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Apple expected to produce 6 million second-gen iPads per month - Page 3

post #81 of 83
Originally Posted by Damn_Its_Hot View Post

I find it interesting that when discuss cost you looked at the major component costs of hardware but didn't have anything in the mix for the software (iOS) which is a major cost (amortized across product lines and time).

Because it doesn't matter, it is very useful to know how much the hardware costs. That is the price of each unit as it leaves the factory.
Putting in these component costs but nothing for software and manufacturing is a huge over site IMHO.

For people that have a grasp of business it is very useful. Besides most of the times the manufacturing cost is rolled into the equation. Such numbers generally are receding to how much it costs to ship each additional unit.

This number has absolutely nothing to do with taxes, overhead or other costs. Frankly I think that these numbers offered up are often bogus. However I'm sure Apple has the cost of every single item down to a fractional cent and knows exactly how much each iPad costs as it leaves the factory. They have to because they have to be able to structure the selling price based on that and overhead.

Just my thoughts - could be I don't understand manufacture of a hard product (as opposed to software) since I have spent my career in software engineering (and as a civil engr b4 that in my first life).

I believe you are right here.

There is an old adage in business that you don't make your money based on what you can sell a product for but rather what you can buy it for. The thought being that you have limitations on what you can sell something to the public at price wise. This can be due to the economy, competition or lack of strong interest. So to be successful you buy your component products at the lowest possible cost.

I've basically have worked in the manufacture of hard goods all my life. At first in a job shop and then in a big corporation. Believe me the manufacturing managers are expected to know the products cost to within a fraction of a cent. That is the cost of the product as it leaves the packaging line for the customer or warehouse.

By the way this is not info that is generally shared with the public. For example Apple will never share how much each iPad costs them to build nor will they share the costs of individual components such as the A4. It is extremely sensitive information because again you make your money based on your ability to buy at very low prices.

I just wanted to point out that the numbers are very useful even if they don't reflect additional costs that have to be built into the products price. Those costs though simply have nothing to do with the cost to produce item xyz. In this case we are dealing with educated guesses based on different sources where the error could be rather huge.
post #82 of 83
Originally Posted by solipsism View Post

Sure, it needs to be counted in the total cost, but I dont think its a very much. Just look at Mac OS and how many units and types of units they used to sell and still sell. Then note the nature of that device being able to have various 3rd-party HW and SW that needs to be tested for. iOS is a single new model each year for the iPad, iPhone and iPod Touch (not sure about the AppleTVs HW update cycle), which are all fairly similar in many of the HW areas, and its much more limited in scope of what can diverge due to user interaction due to the closed HW and SW system. On top of that, they sell 6x(?) as many iOS-based devices as Macs.

To put another way, since its release in June arent they year of use arent they slated to sell over 100M iOS-based devices? If they spent $100M on SW for iOS in total that would be $1 per unit, right?

It really does matter how much money they spent on iOS as it has absolutely nothing to do with the number discussed. These numbers are simply estimates of how much it costs Apple to buy each additional iPad from the factory. I'm not sure why this is so damn difficult for people to grasp.

So let's discuss cars. Say we have vehicle XYZ that takes a V8 engine. That engine is made up of parts built internally and with those purchased from outside vendors. Those parts go through the production process and end up becoming a great V8 engine. When it leaves the factory floor it has a cost associated with it's manufacture. The auto maker "buys" that engine at that price and slips the engine into the chassis with everything else that gets bolted on or installed into the chassis. At the end of the assembly line that vehicle has been produced at a specific cost to the company. It is the sum of the labor and parts cost only. The car is then sold (or whatever program they may be using) to a dealer at a much higher figure. This higher figure has a whole bunch of other things factored into it built on top of the cost to produce. All of these things must be factored in so that the company can profitably sell xyz car. However they can not profit if they don't know those costs precisely.

In the case of Apple a lot of organizations have attempted to estimate iPads production cost simply because it is a very useful number to know. It is not however useful at all to people that don't have a clue about business. Taxes (huge), overhead, R&D and other factors can all be significant but they have nothing to do with that cost to produce each unit.
post #83 of 83
If they don't come out with a smaller device along side iPad 2 I will be very disappointed. It is a good thing inning a major stock holder as I would feel the need to expess my dis pleasure with management.
Originally Posted by SpamSandwich View Post

Yes, I said that if there was going to be a tablet from Apple that one measuring 5.5"x8.5" would be optimal, since that is the most popular size of (non-electronic) planner/organizer.

Exactly. These are very portable and handy "notebooks" that could easily be replaced with an iOS device. The problem is iPad is not that device as it is far to big. Touch and iPhone come close to offering that sort of functiinanity but they are at the other end of the spectrum and to small.

The more that I think about this though the more that I start to believe that the real need is for a slightly larger iPhone. We are talking huge gear but rather minor growth in length and width but a much bigger screen. They can do that buy offering up a new industrial design where the two thick black bars are greatly reduced in size at each end.

In the end I think people would be very surprised at just how much the utility of iPhone would increase if we had the option to go with a bigger screen. Obviously we are talking keeping the device very pocketable. The thing is one or two more lines of text in horizontal mode could do wonders. Especially if at the same time the screen could be made significantly wider in horizontal mode.
I stand by that statement, although it seems the larger size is also working out pretty well for Apple.

We maybe for Apple and a lot of owners iPad is working out well but it is a far cry from portable tablets many of us would like to have. Like mentioned above sometimes I think a slightly bigger iPhone would do the trick. Then at other times I realize it probably isn't worth it. Rather my favored size can best be approximated by picking up an O'Rielly Pocket Reference which has just about all the right size features if you want to imagine what an ideal iPad Mini would be like for me. It would be a size that is extremely useful for PadFs, nots and other stuff on the plant floor.

I fear that Apple has already recognized that such a device would be of primary mystery to business and thus would not have the demand of a consumer device. We can only hope that Steveos comments about smaller iPads was all BS. The thing is don't call it an iPad instead call it Touch Maxi!
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