Originally Posted by bartfat
And you pulled these numbers from where? That's what I thought, your ass. I could just as easily say the iPad has a $100 or $150 profit margin, vs. HP's is $50. But that would be too logical for Apple to only have a reasonable 2x or 3x the profit of HP.
There are lots of numbers out there in the public domain.
In the case of Apple we know that overall the amount of profit vs. its turnover. So it is well known that runs at much higher profit margins than the rest of the consumer electronics industry.
But we can get more than that. The fancy GAAP / non-GAAP accounting rules meant we could figure out the profitability of iPhone. (Strictly iPhone + AppleTV) - we also know the numbers of iPhones sold. Divide the one by the other you get profit per unit on iPhone.
There's also the iSuppli teardown data - which looks at component cost VS cost to consumer.
These marry up - we can then figure out manufacture cost and other costs reducing profit.
For iPad we have just the iSuppli teardown costs. $260 - With a $499 retail cost a $200 per unit profit fits with everything above.
For HP's netbooks we have similar data. HP's consumer products division which makes the laptops etc - publishes its overall profitability. It's only about 5%. The build costs of netbooks are also well known. We can guess the Windows licensing costs. $40 Keyboard, hard drive, memory etc.
We know the number of laptops+netbooks made by HP and their profits. Again you can divide one by the other and reach a per-unit profitability. The number is very very low. About $20 per unit across their whole line. Netbooks could be less profitable. We end up with the conclusion that profitability of netbook is razor thin. (And that is if you ignore the expensive recalls of self-combusting power supplies)
So the numbers require a bit of guesswork and interpolation. But however you dice it, the iPad salesman has to sell far fewer units that the netbook salesman to make the same money. A factor of 3 (as you suggest) would be dramatic - but it looks like it's nearer to 10.
In the phone space, Apple's ability to be profitable is more dramatic than a lot of people realise.
There's no reason to think that Apple will treat this market differently.