16GB iPad components estimated to cost Apple $219 - Page 2

My bet was on the Qualcomm Gobi series because of all the speculation on Qualcomm and Verizon. The chipset is software programmable for EVDO and HSDPA and include AGPS but we will have to wait till April when IFixit has a teardown.

If it sells at $499, it'll stay at $499.

However charging $599 for an extra $30 of components is a bit rich. $559 would be better.

And $130 for 3G capability! Are they paying some of that to the network provider? Again this should be a lot less of an additional cost.

The 32GB models are the worst value for money. Avoid these.

More reasonable price would be:

Base: $499 -> $569 -> $699
3G: $579 -> $649 -> $779

However I suspect that Apple just wants to push people to spend more on the 64GB, and is using the 32GB as a model to gain interest and then upsell to the 64GB.

Another meaningless study. It fails to factor in manufacturing [which probably is little because of slave labor], marketing, shipping, warranty, support, and development costs.

Further, Apple's gross profit margin, which usually is in the low thirty percent range, is meaningless until development and initial marketing costs are paid.

Come on- the iPhone dropped $200 in 2.5 months after release and that was a truly revolutionary product. You think this will sell more than that did? Have lines around the block full of people clammoring to buy it? Think again.

Let's not forget any license fees

There's no way that the costs are accounted for using this method.

Now that's just a bout the dumbest thing I've read in a long time. Stupidity is not a saving grace, and neither is ignorance.

This was an analysis by market research firm iSuppli. They have no visibility into Apple's internal costs are. They can only accurately guess on the component costs, and maybe make guesstimate on assembly. That's why they only report the BOM cost.

No one outside of Apple knows what those other costs are.

To be fair the PA Semi cost will amortise across 100 million iPhones and iPod touches and iPads over the next two years. $400m running costs (incl. PA Semi purchase costs and operational costs until 2012) would cut the cost of PA Semi IP in these devices to $4 a device. In financial terms Apple has already accounted for the purchase, so it's actually just running costs.

Of course, on top of that you have the licensing costs for included hardware IP, which could run to another $5 a chip. Then there is manufacturing - a small 45nm chip probably costs at least $10 to make and package - iSupply said $17 in total, lets go with that.

And probably a good hundred million enhancing iPhone OS into iPad OS, including developer tools, drivers, new UI designs and implementation, etc.

And marketing!

No, it's dumb, just a simple reminder that R&D costs big money. It's fair and accurate to say that the A4 chip has cost $300m already, when you factor in the cost of purchasing PA Semi, the ARM and graphics licensing (PowerVR? Didn't also buy a chunk of those guys up also?) as well as the simple overheads for staffing the operation and the costs involved in fabbing the products at low volumes during the testing phases etc.

Chances are the costs for most of the above are already accounted for in previous years books, but that doesn't mean it doesn't count towards the costs when pricing a shipping product this year.

Here's another...

Further to what I just said +1 what this guy said

Also, remember it's largely up front. They may get to the $5 a unit price when the unit has been out enough time, but for now it's all spent, with no sales to show. What if they had spent all the money on PA and produced a chip that was no better than the latest Samsung OEM part, but at a higher cost? That's the risk they made at the time, just because it might be paying off shouldn't mean they can't profit from it.

Actually, they need to block his IP address because he probably posts from a variety of fake e-mail addresses... or just block whatever part of the Internet backbone he's on.

He'd probably be dead within a week without the ability to continually draw negative attention to himself.

The best reply EVER!

Maybe a commodity product but generally that is not a healthy sign for business. Look at Detroit of the computer memory business and convince me that is a good thing for those businesses.

Generally businesses need to grow to stay around. In part that means innovation and new products that expand the marketplace. Hence iPad.

Nope it is an exercise in stupidity if you are not aware of and understand what is being accounted for. Do you really think Apple could have come up with iPhone and the whole iPod lineup without without hefty markups on it's Macs and other hardware and software? How else would they have paid the engineers wages and the management staff in R&D.

Frankly your mentality is very destructive to the economy as a whole. Mainly because it underplays the importance of investing in the future while at the same time trying to offer up this idea that profits are bad. The reality is profits feed the R&D machines that give us things like new Airplanes, new and improved computers and a host of other conviences of modern life.

I'm not saying that every development of modern life is good. The music industry is one example of a development that probably had some negative social impact. Not so much because of the quality of todays commercial music but rather because common folk no longer make music.

What is enlightening is that the capitalist system actually works when there is a potential fir profit.

Dave

why all the fuss, its just the mac / apple premium.

That would be like saying that your first dinner in a new house cost $250,000.00, when you factor in the cost of buying the house...

It is not a method which yields useful information.

If someone hasn't said it then I'll say it. This is just for parts. Let's remember that Apple has to pay people to make them, then pay for shipping, and then pay for marketing them. Their margins will be more like 33%.

So I surmise that you have little knowledge of how any of this stuff works?

Yeah i wonder how much 9 years or so of R+D cost.

The guy did say "the costs for most of the above are already accounted for in previous years books".

It is just a interesting mental exercise.

5m iPads - then the cost of buying in expertise and developing the chip costs $60 a device.
50m devices - then the cost is $6 a device.
300m devices - then the cost is $1 a device.

It isn't hard to contemplate that one year's combined iPad, iPhone and iPod touch sales could hit the 50m mark.

You then have to pit the cost against using whatever SoC that Samsung would have sold Apple instead. The current A8 SoC is $15 according to iSupply, but an A9 SoC would have cost more anyway. Also it wouldn't have been an exact match, or have any Apple IP or tweaks included. I don't know if in these terms Apple would ever get their money back, but being in control is probably worth it for them.

Except you can sell your house and get your money back. And that you probably didn't pay cash up front for your house. And that you would be eating meals regardless of the price of the house you live in. And that you don't buy a house just to eat meals in. This analogy yields nothing.

I'm not going to try to convince you of anything, especially not an assertion that I neither made nor would make.





Seemingly, you did not understand what I said.



Yep - This confirms that my statement of fact went over your head. If you look up "Marginal Concepts" on wikipedia there's lots of good articles on related topics.

At this point there are 63 posts. Of which 17 are either posted by teckstud or a response to one of his ravings. That's more than 25% of the thread (which is actually low for him).

Personally, I have him on ignore, but it doesn't work if everyone replies to his inanities which is exactly what he wants anyway. He's an attention whore.

If everyone added him to their ignore list, the forum would work a lot better. Please?

I suspect that Apple has big plans for PA Semi and will make a killing on the purchase, compared with buying chips elsewhere.

Those types of things are equally true for the PA Semi purchase. That's kinda the whole point of the analogy: The method yields no useful information.

HTH.

Jackasses are difficult people to understand, too.

Actually Jason, I think that Apples operating Margin on the iPhone/iPod Touch and Ipod family is much smaller than 30%.

Their operating margin for PCs was close to 50% in the late 90s, and has gone down to the 30% you cited (as opposed to the 5ish%(or less) of most PC box pushers), but I believe the iPhone/iPod product lines are in the 10% to 20%, wish I could find my source tho'. :-( If you have a source, please, I'd like to read it.

but I think that at $499, they will be straining to reach 30%.

Sure, they "trend" that way... AFTER you've recouped the cost of R&D, manufacturing ramp up, etc.

I think one reason why Apple dropped the price of the iPhone after its introduction wasn't because people were complaining about the price or because sales were slow (they weren't). But rather it was because they didn't know until AFTER the iPhone was release how well it would sell. And once they realized they could spread the cost of R&D over a larger number of units, they were able to lower the price.

So until they know how many iPads they'll sell, it's impossible to know how much revenue each unit needs to bring in to cover the non-manfacturing costs that iSuppli never accounts for.

Apple spends a lot time time refining their products, sometimes years before anything is ever sold. That time isn't exactly free!

Please tell me how to ignore him....

User CP (toward upper left of forum window » Edit Ignore List (lefthand column)

Yea that's only half the story, Ford increased the workers pay so that they could afford to buy a car.



Obviously I meant that I hope Apple employs more people with iPad margins that high.



That's a insult to my intelligence, and yours, because you misspelled Democrat.



I understand how the free market works, I also understand, like Henry Ford did, that in a robust economy, money circulates from consumer to business to consumer and business again, round and round. The faster it goes, the better it is for everyone.

Last time I checked, Apple had 30 or so BILLION dollars in cash, what is that money doing? Is it contributing to the jobs the economy needs which Apple depends upon?

They aren't really the same thing at all.

Apple paid in full up front, nearly a third of a billion dollars, for something that they would receive no immediate return on, and potentially no return at all.

With your house, you can live in it straight away, you probably bought it on a mortgage, and every month you live in it is a month of rent you aren't paying elsewhere. Since Apple bought PA it has been all cost, no return, and no savings - they have still been paying for other peoples designs in the meantime.

It's like renting a place out, paying up front in full for a new house that you can't live in for 3 years, and which may prove to be a house of cards that is uninhabitable when you try to move in.

Well your lack of education isn't my problem.

The reality is I run into this sort of mentality everyday. That is people who expect a free ride, on the backs of the working people of this country, because they can't or won't go out and make a living. They take somebody making a profit off them as a personal insult or an attempt to screw them. Wether it is some old retired person complaining about the price of a cup of coffee they could have made themselves or some welfare mom whining about the costs of diapers, it is still a sign of a person with the assumption he is entitled to goods free of profit.

Now I'm sure many of you will say but they don't have the money. To which is say then screw them. You know what happens when I don't have money, I don't buy things. I don't go to the movies or sit at McDonalds for hours drinking coffee. It is all about personal responsibility and meeting your obligations in life.

Welfare is a perfectly good example of the issues we face as a society. Everyone fully understands that some, for whatever reason, can not function fully. Those are the people Welfare was original suppose to be inplace for. These days though we have a system that supports fully functional people whom are simply to lazy to work. It is culture of the entitled taken to the ultimate level, why work when I can have everything for free.

Sadly; as we can see in this thread, the culture of entitlement and ignorance is moving into the mainstream. The thought that the norm of a product costing more than the sum of it's parts, confuses and offends people that don't know anybetter. Hell there are people that think paying anything is to much effort but frankly these thieves aren't much different than those that object to profits of any kind.

Dave

Thanks! Hadn't had coffee yet so I wasn't sure if it would be funny at all. I see I made a grammatical error in the chart. Oops.

Here's (part of) the problem, and I'm not referring to anyone in particular here.

If I'm not mistaken, the posts of users you have ignored still show up, but their comments are collapsed. This creates a situation in which the user might be tempted to view the ignored post and then possibly respond to it. Ignored users' posts should not appear at all for those who have ignored them via User CP.

I don't want to put words in your mouth, but your post reads like you're blaming iSuppli for the (clearly widespread) misapplication of their manufacturing cost breakdowns.

From all the articles I've read, I've never seen iSuppli's analysts state (or even imply) that R&D, packaging, and marketing don't factor into the retail price. In fact, their original breakdown (from here) explicitly states: "Please note these cost estimates account only for hardware and manufacturing costs and do not include other expenses such as software, royalties and licensing fees."

I don't think it's iSuppli's fault that trolls with an axe to grind against Apple (or just the iPad) ignore all those other factors just so they can continue to bitch about something on the internet.

Who cares?

It's none of my business to know what Apple might have in the cost of a product none what so ever. Then you throw in that the prices you/they have, may well be wrong and it's all meaningless and none of my business.

If you want to put in there, Apples cost to operate their business daily, their cost for R&D, their cost to deal with all of the silly lawsuit they get each day, and the number of folks that are working because of Apple I MIGHT care this much more (very little).

If you have the time, I would like to know the cost for the following items I'd greatly appreciate knowing that I paid someone to make a profit on me

- Toyota Avalon
- Toyota Camry
- Panasonic 54" Plasma TV
- Pizza Hut Pizza
- Lottery Tickets I purchase each day

I KNOW there are more important things you could be doing, but it seems like you want to dig up dirt, so dig away.

Skip

The option like that in vBulletin is "Tachy Goes to Coventry" which is a global ignore list, though the site moderators can still see their posts. These posters won't even know their situation until they check the site from a logged out position to see that they are invisible.

TEKstud is typical New Yorker, paranoid as crap because always thinking someone is ripping him off, like to hear their own voice e.g., Donald Trump, or in his case, likes to publish as much BS comments, which majority of time, make no sense and just show, he practices the best verbal diarrhea for any person, i know in blogs, discussion threads etc.

To be frank you should get honorary PhD from Harvard Law School for your BS!

Please don't take it personal, accept your gift and use it wisely.