High cost of new iPad components drives down profit margins - Page 2

Yea Samsungs lawyer screwed that up, the Galaxy Tabs aspect ratio is different form the iPad and that should've been evident in picking it out. HW hasn't been Samsungs strong suit for awhile but lots of what they've done in other areas can be argued has helped Apple build excellent devices.

They should sell it for a loss like amazon, that's a brilliant business model...

They want you to buy the $80 a month subscription plan so you can make it rain on them every month on schedule.

If you're referring to Amazon Prime then you're mistaken, its $79 a year.

Considering all you get its a good deal.

http://www.amazon.com/gp/prime/ref=a...amazon%20prime

I agree. Where was apple when motorolla INVENTED THE CELL PHONE? Where was apple when in 1997 the world first MP3 player was shipped?

Point is....how about apple actually innovate and create something NEVER SEEN BEFORE rather than take something thats always been around and put a spit and polish on it?

Quit acting like apple invented the cellphone or the rectangle, was always around.

Disclaimer: Not saying the idevices are bad products, they are actually great, i still use my 4th gen ipod nano to this day. Just saying lets not get carried away.

Look up 'straw man argument'.

No one ever claimed that Apple invented the cell phone or MP3 player.

If you ever have an intelligent argument, feel free to let us know.

Lower margins is the penalty you pay when you bring new tech to the market. As production tech improves and component prices drop, the margins will self correct. That is the advantage of high volume purchasing.

So much for boycotting Samsung in favor of buying Apple products. Samsung makes big bucks from every iPad purchased. Given the difference in volume, they likely make more, in absolute terms, form iPad sales than they do from their Samsung branded tablets.

He's correct in some ways. Apple didn't invent the touchscreen phone nor the tablet. What Apple excels in is taking current technology and ideas and putting them together in a new way plus pairing it with great software. Apple makes things streamlined and sexy looking plus easy to use which is something that's obviously not easily done.

I was thinking the same thing. But likely they can determine the delta between the new parts and the old, leaving the "lower margin" conclusion intact, even if the exact number is, at best, suspect.

Thank yu. exactly what i was trying to say.

On the other hand you have companies like motorolla and Samsung who excl at making the backbone for things to work. Hence their huge number of FRAND patents. Maybe if they spend less time on researching how to make cellphones talk better to each other, and make 3g better and 4g better and make further the technology of organic LEDs and so on/ Maybe if they spend less time on that stuff and focus on design, they may be able to compete.

Content sales? Probably.

But Amazon sells much more than digital content with the Fire, and so the estimate is not very well-grounded. Amazon sells pretty much everything, and the Fire is designed as a portal to their store (much like the iPad).

Apple claims it makes almost no profit from App sales and other content, or is that old information which has now changed?

Nope. It doesn't tell you that. At most, it tells you that Apple makes a lower margin on the iPad than it used to at the launch of the iPad 2.

Especially all the ones that need to buy a new AV adapter for their iPad.

http://store.apple.com/us/product/MD098

$39 bucks is pushing it. But when you consider that the old one works just fine, but now requires you to dismiss a useless Error message, then "greedy" might not be too far off.

So you've reasoned that because Apple is being greedy by using the same same dock connector another year note that this is it's 10 year of use when they could have completely altered it year after year so that you would never see an error message you can ignore because they could make it so it would never plug in. Brilliant¡

That's true, but he's not the least bit correct. He claimed that Apple fans claimed that Apple invented the cell phone and MP3 player. No one ever claimed that, so it's a straw man argument.

Nope. Wrong again.

Here's my reasoning:

No dock connector is really necessary. Others add standard ports.

The AV connector is priced at 39 bucks, while comparable cables are much cheaper.

There seems to be no physical need for existing owners to use the new overpriced connector, except that Apple screwed something to make it necessary.

Understand? Or do I have to go on and on once again? Do I need to draw a picture or something?

Which standard port that was available 10 years ago would do all the same things as the 30 pin connector?

None. What does the AV connector do today that no standard port will do?

I think you need to understand the difference between invention and innovation.

The cost of the ipad may have gone up but i expect with a more powerful device comes sales via the apple stores.

Also a device that is this good will give problem for competitors - if apple's margins go down so do there competitors and there margin are low enough already.

This device could really swing for apple in the corp business world.

Did you finish reading his whole comment? He's mocking Apple, as he always does.

in the next earnings release. If they fall significantly, then we will know that some of the costs in this chart are true. Especially so, if revenues are up x% but earnings don't keep pace.

Oh I know, it's just a common misconception that seems to run rife in all tech blogs and forums.

Umm That's speculation since they really don't know how much Apple's pays for parts with their economy of scale. The article comes off as if they know but I doubt that very seriously.

So your point is that you think Apple is wrong for combining USB, HDMI, and power all into a single port so they could keep the device thin?

You should really stop with the inane Apple-bashing long enough to join the rest of us in the real world.

The cost to make the iPad has nothing to do whether or not it is an incremental update. The final product, compared to the product it replaces determines that rather arbitrary designation.

-kpluck

A fair number of people celebrating this report are amongst those arguing that the suggested $70 premium on the iPad, reported Erroneously here on AI, was a good thing. ISuppli never claim to guess the component costs in volume, but generally know their stuff.

16$, 32$ and 64$ more dollars per device would have bumped the storage to 32, 64 and 128gbs respectively, and since more storage would give people a higher insentive to buy more content from apple, it's arguable they would be making this money back from the content anyway.

They are being dishonest here though. The ipad might have the same price points, but storages of 16 and 32gbs are not viable anymore given the maturity and posibilities of the platform, as well as the ever increasing content and size of content provided by apple itself, and the demands on storage by the retina display. They are essentially then pushing most people to buy the high end model(s) where their profit margin is also the highest if they want a device with decent life span and usage possibilities. I am very disapointed with them for doing this, and like I said it's a shame, they would have still kept the same margins and made it up on content sales anyway...

And I also feel strategically it's going to come back and bite them in the ass when in a couple of months time androids with retinas from samsung with sd card slots are going to be popping up and they are left with plenty of embittered customers who own ipads otherwise great but crippled in capabilities by their limited storage. They are abusing their dominant position in the market here and being careless and greedy. As much as I admire them for coming up with the ipad and finally revolutionazing the tablet to what it is right now, and as much as I dislike both google and samsung, I will be happy when (it's not an if for me, it's when) they get what's coming to them for crippling this generation of ipad in terms of storage.

In getting my new iPad I didn't restore from iTunes, iused a clean iPad and I use the purchased tab to download what I use and ignored the rest. The cloud makes local storage less important.

I thought the same thing, Others might be late to the game but they are going to play. Asus will be first in releasing their Infinity model next month with a S4 Kait CPU, a 1080p resolution and 64GB of ram, however they also have a miniSD that supports another 64GB and with the SD Card in the Keyboard base you can can have an additional 64GB for a total of 196GB with keyboard and 128GB without. Samsung will be releasing a tablet with their new quad core CPU and quad core GPU, a comparable rez most likely 16.9 and using their fantastic SAMOLED technology, 8MP camera, MiniSD, so 128GB there. Then of course the horde of Windows 8 tablets and those will most defiantly will have large drives were talking Windows here and miniSD cards most likely there but we will have to wait to see.

Um, what?
From Wikipedia:


No. The only person making these claims is you and the "Apple didn't invent the black rectangle" voices on these forums. Has it ever occurred to you (and it hasn't, based on what you wrote) that what the world wanted was a better mouse trap, or what you blithely dismiss as "spit and polish"? I mean, who'd pay for an iPhone when you can get a Blackberry or Palm Treo or crashy Windows Mobile 6 PDA phone (with stylus input, but let's all pretend the Galaxy Note invented that)? Even all of those smartphones are just spit and polish on basic analog mobiles. According to you, we shouldn't praise spit and polish; what's really important is who invented the first, primitive mobile phones OUT OF THIN AIR. And you credit Motorola for creating something NEVER SEEN BEFORE (to use your term), because all mobile phone systems pre-dating Moto's never existed.

All of that "extra" space an iPad user has on iTunes

It makes it less important to a certain extent, you can't cloud away 1.5 gb games and textbooks, or a minimal 50% increase in the combined storage for apps due to retina, you can't also cloud away much larger files for magazine subscriptions again due to the retina display, or 1080p movies from the iTunes stores. You can't also expect an iPad to store just a couple of movies, a couple of reference textbooks for uni/work, a few apps and a couple of games and then keep swapping on and off the cloud.

In any case we ll see how this plays out in the future which is the ultimate (although certainly not always fair or impartial) judge of people's and companies choices. I firmly believe apple have chosen unwisely and greedily here to save up a few $ per device when they already have more than adequate margins, volume in sales, and content to sell and recoup the extra $ for more storage. They have also chosen unwisely because one of their arch competitors is also one of their prime hardware manufacturers.

They carved the tablet market for themselves, they priced the iPad so competitively that no one managed to undercut them. They should have given everyone the coup de grace here by bumping the storages up considerably and completely dominating the tablet market. If people bite the bullet and get 16gb iPads and realise after a short while that storage is ridiculously low for their usage, and they can't even sell their device cause other people have realised this too, you bet apple are going to have a lot of embittered customers who are going to jump on the next tablet with an sd card around the corner and consider it the next best thing to sliced bread for giving them this flexibility. Then apple will have needlessly vindicated all those idiots blathering on about apple being restrictive to choice.

But the 16GB will always sell as it is a steal. My feeling is that in a retina world the iPad will always have to be managed, I bet in a future OS Apple does that for you with apps, something like Kindle which deletes locally behind your back, and hardly distinguishes between apps on the device and elsewhere . In the apple case power users can turn that off for manual use. I see them increasing the default iCloud storage and requiring magazines to store there, or use their own storage for back issues, or face a ban.

Apple have very concrete advantages in their ecosystem, software and hardware integration, manufacturing skills, physical stores, and content via the app and iTunes store. They also have a vey strong brand name and their tablet platform has by now far more people who know how to use it. But they are wrong in thinking that they are invincible and the only way is up for them. If google want to brand and aggressively market a Samsung based tablet product they can easily get a 20% share off of apple and very quickly. Amazon managed to get market share in a few months time. As you correctly point out others are going to play too, of apple manages to lose again in the market they pretty much created as they did with the personal computer it will be another case of history repeating itself, and history has a tendency to do just that.

All these features I am sure would help a lot, let's see how apple plays it, because the alternative of manualy manage content off and on the device is not viable.

It's likely the estimates are wrong, because a plain old bill of materials cannot reflect the actual volume purchasing power or specially negotiated agreements between Apple and their suppliers.

If Apples profit share of the global cellphone market is around 75% with only 9% market share by units, you gotta think that the profit share in the tablet market is close to 100% considering that Amazon is selling the Kindle Fire at a loss and many other other tablet makers have been blowing out their tablets at a loss as well (HP TouchPad, RIM PlayBook, etc.). Samsung itself has also said that it isn't doing well with the tablets.

Apple could afford to absorb the higher cost on this one although I think Apple is probably getting a better deal than what's listed on this external BOM. Apple seems set on maintaining these price points. The iPad pricing structure seems like an impregnable wall for the competition. It's still an "uphill" battle for the iPhone and Mac businesses in terms of market share but the iPad business is looking more like defending the fort from the mountaintop - kind of like what the iPod business has been over the past decade.