity remained unchanged.
For the next revision, where does Apple go. The screen resolution will probably never be bumped up from where it has just gone, at least not as long as the iPad is intended for use by humans. The next iPad will likely be lighter, with a step up in the processor and probably we'll see the memory doubled, at no additional leap in price. What is not reasonable, though, is to think Apple should have added in a leap in memory in addition to bringing out the new screen. Saving the memory upgrade for next year gives Apple something else to set the new model apart. In the meantime, as word spreads that 16GB isn't a good idea for many consumers, Apple will make additional profit by selling a larger percentage of 32GB and 64GB models. Yet, still, there are some consumers who can make do with a 16GB model, especially if it's the iPad 2.
Yes my iPad 2 cost the same as a 16GB iPad 3 but it's still very much worth what I paid. So far I'm finding that it is everything I'd hoped it would be. I'm willing to bet that I would already be regretting it if I had made the mistake of buying a competitor's tablet instead.
I think what you really don't understand is that the competition is so far behind in terms of offering a integrated, thoroughly evolved tablet experience that bringing out a batch of high-resolution competitors will do nothing to close the gap. And wait until you find out what the price tag will be for those high-resolution tablets. Apple will be able to get the technology a lot cheaper than the rest because of economies of scale. That can't help but be reflected in the cost passed down to consumers. I wouldn't be surprised if even with the premium paid to have more memory, the iPad will still come in at a lower cost than the alternatives.
It makes it less important to a certain extent, you can't cloud away 1.5 gb games and textbooks, or a minimal 50% increase in the combined storage for apps due to retina, you can't also cloud away much larger files for magazine subscriptions again due to the retina display, or 1080p movies from the iTunes stores. You can't also expect an iPad to store just a couple of movies, a couple of reference textbooks for uni/work, a few apps and a couple of games and then keep swapping on and off the cloud.
In any case we ll see how this plays out in the future which is the ultimate (although certainly not always fair or impartial) judge of people's and companies choices. I firmly believe apple have chosen unwisely and greedily here to save up a few $ per device when they already have more than adequate margins, volume in sales, and content to sell and recoup the extra $ for more storage. They have also chosen unwisely because one of their arch competitors is also one of their prime hardware manufacturers.
They carved the tablet market for themselves, they priced the iPad so competitively that no one managed to undercut them. They should have given everyone the coup de grace here by bumping the storages up considerably and completely dominating the tablet market. If people bite the bullet and get 16gb iPads and realise after a short while that storage is ridiculously low for their usage, and they can't even sell their device cause other people have realised this too, you bet apple are going to have a lot of embittered customers who are going to jump on the next tablet with an sd card around the corner and consider it the next best thing to sliced bread for giving them this flexibility. Then apple will have needlessly vindicated all those idiots blathering on about apple being restrictive to choice.
Ya' know this is getting a bit old... Like your endless rants about a matte display (now in your sig).
I have grandchildren who exhibit less of a "sense of self-entitlement" than you do... Grow up!
You can no more goad Apple into giving you exactly what you want than you can goad someone into liking you... Move on!
Yeah, people who buy hardware for bragging rights should probably buy something else. The A5X is clearly not 28nm enough for you.
Everyone else who wants the best tablet experience should buy a new iPad.
Exactly!
Apple has to concern themselves with what is doable at the quantities they want within the timeframe they want..
Sure Apple could call up the parts mfgrs and foundries and say we want the latest greatest spec'd whatever -- at this price... Now, all you need do is commit to delivering up to 10 million each for the next 6 months and up to 15 million each for the 3 months after that...
All we ask is that you prove you can deliver and agree to sign this damages agreement if you fail to deliver...
Sign here, please
Just as there are economies of scale there are penalties of scale...
Edit: The other lesson to be learned -- you don't change everything at once... remember MobileMe?
Ya' know this is getting a bit old... Like your endless rants about a matte display (now in your sig).
I have grandchildren who exhibit less of a "sense of self-entitlement" than you do... Grow up!
You can no more goad Apple into giving you exactly what you want than you can goad someone into liking you... Move on!
What are you on about? I haven't talked about a matte screen for more than two years. I am sorry you think this is a sense of entitlement to demand decent minimum storage specs for using the product as apple intended and consuming their content via their stores. Apple dropped the ball wih storage on iPad 3, and they have absolutely no excuse for no storage bumps in more than 2 years.
What are you on about? I haven't talked about a matte screen for more than two years. I am sorry you think this is a sense of entitlement to demand decent minimum storage specs for using the product as apple intended and consuming their content via their stores. Apple dropped the ball wih storage on iPad 3, and they have absolutely no excuse for no storage bumps in more than 2 years.
1) It's in your sig so you are posting about matte displays.
2) You are demanding that a company in a free market society bend to your whims. You certainly have the right to take that position but it's an egotistical, self-entitled position that you take.
3) If 64GB is not enough for you then don't buy an Apple product. Will a storage increase come next year? I t will, but this year the extra expense was put into the Retina Display which they deemed more important than doubling the capacity at the same price point. If it's a dumb business move on their part then you'll see the unit sales drop, if not, then you are once again wrong but I'm sure you will continue to tell us how Apple has once again wronged you.
This just proves how totally clueless certain people are. You know exactly who I'm talking about. I'm talking about the people who constantly whine and moan about there only being incremental updates. These people with their brilliant minds wouldn't even be able to run a lemonade stand, let alone running a tech company or deciding what sort of features are relevant for inclusion on a tablet.
For the same $499 price as the previous iPad, the new iPad features a display which is significantly more expensive than the previous display. Being on the cutting edge aint cheap homie. It's the best display ever to exist on any tablet. The NAND cost is the same, but the DRAM cost is almost double that of the previous version. The processor cost has also been greatly increased and the new camera costs three times as much as the old one. The higher capacity battery also costs a great deal more. Is it any coincidence that Apple is the first company to be able to release such a display in a $500 device?
The profit margin might be slightly less for Apple, but they'll still be making a pretty handsome profit which all other companies would kill for. While most other tablets are pieces of junk that should never have been made in the first place, the iPad is a technological marvel, a timeless classic that many have attempted to duplicate, but zero have succeeded in.
Quote:
Originally Posted by Vadania
So does this mean the "Apple tax" my guy friends are telling me I'm paying are false? Cool! I'm printing this article out. I'll put it under my 'smart' cover. )
Including the screen, RAM, upgraded graphics processing and camera while maintaining battery life at the same base price is indeed a technical and business achievement. Not even considering the app base and other parts of the ecosystem, Apple's control of the OS update cycles, etc., etc.
It's amazing to see.
However, speaking of margins, Apple taxes and "static pricing" - assuming these "best estimate" figures are anywhere in the ballpark - I truly don't get why Apple's marking up the 4G and higher storage parts so much more than the iPad itself - especially considering none of the more tricked out models sell as well, and for the storage, NO new engineering's required on a part that's likely cheaper than it was last year.
i.e., about $42+ in extra cost is going for $129 for 4G models - and on the iPad 2 3G variant, Apple's charging us the same $129 for $26 in extra build costs (and no new R&D). I'm all for healthy margins, but a 500% gross margin (on the iP 2) and 300% on the rest of the line upgrades seems, dare I say, a bit steep, even for Apple.
Now you could argue I just answered my own question - they sell fewer so need higher margins to justify their being in the line - but on the other hand, gouging for the 4G radio is part of what holds the sales of the cellular data models down.
This suggests Apple themselves see iPads as more of a Wi-Fi product and that the cellular models are more to make sure the market niche is covered so that no other manufacturer can attack them on that flank.
But then (in the established, traditional Apple manner) they're doing the same thing for (non-user upgradeable) memory. 32GB costs you $100 more and Apple about $16 more, while 64GB is $200 to you and $50 to Apple - leaving us again flirting with 4-500% margins (again, to be clear, on the upgrades, not the whole machine).
This is part and parcel of another historical fact about Apple - that it pushes under-equipped base models starved of optimal memory and storage - which actually detracts from their main selling point, the famous "user experience." One would think they'd offer the better equipped models at the same healthy margins as the rest of their products both to increase sales and improve that experience for more users. But over recent years at least, they haven't.
Surely the prices of SSD storage have been following the same downward curve as all silicon - and Apple certainly knows that App sizes, photo sizes, 1080 video sizes, iBook sizes, movie downloads etc. are going to rapidly fill up a 16GB model. Yet there's still no 128 GB model, and the models atop the 16GB are comparatively overpriced (along with the 4G's).
And unlike the case with Macs, your independent shop is NOT going to be able to upgrade these parts - storage and especially radio - after the fact at a more reasonable price. You're stuck with what you buy. Period. (Right??)
Now for my own needs I'm still going to be buy the 64GB 4G - but don't color me happy about knowing I'm taking a double whammy on both the radio and the memory!
That's $330 more to Apple for about $93 in extra build costs, i.e, a 355% margin on the upgrades.
I sincerely don't want Apple to lose their Jobsian mojo, but this aspect of model pricing is one I hope they revisit in the future.......
i.e., about $42+ in extra cost is going for $129 for 4G models - and on the iPad 2 3G variant, Apple's charging us the same $129 for $26 in extra build costs (and no new R&D). I'm all for healthy margins, but a 500% gross margin (on the iP 2) and 300% on the rest of the line upgrades seems, dare I say, a bit steep, even for Apple.
It's not just about the margins it's also about the total profit per unit. They have to take into account their cannibalising of higher-end models by introducing a new lower-end model.
Often we see a lower-end model get introduced to attract new buyers which can then be up sold, but if you're low end is a year old model with a significantly lower display resolution you probably need to consider that up selling isn't in the cards.
Quote:
Now you could argue I just answered my own question - they sell fewer so need higher margins to justify their being in the line - but on the other hand, gouging for the 4G radio is part of what holds the sales of the cellular data models down.
I'm not sure if you are using the term price gouging literally or not but I see nothing that is forcing you to buy the iPad at all, much less one with cellular connectivity, so suggesting that Apple is acting an in unlawful way will need to be supported. I also don't understand where you get your final tally for the total cost of the cellular addition, how you know it's accurate, and why you think that gross margin for an option excessive.
Quote:
Surely the prices of SSD storage have been following the same downward curve as all silicon - and Apple certainly knows that App sizes, photo sizes, 1080 video sizes, iBook sizes, movie downloads etc. are going to rapidly fill up a 16GB model. Yet there's still no 128 GB model, and the models atop the 16GB are comparatively overpriced (along with the 4G's).
They have, a little, but they also have plenty of road blocks. For instance, Moore's Law doesn't work with NAND flash so you can't expect that NAND will will get twice the capacity every two years. We're still dealing with the same density chips so only refinements to the process will effect the cost per GB.
Q: Do you think it would have been wise for Apple to not release the Retina Display iPad this year so it can double the capacity of the NAND flash?
I certainly don't think that would have been smart looking at the iPad APR being closer to the cheapest iPad price, not the most expensive. Apple surely knows what customers are buying.
Yet again, these tools at iSuppli publish figures that they effectively pull out of their arses and sites like this make comment based on them being valid. iSuppli have no insider knowledge, they have no idea what deals Apple or others made with manufacturers or assemblers and this 'estimates' should be taken with an iceberg sized pinch of salt.
This fact alone should nullify any comments based on their fanciful estimates.
However, speaking of margins, Apple taxes and "static pricing" - assuming these "best estimate" figures are anywhere in the ballpark - I truly don't get why Apple's marking up the 4G and higher storage parts so much more than the iPad itself - especially considering none of the more tricked out models sell as well, and for the storage, NO new engineering's required on a part that's likely cheaper than it was last year..
Simple. Pricing is determined by what the market will bear and has little or not connection to the cost to implement a feature.
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.
However, with windows 8, ms will tout selling millions of windows 8 licenses - IMHO it will fall upon the OEM's to make a competitive tablet.
I agree with you, that the OEM's will have a difficult time competing with the iPad on price, so I expect to hear them touting the "competitive edge" of windows compatibility.
Kinda how android tablets were touting the "competitive edge" of flash compatibility
The wildcard in all of this is ios 6 - which Apple is understandably holding their cards closely.
I'm not sure if you are using the term price gouging literally or not but I see nothing that is forcing you to buy the iPad at all, much less one with cellular connectivity, so suggesting that Apple is acting an in unlawful way will need to be supported. I also don't understand where you get your final tally for the total cost of the cellular addition, how you know it's accurate, and why you think that gross margin for an option excessive.
"Gouging" is not a legal term as I used it, just a pejorative one - and I know Apple's not alone in charging higher margins for upgrades. Happens in the auto biz all the time - where the "packs" add higher margins and then depreciate faster in the resale market than the rest of the car - as also happens with Apple gear.
In fact I buy 1-3 year old cars with all the upgrades for that very reason - it's like getting the leather, moon roof, and such for nearly nothing - but I want 4G and 64 GB NOW - and so will - being presumably of somewhat sound mind - pay the going freight for my iPad.
I'm also not questioning Apple's right to charge whatever they want, just suggesting that there are other approaches to consider that might work out as well or better for them AND their customers.
I'm definitely not anti-capitalist or anti-profit and I am anti-any-form-of-price-control, but I'm also always looking for the best win-win solutions, and find some value in Tony Blair's notions about "stakeholder capitalism" - with we buyers as one of the stakeholders to be considered.
So on second thought, your point is well taken and I wish I'd chosen a less "loaded" term (except, perhaps for still charging an extra $130 for the 3G radio on the iP 2!). Given that the $399 pricing for the iPad 2 is genius (and, yes, yes, yes, certainly "fair" to buyers for the value delivered), that one markup's, uhh, well, how about "arch" at least?
And, no, I don't know the figures I calculated from are accurate - but they're closer than anything else I have ready access to. At least AI keeps quoting iSuppli all the time.
However, the calculation I made was simple and simply taken from the chart by subtracting the estimated BOM's of the various devices from their selling prices to isolate the costs and prices of the upgrades, and therefore the margins on the upgrades alone. Just arithmetic from the charts.
Quote:
Originally Posted by SolipsismX
For instance, Moore's Law doesn't work with NAND flash so you can't expect that NAND will will get twice the capacity every two years. We're still dealing with the same density chips so only refinements to the process will effect the cost per GB.
Q: Do you think it would have been wise for Apple to not release the Retina Display iPad this year so it can double the capacity of the NAND flash?
I certainly don't think that would have been smart looking at the iPad APR being closer to the cheapest iPad price, not the most expensive. Apple surely knows what customers are buying.
PS: Doubling the capacity will come next year.
I think they got the feature set - AND PRICE - of the base model exactly right if the cost figures are fairly close. Totally a home run. Especially granting your point about NAND flash which I'm less knowledgeable about than you. (And my post led with that observation, in fact, as in describing it as "amazing.")
And I can settle for a 64GB being the top 2012 model with all the cloud options around. And am thrilled that 4G AND Retina resolution AND usable 1080p/5MP shooting AND great programs to edit and post them - all on one device - are all available this year. This IS far from an "incremental" or "modest" upgrade - and is in ways more than I'd even thought they could accomplish.
But I do think Apple's predilection for numbers ending in $99 could be revisited - and it might even boost sales (and eventual net profits) more IF it is even close to true that the 32GB model has a BOM of only $16 more than the 16GB, and the 64 costs Apple something like $50 more - i.e., in that case to reconsider the price of the models with more storage.
That is, I suggest (and it's just my suggestion, granted, though I have run several businesses for over 25 years - if far below AAPL scale), it might have been sound biz strategy to price the models at $499, $549 and $599 for the different NAND capacities - which would more than maintain gross margins and stimulate sales of the higher models (and be more useful to users).
And leave the rest of the tab manufacturers even more forlorn.
I was further going to say that adding $85 - or even $100 - for the (presumed) $43 radio costs rather than $130 would also have been a "good" move for both Apple and buyers - but on second thought, there were certainly R&D costs involved in moving to 4G - and the fact of the novelty of 4G being there with the battery life intact for a few grams of weight above the non-4G model - so I'll totally take back my grouse about that part based on your useful feedback.
But if the cost differential remains the same next year (when 4G has become a more power efficient and "commodity feature" in cell network devices)..... ...I'd re-make my suggestion then.
Quote:
Originally Posted by irnchriz
Yet again, these tools at iSuppli publish figures that they effectively pull out of their arses and sites like this make comment based on them being valid. iSuppli have no insider knowledge, they have no idea what deals Apple or others made with manufacturers or assemblers and this 'estimates' should be taken with an iceberg sized pinch of salt.
This fact alone should nullify any comments based on their fanciful estimates.
As above, what else do we have to go on? And some of this info has to be based on real industry sources - it's not ALL made up, even if you allow likely overall variances of, say, +/- 15% overall and much more on any particular component. Firms like iSuppli can be wrong a fair amount of the time, but can't go on for years on nothing (unlike many stock touts and "analysts," who can!).
What's more the iPad is not limited in internal space as the iPhone so apple did not have use the new toshi chip that's already in mass production since 4 months ago, they could have used two 64gb modules, which with their mega deals they get cheaper than anyone, and which by now, more than 2 years after iPad one, are considerably cheaper for the obvious scale manufacturing and refinement reasons.
Apple has elected to maintain their very generous profit margins and cripple the entry models of the iPad in terms of storage. 16 and 32gbs are by anyone's standards, anyone who isnt an apple slf appointed apologist very constricting for the intents and purposes of the iPad, especially so an iPad with retina display. If they were hardly sufficient on a non retina display iPad, on an iPad with no textbooks, 1080p camera, and 1080p videos to download, then on an iPad with all these features they are indeed crippling to the usage of the device. A device that unlike the macs does not lend itself to user upgradable storage. It also lowers the usage horizon of the iPad to a time span that is much more limited, and much more limited than any mac currently on the market.
Like I said I am going to buy the 64gb iPad as soon as I can and as soon as they tweak the first teething issues in production, namely the concern about heat in the lower left corner. Even if they can't address this, I am still going to purchase one. But I will not be happy with apple and the storage they offer me at this price, and I will Not be persuaded by anyone that I should be. I also hope both windows 8 and androids finally make themselves felt to apple because that's the only way they will start offering more to me as a customer.
While I agree that the 16GB model is no longer viable for the average iPad purchaser, if you are an average iPad owner and can't figure out how to manage with 32GB, that's your problem and not on Apple. What's going to happen is that most consumers are simply not going to be cheap about their purchase and simply buy an iPad with at least 32GB. Fact is that the onus is on the consumer to make an informed purchase. If, for example, you purchase a car that seats two and then complain that five passengers will not fit, doesn't that reflect poorly on the purchaser more than the manufacturer. Shame on you, not Apple, if you buy a product that doesn't meet your needs. I would think that even the 16GB versions, especially with the iPad 2 models, can be adequate for some consumers. Those consumers are not being asked to pay for capacity they don't need, which is as it should be. Why should such a consumer be forced to subsidize your purchase of a product with additional memory. For example, I just bought an iPad 2 with 32GB and so far I'm thrilled with the purchase. I'm not going to have any major issues working with the available memory. Yet do I resent that by not making 32GB the minimum standard, I'm paying a premium to upgrade capacity. Absolutely not. Even with the added cost of opting for the additional memory, the iPad 2 still represents by far the best value in a tablet of that size. I don't doubt that there are consumers who would be fine with 16GB and for them, $399 US for a decent tablet is a great deal.
It sounds like you couldn't figure out how to manage with even 32GB and all I can say is, if you have special requirements, stop whining and pay for the additional storage.
Apple had particular price points to consider. They wanted to add a high-resolution screen and that meant a beefier battery, more expensive screen technology, and more processing muscle. To deliver that without increasing the base price something had to give and that something this time around is that the memory capacity remained unchanged.
For the next revision, where does Apple go. The screen resolution will probably never be bumped up from where it has just gone, at least not as long as the iPad is intended for use by humans. The next iPad will likely be lighter, with a step up in the processor and probably we'll see the memory doubled, at no additional leap in price. What is not reasonable, though, is to think Apple should have added in a leap in memory in addition to bringing out the new screen. Saving the memory upgrade for next year gives Apple something else to set the new model apart. In the meantime, as word spreads that 16GB isn't a good idea for many consumers, Apple will make additional profit by selling a larger percentage of 32GB and 64GB models. Yet, still, there are some consumers who can make do with a 16GB model, especially if it's the iPad 2.
Yes my iPad 2 cost the same as a 16GB iPad 3 but it's still very much worth what I paid. So far I'm finding that it is everything I'd hoped it would be. I'm willing to bet that I would already be regretting it if I had made the mistake of buying a competitor's tablet instead.
I think what you really don't understand is that the competition is so far behind in terms of offering a integrated, thoroughly evolved tablet experience that bringing out a batch of high-resolution competitors will do nothing to close the gap. And wait until you find out what the price tag will be for those high-resolution tablets. Apple will be able to get the technology a lot cheaper than the rest because of economies of scale. That can't help but be reflected in the cost passed down to consumers. I wouldn't be surprised if even with the premium paid to have more memory, the iPad will still come in at a lower cost than the alternatives.
Why can't we have a miniSD card and be done with it? There're re now 64GB class 10 cards, I drool every time I think about all the samples I can store on that for my music creation apps. Sure you can pay the outrageous price for 64GB model but it still doesn't scale for the future. More and more people are using their iPads as their sole machine. It's time Apple caters to them.
Like a broken record; I want a miniSD card slot, a file manager so I can completely sever iTunes from the equation and last I want my iPad to be mounted as a normal drive when connected to any computer. You know standard features that are available on pretty much every phone and tablet that doesn't have a Apple on it. Yes, yes I know since Apple didn't give it to us in first place we don't need it, they no better.
Comments
I was thinking the same thing. But likely they can determine the delta between the new parts and the old, leaving the "lower margin" conclusion intact, even if the exact number is, at best, suspect.
Lower gross margin does not necessarly result in a lower net margin. The initial iPad development costs have already been amortized out of the picture, so all they need to carry is the cost of updates.
I was thinking the same thing. But likely they can determine the delta between the new parts and the old, leaving the "lower margin" conclusion intact, even if the exact number is, at best, suspect.
Lower gross margin does not necessarly result in a lower net margin. The initial iPad development costs have already been amortized out of the picture, so all they need to carry is the cost of updates.
If Apple’s profit share of the global cellphone market is around 75% with only 9% market share by units, you gotta think that the profit share in the tablet market is close to 100% considering that Amazon is selling the Kindle Fire at a loss and many other other tablet makers have been blowing out their tablets at a loss as well (HP TouchPad, RIM PlayBook, etc.). Samsung itself has also said that it isn't doing well with the tablets.
Apple could afford to absorb the higher cost on this one although I think Apple is probably getting a better deal than what's listed on this external BOM. Apple seems set on maintaining these price points. The iPad pricing structure seems like an impregnable wall for the competition. It's still an "uphill" battle for the iPhone and Mac businesses in terms of market share but the iPad business is looking more like defending the fort from the mountaintop - kind of like what the iPod business has been over the past decade.
Could absorb the higher costs their already at 45 percent margin. I swear you guys make it sound like the new iPad is breaking the bank or something. Like the Amazon Fire it's all about the content. The iPad is to expensive, I bought the 32GB iPad and with all the new apps taking up a lot more space I now have 12GB free. After I upload my Music and eBooks that number is now 6GB, when I start buying iBooks I shudder to think at the space they will take up. They should have added a MiniSD card for the price they charged, over 700 dollars.
This have to be wrong. I understand that BOM are guesses, but they need to have some logic.
The A5X is an gigantic SoC. Larger SoC = more expensive to manufacture.
The 23 dollar price is calculated on a Wafer price of 5000 dollars and that you get about 220 die candidates from a wafer.
At least 10-20% of the dies will fail validation. + design cost + license cost to ARM and PowerVR.
Compare it to Tegra3. Its 50% smaller on a smaller 40nm process. Nvidia charges up to 50 dollar for it.
A5X is almost 5 times larger then Tegra2. Tegra2 cost 25 dollar to buy.
The A5X is a mess. This is clearly a desperate plan B SoC. Same old process node as A5. 45m. Not 40. 32 or 28nm.
Memory that is not integrated into the SoC.
The size of A5X is like an Intel Sandy Bridge CPU. The only good thing about being so big is that Iphone NeXT wont get this SoC. It wont fit inside a Iphone.
I really hope that Apple does something that they never have done before: A mid year processor bump of Ipad when 28nm is online. Much lower power consumtion, can probably shave of 10-20% of the battery to have the same weight as iPad2.
Worst case scenario is that we have to wait one year for the real Ipad"3".
Fixed SoC. New CPU/GPU + processor node. Fixed retina display (the Sharp power saving retina displaY), double Flash memory, real Siri, NFC, iOS6, integrated memory into the SoC. This is a must buy tablet. The "new" Ipad is just a retina display. 4 times the pixels. 0 more CPU and double GPU = slower then Ipad 2.
If Steve was alive he would have gone to TSMC and screamed at them for hours. "you said you could do it. How can you accept this incompetence? I give you a chance to change the world. To make a dent in it, and you blew it. We (apple) designed a chip to be manufactured by you. We spent thousend of man hours to design the most elegant chip that the world would have seen. You made validation and test wafers in june 2011, and still you cant deliver 9 month later? What's wrong with you? No elegance. No class. You F-ed us. We will never work with you again"
Tim Cook: "To bad that you at TSMC could not deliver. Its ok. You now have 6 more months to get it working before the Iphone launch. Good luck. We will postpone our computer line with A class SoC."
"A5X costs an estimated $23"
This have to be wrong. I understand that BOM are guesses, but they need to have some logic.
The A5X is an gigantic SoC. Larger SoC = more expensive to manufacture.
The 23 dollar price is calculated on a Wafer price of 5000 dollars and that you get about 220 die candidates from a wafer.
At least 10-20% of the dies will fail validation. + design cost + license cost to ARM and PowerVR.
Compare it to Tegra3. Its 50% smaller on a smaller 40nm process. Nvidia charges up to 50 dollar for it.
A5X is almost 5 times larger then Tegra2. Tegra2 cost 25 dollar to buy.
The A5X is a mess. This is clearly a desperate plan B SoC. Same old process node as A5. 45m. Not 40. 32 or 28nm.
Memory that is not integrated into the SoC.
The size of A5X is like an Intel Sandy Bridge CPU. The only good thing about being so big is that Iphone NeXT wont get this SoC. It wont fit inside a Iphone.
That is, of course, ridiculous.
The A5X does its job very well. By all reports, it's at least as fast as Tegra 3 and faster in most things. You see, Apple is focused on the results, not geeky little spec battles. And the results are excellent.
Not to mention, of course, that your 'facts' are wrong. Tegra 3 is not a $50 processor. Nvidia says it's $15-25:
http://www.tegra3.org/tegra-3-set-fo...rofits-for-q3/
16$, 32$ and 64$ more dollars per device would have bumped the storage to 32, 64 and 128gbs respectively, and since more storage would give people a higher insentive to buy more content from apple, it's arguable they would be making this money back from the content anyway.
They are being dishonest here though. The ipad might have the same price points, but storages of 16 and 32gbs are not viable anymore given the maturity and posibilities of the platform, as well as the ever increasing content and size of content provided by apple itself, and the demands on storage by the retina display. They are essentially then pushing most people to buy the high end model(s) where their profit margin is also the highest if they want a device with decent life span and usage possibilities. I am very disapointed with them for doing this, and like I said it's a shame, they would have still kept the same margins and made it up on content sales anyway...
And I also feel strategically it's going to come back and bite them in the ass when in a couple of months time androids with retinas from samsung with sd card slots are going to be popping up and they are left with plenty of embittered customers who own ipads otherwise great but crippled in capabilities by their limited storage. They are abusing their dominant position in the market here and being careless and greedy. As much as I admire them for coming up with the ipad and finally revolutionazing the tablet to what it is right now, and as much as I dislike both google and samsung, I will be happy when (it's not an if for me, it's when) they get what's coming to them for crippling this generation of ipad in terms of storage.
While I agree that the 16GB model is no longer viable for the average iPad purchaser, if you are an average iPad owner and can't figure out how to manage with 32GB, that's your problem and not on Apple. What's going to happen is that most consumers are simply not going to be cheap about their purchase and simply buy an iPad with at least 32GB. Fact is that the onus is on the consumer to make an informed purchase. If, for example, you purchase a car that seats two and then complain that five passengers will not fit, doesn't that reflect poorly on the purchaser more than the manufacturer. Shame on you, not Apple, if you buy a product that doesn't meet your needs. I would think that even the 16GB versions, especially with the iPad 2 models, can be adequate for some consumers. Those consumers are not being asked to pay for capacity they don't need, which is as it should be. Why should such a consumer be forced to subsidize your purchase of a product with additional memory. For example, I just bought an iPad 2 with 32GB and so far I'm thrilled with the purchase. I'm not going to have any major issues working with the available memory. Yet do I resent that by not making 32GB the minimum standard, I'm paying a premium to upgrade capacity. Absolutely not. Even with the added cost of opting for the additional memory, the iPad 2 still represents by far the best value in a tablet of that size. I don't doubt that there are consumers who would be fine with 16GB and for them, $399 US for a decent tablet is a great deal.
It sounds like you couldn't figure out how to manage with even 32GB and all I can say is, if you have special requirements, stop whining and pay for the additional storage.
Apple had particular price points to consider. They wanted to add a high-resolution screen and that meant a beefier battery, more expensive screen technology, and more processing muscle. To deliver that without increasing the base price something had to give and that something this time around is that the memory capacity remained unchanged.
For the next revision, where does Apple go. The screen resolution will probably never be bumped up from where it has just gone, at least not as long as the iPad is intended for use by humans. The next iPad will likely be lighter, with a step up in the processor and probably we'll see the memory doubled, at no additional leap in price. What is not reasonable, though, is to think Apple should have added in a leap in memory in addition to bringing out the new screen. Saving the memory upgrade for next year gives Apple something else to set the new model apart. In the meantime, as word spreads that 16GB isn't a good idea for many consumers, Apple will make additional profit by selling a larger percentage of 32GB and 64GB models. Yet, still, there are some consumers who can make do with a 16GB model, especially if it's the iPad 2.
Yes my iPad 2 cost the same as a 16GB iPad 3 but it's still very much worth what I paid. So far I'm finding that it is everything I'd hoped it would be. I'm willing to bet that I would already be regretting it if I had made the mistake of buying a competitor's tablet instead.
I think what you really don't understand is that the competition is so far behind in terms of offering a integrated, thoroughly evolved tablet experience that bringing out a batch of high-resolution competitors will do nothing to close the gap. And wait until you find out what the price tag will be for those high-resolution tablets. Apple will be able to get the technology a lot cheaper than the rest because of economies of scale. That can't help but be reflected in the cost passed down to consumers. I wouldn't be surprised if even with the premium paid to have more memory, the iPad will still come in at a lower cost than the alternatives.
It makes it less important to a certain extent, you can't cloud away 1.5 gb games and textbooks, or a minimal 50% increase in the combined storage for apps due to retina, you can't also cloud away much larger files for magazine subscriptions again due to the retina display, or 1080p movies from the iTunes stores. You can't also expect an iPad to store just a couple of movies, a couple of reference textbooks for uni/work, a few apps and a couple of games and then keep swapping on and off the cloud.
In any case we ll see how this plays out in the future which is the ultimate (although certainly not always fair or impartial) judge of people's and companies choices. I firmly believe apple have chosen unwisely and greedily here to save up a few $ per device when they already have more than adequate margins, volume in sales, and content to sell and recoup the extra $ for more storage. They have also chosen unwisely because one of their arch competitors is also one of their prime hardware manufacturers.
They carved the tablet market for themselves, they priced the iPad so competitively that no one managed to undercut them. They should have given everyone the coup de grace here by bumping the storages up considerably and completely dominating the tablet market. If people bite the bullet and get 16gb iPads and realise after a short while that storage is ridiculously low for their usage, and they can't even sell their device cause other people have realised this too, you bet apple are going to have a lot of embittered customers who are going to jump on the next tablet with an sd card around the corner and consider it the next best thing to sliced bread for giving them this flexibility. Then apple will have needlessly vindicated all those idiots blathering on about apple being restrictive to choice.
Ya' know this is getting a bit old... Like your endless rants about a matte display (now in your sig).
I have grandchildren who exhibit less of a "sense of self-entitlement" than you do... Grow up!
You can no more goad Apple into giving you exactly what you want than you can goad someone into liking you... Move on!
The A5X is a mess. This is clearly a desperate plan B SoC. Same old process node as A5. 45m. Not 40. 32 or 28nm.
Yeah, people who buy hardware for bragging rights should probably buy something else. The A5X is clearly not 28nm enough for you.
Everyone else who wants the best tablet experience should buy a new iPad.
Yeah, people who buy hardware for bragging rights should probably buy something else. The A5X is clearly not 28nm enough for you.
Everyone else who wants the best tablet experience should buy a new iPad.
Exactly!
Apple has to concern themselves with what is doable at the quantities they want within the timeframe they want..
Sure Apple could call up the parts mfgrs and foundries and say we want the latest greatest spec'd whatever -- at this price... Now, all you need do is commit to delivering up to 10 million each for the next 6 months and up to 15 million each for the 3 months after that...
All we ask is that you prove you can deliver and agree to sign this damages agreement if you fail to deliver...
Sign here, please
Just as there are economies of scale there are penalties of scale...
Edit: The other lesson to be learned -- you don't change everything at once... remember MobileMe?
Ya' know this is getting a bit old... Like your endless rants about a matte display (now in your sig).
I have grandchildren who exhibit less of a "sense of self-entitlement" than you do... Grow up!
You can no more goad Apple into giving you exactly what you want than you can goad someone into liking you... Move on!
What are you on about? I haven't talked about a matte screen for more than two years. I am sorry you think this is a sense of entitlement to demand decent minimum storage specs for using the product as apple intended and consuming their content via their stores. Apple dropped the ball wih storage on iPad 3, and they have absolutely no excuse for no storage bumps in more than 2 years.
What are you on about? I haven't talked about a matte screen for more than two years. I am sorry you think this is a sense of entitlement to demand decent minimum storage specs for using the product as apple intended and consuming their content via their stores. Apple dropped the ball wih storage on iPad 3, and they have absolutely no excuse for no storage bumps in more than 2 years.
1) It's in your sig so you are posting about matte displays.
2) You are demanding that a company in a free market society bend to your whims. You certainly have the right to take that position but it's an egotistical, self-entitled position that you take.
3) If 64GB is not enough for you then don't buy an Apple product. Will a storage increase come next year? I t will, but this year the extra expense was put into the Retina Display which they deemed more important than doubling the capacity at the same price point. If it's a dumb business move on their part then you'll see the unit sales drop, if not, then you are once again wrong but I'm sure you will continue to tell us how Apple has once again wronged you.
This just proves how totally clueless certain people are. You know exactly who I'm talking about. I'm talking about the people who constantly whine and moan about there only being incremental updates. These people with their brilliant minds wouldn't even be able to run a lemonade stand, let alone running a tech company or deciding what sort of features are relevant for inclusion on a tablet.
For the same $499 price as the previous iPad, the new iPad features a display which is significantly more expensive than the previous display. Being on the cutting edge aint cheap homie. It's the best display ever to exist on any tablet. The NAND cost is the same, but the DRAM cost is almost double that of the previous version. The processor cost has also been greatly increased and the new camera costs three times as much as the old one. The higher capacity battery also costs a great deal more. Is it any coincidence that Apple is the first company to be able to release such a display in a $500 device?
The profit margin might be slightly less for Apple, but they'll still be making a pretty handsome profit which all other companies would kill for. While most other tablets are pieces of junk that should never have been made in the first place, the iPad is a technological marvel, a timeless classic that many have attempted to duplicate, but zero have succeeded in.
So does this mean the "Apple tax" my guy friends are telling me I'm paying are false? Cool! I'm printing this article out. I'll put it under my 'smart' cover.
Including the screen, RAM, upgraded graphics processing and camera while maintaining battery life at the same base price is indeed a technical and business achievement. Not even considering the app base and other parts of the ecosystem, Apple's control of the OS update cycles, etc., etc.
It's amazing to see.
However, speaking of margins, Apple taxes and "static pricing" - assuming these "best estimate" figures are anywhere in the ballpark - I truly don't get why Apple's marking up the 4G and higher storage parts so much more than the iPad itself - especially considering none of the more tricked out models sell as well, and for the storage, NO new engineering's required on a part that's likely cheaper than it was last year. Now you could argue I just answered my own question - they sell fewer so need higher margins to justify their being in the line - but on the other hand, gouging for the 4G radio is part of what holds the sales of the cellular data models down.
This suggests Apple themselves see iPads as more of a Wi-Fi product and that the cellular models are more to make sure the market niche is covered so that no other manufacturer can attack them on that flank.
But then (in the established, traditional Apple manner) they're doing the same thing for (non-user upgradeable) memory. 32GB costs you $100 more and Apple about $16 more, while 64GB is $200 to you and $50 to Apple - leaving us again flirting with 4-500% margins (again, to be clear, on the upgrades, not the whole machine).
This is part and parcel of another historical fact about Apple - that it pushes under-equipped base models starved of optimal memory and storage - which actually detracts from their main selling point, the famous "user experience." One would think they'd offer the better equipped models at the same healthy margins as the rest of their products both to increase sales and improve that experience for more users. But over recent years at least, they haven't.
Surely the prices of SSD storage have been following the same downward curve as all silicon - and Apple certainly knows that App sizes, photo sizes, 1080 video sizes, iBook sizes, movie downloads etc. are going to rapidly fill up a 16GB model. Yet there's still no 128 GB model, and the models atop the 16GB are comparatively overpriced (along with the 4G's). Now for my own needs I'm still going to be buy the 64GB 4G - but don't color me happy about knowing I'm taking a double whammy on both the radio and the memory!
I sincerely don't want Apple to lose their Jobsian mojo, but this aspect of model pricing is one I hope they revisit in the future.......
i.e., about $42+ in extra cost is going for $129 for 4G models - and on the iPad 2 3G variant, Apple's charging us the same $129 for $26 in extra build costs (and no new R&D). I'm all for healthy margins, but a 500% gross margin (on the iP 2) and 300% on the rest of the line upgrades seems, dare I say, a bit steep, even for Apple.
It's not just about the margins it's also about the total profit per unit. They have to take into account their cannibalising of higher-end models by introducing a new lower-end model.
Often we see a lower-end model get introduced to attract new buyers which can then be up sold, but if you're low end is a year old model with a significantly lower display resolution you probably need to consider that up selling isn't in the cards.
Now you could argue I just answered my own question - they sell fewer so need higher margins to justify their being in the line - but on the other hand, gouging for the 4G radio is part of what holds the sales of the cellular data models down.
I'm not sure if you are using the term price gouging literally or not but I see nothing that is forcing you to buy the iPad at all, much less one with cellular connectivity, so suggesting that Apple is acting an in unlawful way will need to be supported. I also don't understand where you get your final tally for the total cost of the cellular addition, how you know it's accurate, and why you think that gross margin for an option excessive.
Surely the prices of SSD storage have been following the same downward curve as all silicon - and Apple certainly knows that App sizes, photo sizes, 1080 video sizes, iBook sizes, movie downloads etc. are going to rapidly fill up a 16GB model. Yet there's still no 128 GB model, and the models atop the 16GB are comparatively overpriced (along with the 4G's).
They have, a little, but they also have plenty of road blocks. For instance, Moore's Law doesn't work with NAND flash so you can't expect that NAND will will get twice the capacity every two years. We're still dealing with the same density chips so only refinements to the process will effect the cost per GB.I certainly don't think that would have been smart looking at the iPad APR being closer to the cheapest iPad price, not the most expensive. Apple surely knows what customers are buying.
PS: Doubling the capacity will come next year.
This fact alone should nullify any comments based on their fanciful estimates.
However, speaking of margins, Apple taxes and "static pricing" - assuming these "best estimate" figures are anywhere in the ballpark - I truly don't get why Apple's marking up the 4G and higher storage parts so much more than the iPad itself - especially considering none of the more tricked out models sell as well, and for the storage, NO new engineering's required on a part that's likely cheaper than it was last year..
Simple. Pricing is determined by what the market will bear and has little or not connection to the cost to implement a feature.
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.
However, with windows 8, ms will tout selling millions of windows 8 licenses - IMHO it will fall upon the OEM's to make a competitive tablet.
I agree with you, that the OEM's will have a difficult time competing with the iPad on price, so I expect to hear them touting the "competitive edge" of windows compatibility.
Kinda how android tablets were touting the "competitive edge" of flash compatibility
The wildcard in all of this is ios 6 - which Apple is understandably holding their cards closely.
We'll make it up on volume
Partially, but I think AppleCare+ is actually where these margins will be substantially improved.
I'm not sure if you are using the term price gouging literally or not but I see nothing that is forcing you to buy the iPad at all, much less one with cellular connectivity, so suggesting that Apple is acting an in unlawful way will need to be supported. I also don't understand where you get your final tally for the total cost of the cellular addition, how you know it's accurate, and why you think that gross margin for an option excessive.
"Gouging" is not a legal term as I used it, just a pejorative one - and I know Apple's not alone in charging higher margins for upgrades. Happens in the auto biz all the time - where the "packs" add higher margins and then depreciate faster in the resale market than the rest of the car - as also happens with Apple gear. I'm also not questioning Apple's right to charge whatever they want, just suggesting that there are other approaches to consider that might work out as well or better for them AND their customers.
I'm definitely not anti-capitalist or anti-profit and I am anti-any-form-of-price-control, but I'm also always looking for the best win-win solutions, and find some value in Tony Blair's notions about "stakeholder capitalism" - with we buyers as one of the stakeholders to be considered.
So on second thought, your point is well taken and I wish I'd chosen a less "loaded" term (except, perhaps for still charging an extra $130 for the 3G radio on the iP 2!). Given that the $399 pricing for the iPad 2 is genius (and, yes, yes, yes, certainly "fair" to buyers for the value delivered), that one markup's, uhh, well, how about "arch" at least?
And, no, I don't know the figures I calculated from are accurate - but they're closer than anything else I have ready access to. At least AI keeps quoting iSuppli all the time.
However, the calculation I made was simple and simply taken from the chart by subtracting the estimated BOM's of the various devices from their selling prices to isolate the costs and prices of the upgrades, and therefore the margins on the upgrades alone. Just arithmetic from the charts.
For instance, Moore's Law doesn't work with NAND flash so you can't expect that NAND will will get twice the capacity every two years. We're still dealing with the same density chips so only refinements to the process will effect the cost per GB.I certainly don't think that would have been smart looking at the iPad APR being closer to the cheapest iPad price, not the most expensive. Apple surely knows what customers are buying.
PS: Doubling the capacity will come next year.
I think they got the feature set - AND PRICE - of the base model exactly right if the cost figures are fairly close. Totally a home run. Especially granting your point about NAND flash which I'm less knowledgeable about than you. (And my post led with that observation, in fact, as in describing it as "amazing.")
And I can settle for a 64GB being the top 2012 model with all the cloud options around. And am thrilled that 4G AND Retina resolution AND usable 1080p/5MP shooting AND great programs to edit and post them - all on one device - are all available this year. This IS far from an "incremental" or "modest" upgrade - and is in ways more than I'd even thought they could accomplish.
But I do think Apple's predilection for numbers ending in $99 could be revisited - and it might even boost sales (and eventual net profits) more IF it is even close to true that the 32GB model has a BOM of only $16 more than the 16GB, and the 64 costs Apple something like $50 more - i.e., in that case to reconsider the price of the models with more storage.
That is, I suggest (and it's just my suggestion, granted, though I have run several businesses for over 25 years - if far below AAPL scale), it might have been sound biz strategy to price the models at $499, $549 and $599 for the different NAND capacities - which would more than maintain gross margins and stimulate sales of the higher models (and be more useful to users).
And leave the rest of the tab manufacturers even more forlorn.
I was further going to say that adding $85 - or even $100 - for the (presumed) $43 radio costs rather than $130 would also have been a "good" move for both Apple and buyers - but on second thought, there were certainly R&D costs involved in moving to 4G - and the fact of the novelty of 4G being there with the battery life intact for a few grams of weight above the non-4G model - so I'll totally take back my grouse about that part based on your useful feedback.
But if the cost differential remains the same next year (when 4G has become a more power efficient and "commodity feature" in cell network devices)..... ...I'd re-make my suggestion then.
Yet again, these tools at iSuppli publish figures that they effectively pull out of their arses and sites like this make comment based on them being valid. iSuppli have no insider knowledge, they have no idea what deals Apple or others made with manufacturers or assemblers and this 'estimates' should be taken with an iceberg sized pinch of salt.
This fact alone should nullify any comments based on their fanciful estimates.
As above, what else do we have to go on? And some of this info has to be based on real industry sources - it's not ALL made up, even if you allow likely overall variances of, say, +/- 15% overall and much more on any particular component. Firms like iSuppli can be wrong a fair amount of the time, but can't go on for years on nothing (unlike many stock touts and "analysts," who can!).
Solipsism is incorrect, we are not still dealing Witt the same density chips, http://www.phonearena.com/news/Toshi...phones_id18322
What's more the iPad is not limited in internal space as the iPhone so apple did not have use the new toshi chip that's already in mass production since 4 months ago, they could have used two 64gb modules, which with their mega deals they get cheaper than anyone, and which by now, more than 2 years after iPad one, are considerably cheaper for the obvious scale manufacturing and refinement reasons.
Apple has elected to maintain their very generous profit margins and cripple the entry models of the iPad in terms of storage. 16 and 32gbs are by anyone's standards, anyone who isnt an apple slf appointed apologist very constricting for the intents and purposes of the iPad, especially so an iPad with retina display. If they were hardly sufficient on a non retina display iPad, on an iPad with no textbooks, 1080p camera, and 1080p videos to download, then on an iPad with all these features they are indeed crippling to the usage of the device. A device that unlike the macs does not lend itself to user upgradable storage. It also lowers the usage horizon of the iPad to a time span that is much more limited, and much more limited than any mac currently on the market.
Like I said I am going to buy the 64gb iPad as soon as I can and as soon as they tweak the first teething issues in production, namely the concern about heat in the lower left corner. Even if they can't address this, I am still going to purchase one. But I will not be happy with apple and the storage they offer me at this price, and I will Not be persuaded by anyone that I should be. I also hope both windows 8 and androids finally make themselves felt to apple because that's the only way they will start offering more to me as a customer.
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While I agree that the 16GB model is no longer viable for the average iPad purchaser, if you are an average iPad owner and can't figure out how to manage with 32GB, that's your problem and not on Apple. What's going to happen is that most consumers are simply not going to be cheap about their purchase and simply buy an iPad with at least 32GB. Fact is that the onus is on the consumer to make an informed purchase. If, for example, you purchase a car that seats two and then complain that five passengers will not fit, doesn't that reflect poorly on the purchaser more than the manufacturer. Shame on you, not Apple, if you buy a product that doesn't meet your needs. I would think that even the 16GB versions, especially with the iPad 2 models, can be adequate for some consumers. Those consumers are not being asked to pay for capacity they don't need, which is as it should be. Why should such a consumer be forced to subsidize your purchase of a product with additional memory. For example, I just bought an iPad 2 with 32GB and so far I'm thrilled with the purchase. I'm not going to have any major issues working with the available memory. Yet do I resent that by not making 32GB the minimum standard, I'm paying a premium to upgrade capacity. Absolutely not. Even with the added cost of opting for the additional memory, the iPad 2 still represents by far the best value in a tablet of that size. I don't doubt that there are consumers who would be fine with 16GB and for them, $399 US for a decent tablet is a great deal.
It sounds like you couldn't figure out how to manage with even 32GB and all I can say is, if you have special requirements, stop whining and pay for the additional storage.
Apple had particular price points to consider. They wanted to add a high-resolution screen and that meant a beefier battery, more expensive screen technology, and more processing muscle. To deliver that without increasing the base price something had to give and that something this time around is that the memory capacity remained unchanged.
For the next revision, where does Apple go. The screen resolution will probably never be bumped up from where it has just gone, at least not as long as the iPad is intended for use by humans. The next iPad will likely be lighter, with a step up in the processor and probably we'll see the memory doubled, at no additional leap in price. What is not reasonable, though, is to think Apple should have added in a leap in memory in addition to bringing out the new screen. Saving the memory upgrade for next year gives Apple something else to set the new model apart. In the meantime, as word spreads that 16GB isn't a good idea for many consumers, Apple will make additional profit by selling a larger percentage of 32GB and 64GB models. Yet, still, there are some consumers who can make do with a 16GB model, especially if it's the iPad 2.
Yes my iPad 2 cost the same as a 16GB iPad 3 but it's still very much worth what I paid. So far I'm finding that it is everything I'd hoped it would be. I'm willing to bet that I would already be regretting it if I had made the mistake of buying a competitor's tablet instead.
I think what you really don't understand is that the competition is so far behind in terms of offering a integrated, thoroughly evolved tablet experience that bringing out a batch of high-resolution competitors will do nothing to close the gap. And wait until you find out what the price tag will be for those high-resolution tablets. Apple will be able to get the technology a lot cheaper than the rest because of economies of scale. That can't help but be reflected in the cost passed down to consumers. I wouldn't be surprised if even with the premium paid to have more memory, the iPad will still come in at a lower cost than the alternatives.
Why can't we have a miniSD card and be done with it? There're re now 64GB class 10 cards, I drool every time I think about all the samples I can store on that for my music creation apps. Sure you can pay the outrageous price for 64GB model but it still doesn't scale for the future. More and more people are using their iPads as their sole machine. It's time Apple caters to them.
Like a broken record; I want a miniSD card slot, a file manager so I can completely sever iTunes from the equation and last I want my iPad to be mounted as a normal drive when connected to any computer. You know standard features that are available on pretty much every phone and tablet that doesn't have a Apple on it. Yes, yes I know since Apple didn't give it to us in first place we don't need it, they no better.