Originally Posted by cloudgazer
iSuppli priced the iPad-2 at $326, just for materials, add a small amount for labour, maybe some more for patent royalties and you're up to say $350 cost per unit.
That would put the HPs gross margins much lower than 20%. Then once you added in the costs of marketing, R&D, advertising etc. there's no real doubt that the business is operating at a loss.
I've seen many such comparisons, with a low around $300 and a high around $330. But it is important to note that these are estimates, and these third party organizations simply don't know what HP's cost per unit is; it is speculative. However, it is very obvious from even these figures that HP is likely not selling each touchpad at a loss, as some here have asserted. And, even given the distinction between gross and operating margin, as someone here pointed out, it is not at all clear that this is a money losing move for HP. I'd like to note that you selected one of the higher cost estimates, and then you added some fictional royalties and other assumptions, plus unspecified gross operating costs... in order to reach your figure. In other words, it is purely conjecture on your part.
Bottom line is this: people here adore Apple (and so do I), but this colors commentary to the extent that it is often impossible to find a single commenter who is able to approach issues rationally and objectively. My view is that the doom and gloom prognostications in this thread are exactly that: lacking in objectivity.
HP is making aggressive moves to try and solidify a contender's position in the market, and I think they have that capacity to do so. Their price cut is part of that strategy; it does not spell the end for HP after having just gotten started, and thinking it does is just immature poppycock.