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Apple may agree to component price hikes to secure touch panel supply

post #1 of 19
Thread Starter 
Apple could agree to pay more for touch panel components from overseas suppliers to secure supply in the face of the Japan earthquake, according to a new report.

DigiTimes reported Wednesday that Apple has been in talks with Taiwan-based component makers about touch panel pricing, and the Cupertino, Calif., company has allegedly considered some price increases in negotiations. Sources reportedly said that Apple is looking to secure "sufficient supply" of components for hot-selling products like the iPhone and iPad.

While the move could have a negative impact on Apple's gross margins, it would help to secure the availability of touch panels in the near future. In addition, the report said that a price increase would be a "great help" to the overseas supply chain.

But it wouldn't help Apple's competitors, sources reportedly said. Apple agreeing to a price hike for touch panels would "increase pressure" on other vendors who make tablet computers and touchscreen smartphones.

Apple allegedly plans to build 40 million of its popular iPad in 2011. In order to reach that goal, and keep up with crushing demand for the iPad 2, Apple has reportedly booked more than 60 percent of the total global supply chain touch panel capacity.

Concern over touch panel supply has grown since the earthquake and tsunami disaster struck in Japan. Last week, it was said that Apple's manufacturing partner, Foxconn, has two to three weeks' worth of components stockpiled. Should the situation in Japan not improve by that time, Foxconn could reportedly face a stockout.

Even before the disaster in Japan, Apple's control of the lion's share of the global touch panel market has been predicted to squeeze the company's competitors throughout 2011. Apple Chief Operating Officer Tim Cook revealed in January that his company committed $3.9 billion toward secret long-term component contracts, money believed to be directed toward touch panel displays.
post #2 of 19
Looks like Apple owns everyone (in the mobile market)
post #3 of 19
Given the 'crushing demand', I'd guess that Apple will preserve margins and raise the price a little (at least for iPad 3 and on) -- $549, $649, $749 etc.

And, it will be pitched as a price 'discount,' considering all the new doo-dahs that will have been incorporated!
post #4 of 19
Quote:
Originally Posted by anantksundaram View Post

Given the 'crushing demand', I'd guess that Apple will preserve margins and raise the price a little (at least for iPad 3 and on) -- $549, $649, $749 etc.

And, it will be pitched as a price 'discount,' considering all the new doo-dahs that will have been incorporated!

The situation in Japan is a temporary one, not a permanent one. I really doubt apple will raise prices. The price point is one of the factors that made the iPad 1 such a success. I think they'll let their margins take a hit for a period of time if they have to.
post #5 of 19
Quote:
Originally Posted by anantksundaram View Post

Given the 'crushing demand', I'd guess that Apple will preserve margins and raise the price a little (at least for iPad 3 and on) -- $549, $649, $749 etc.

And, it will be pitched as a price 'discount,' considering all the new doo-dahs that will have been incorporated!

Just curious, was there ever a time since 2000 that Apple increased prices of any product that was released in previous years already?

Quote:
Originally Posted by HMayes View Post

The situation in Japan is a temporary one, not a permanent one. I really doubt apple will raise prices. The price point is one of the factors that made the iPad 1 such a success. I think they'll let their margins take a hit for a period of time if they have to.


Indeed. I do not recall any such happening. As dire as the situation in japan seems to be, is a transient situation.

Having stated this, I also pointed in a previous thread that there is a concern with Apple too concentrated in its source of supplies and as well as manufacturing with just a few companies.

It used to have more diverse manufacturing sites during the computer era. Perhaps one drawback then was the consistency, in terms of quality control that led to consolidation. Not sure. Then, there is cut throat price competition. The first one to go was the local manufacture in California. I think they was had manufacturing in Singapore/Malaysia??? and Ireland. But those were phased out subsequently.

CGC
post #6 of 19
Apple will put its pile of cash to use!

iMac mid 2011 • 27 in • 3,4 GHz Core i7 • 32 GB RAM • AMD Radeon HD 6970M 2GB VRAM

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iMac mid 2011 • 27 in • 3,4 GHz Core i7 • 32 GB RAM • AMD Radeon HD 6970M 2GB VRAM

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post #7 of 19
I doubt they'll raise the price. Given that over half their profit comes from touch pannel based devices though this could have a big impace on their profit figures, which could impact their share price. However I think the increase in profit from extra sales of iPad's this year over last will be greater than the reduced profit of the devices. Or in other words they'lll make less on each device but still sell a lot more of them.

If you do have shares in Apple though. I'd say now's the time to sell them and invest in either the companies that are set to make a load from touch panel displays and other components over the next few months or invest in the companies based in Japan that have had the share price drop but will bouce back again. Then sell the shares and reinvest in Apple.
post #8 of 19
Quote:
Originally Posted by anantksundaram View Post

Given the 'crushing demand', I'd guess that Apple will preserve margins and raise the price a little (at least for iPad 3 and on) -- $549, $649, $749 etc.

And, it will be pitched as a price 'discount,' considering all the new doo-dahs that will have been incorporated!

The term "price point" has been one of the most over used term of the past 10 years, BUT $500 is a legitimate price point. I doubt that Apple will move the iPad over the $500 threshold, They'll do whatever they can to keep the $499 model. Even if it is not a top seller, it still gets consumer interest
post #9 of 19
Quote:
Originally Posted by cgc0202 View Post

Just curious, was there ever a time since 2000 that Apple increased prices of any product that was released in previous years already?

Mac Mini last year
post #10 of 19
They could just make fewer 16 gb. I'm sure that many will buy the 32 gb if 16 not available. I presume the extra 16 gb costs a lot less than the added memory.
post #11 of 19
Quote:
Originally Posted by timgriff84 View Post

I doubt they'll raise the price. Given that over half their profit comes from touch pannel based devices though this could have a big impace on their profit figures, which could impact their share price. However I think the increase in profit from extra sales of iPad's this year over last will be greater than the reduced profit of the devices. Or in other words they'lll make less on each device but still sell a lot more of them.

Now if only the analysts understand that as the mix of Apple products become more diverse, the profit margin may be lower but the net income may increase as a result of the diversity, then there should be no problem.

But, I think it was last year or the year prior when Apple had just the "best quarter ever", the total revenue was higher and also the net income but analysts were "disappointed" that the gross margin was lower than their own cooked up estimate.
post #12 of 19
Quote:
Originally Posted by anantksundaram View Post

Given the 'crushing demand', I'd guess that Apple will preserve margins and raise the price a little (at least for iPad 3 and on) -- $549, $649, $749 etc.

And, it will be pitched as a price 'discount,' considering all the new doo-dahs that will have been incorporated!

It's not in Apple's tradition to move price points. All of their products have the same price for each successive model, as long as they occupy the same position in the product list.
post #13 of 19
Quote:
Originally Posted by bartek View Post

Mac Mini last year

Really? That escaped me. If I remember correctly they made drastic revisions on the mini though along with positioning it as potential server for the higher end.

I was thinking more of their major products - iMac, laptops, iPod and iPhone before the iPad. Many of these have gone down or remained at the same base price -- even with increased disk storage and/or CPU.

I was at the Boylston Apple Store several days last week. I noticed how many of the desktop Macs have been tucked away in the back corner near the elevator. I did not notice where they have the mini. Maybe part of it was the need to have more display space for the big lines of people waiting to try the iPad2.

Quote:
Originally Posted by pridon View Post

They could just make fewer 16 gb. I'm sure that many will buy the 32 gb if 16 not available. I presume the extra 16 gb costs a lot less than the added memory.

I doubt they would do this intentionally either. If there is a demand for it, they will meet the demand. But, wasn't the 16Gb not the bestseller to begin with?

CGC
post #14 of 19
For those that still don’t understand why Apple saves the cash hey earn take note. This is why having vast amounts of cash on hand can be useful. Apple is turning a natural disaster into a strategic move. Sure, they’ll lose some short term net profit per unit, but they’d lose even more for each device they couldn’t sell because they can’t source the components.

From everything I’ve seen there is no other tablet that will make a dent against the iPad. Apple is making the iPad another iPod, not another iPhone, in terms of unit marketshare. The iPad will overtake the Mac in profit and I think has a chance to overtake the iPhone in profit in a couple years.

This is how the elite run the world. You save the money and invest only what you need when the time is right, not because it’s burning a hole in your pocket. This works for individuals, too.
Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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post #15 of 19
I had a suspicion the disaster in Japan and the subsequent technology sector hit may hurt clones more than Apple as this plays out.
From Apple ][ - to new Mac Pro I've used them all.
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From Apple ][ - to new Mac Pro I've used them all.
Long on AAPL so biased
Google Motto "You're not the customer. You're the product."
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post #16 of 19
Quote:
Originally Posted by bartek View Post

Mac Mini last year

Mac Pro on every revision since release...

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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post #17 of 19
Quote:
Originally Posted by cgc0202 View Post

Just curious, was there ever a time since 2000 that Apple increased prices of any product that was released in previous years already?

Well, a minute with Google turns this up from 2002:
Quote:
Although Apple Computer raised the price of its new iMac by $100 on Wednesday because of rising component costs, PC makers probably won't follow with similar increases.

I seem to remember other instances as well, but I agree, they are rare--your point is still valid.

http://news.cnet.com/2100-1040-866212.html
Progress is a comfortable disease
--e.e.c.
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Progress is a comfortable disease
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post #18 of 19
Quote:
Originally Posted by Tallest Skil View Post

Mac Pro on every revision since release...

I did not follow Mac Pro [Desktop] that much nor the mini. It was only more recently that I am more conscious of Apple pricing.

In 2006, I even bought an iPod that just a few months after was replaced with a better iPod with larger storage. But, when I bought the iPod, I really need it for things other than music, though I enjoyed the music too. So, I would have bought it even if I knew they would be coming out with a new iPod, because I need it at the time when it was bought.


Quote:
Originally Posted by Bageljoey View Post

Well, a minute with Google turns this up from 2002:


I seem to remember other instances as well, but I agree, they are rare--your point is still valid.

http://news.cnet.com/2100-1040-866212.html

In 2002, I guess they were still in a fight for their life as a corporate entity, in spite of the success of the iMac. The economy is also just coming out from the lasting impact of the internet bubble burst.

It seems a long time ago, but only six years later we have the financial market-real state bubble. But, Apple has made great strides since then
post #19 of 19
Quote:
Originally Posted by cgc0202 View Post

Just curious, was there ever a time since 2000 that Apple increased prices of any product that was released in previous years already?

CGC

They increased the Mac mini from $499 to $599 to $699
The lower-end Macbook Pro 15" went from $1699 to $1799
The 2008 MacBook Unibody went from $1099 to $1199 and $1499 to $1599 for the low and high end models respectively.

Then ther are those examples where they increased prices because the former prices hid the fact that the devices being sold were underpowered (not sure if I explained this right, so I'll give examples)

The 17" MBP typically cost $2499 before the upgrade in 2010 and had the specs of the highest end MBP. With the upgrade, the 17" dropped in price to $2299, but its specs were those of the lower-end 15" MBP (Core i5 instead of Core i7). Now with the February update, the price went back up to $2499 but it also has the specs of the high end 15" MBP.

Then there's the late 2009 2nd gen. 8GB iPod touch that retailed for $199 (down from $229) because Apple wanted to sell it at that price, but it didn't have the internals of the 3rd gen. ipod touch. Now with the 2010 iPod update, the 8GB iPod touch has the same internals as the 32GB and 64GB versions, but its price went back up o $229.

Those are the only ones I am aware of because I knew their previous prices. There could be more though.
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