Originally Posted by SolipsismX
I'm not sure if you are using the term price gouging literally or not but I see nothing that is forcing you to buy the iPad at all, much less one with cellular connectivity, so suggesting that Apple is acting an in unlawful way will need to be supported. I also don't understand where you get your final tally for the total cost of the cellular addition, how you know it's accurate, and why you think that gross margin for an option excessive.
"Gouging" is not a legal term as I used it, just a pejorative one - and I know Apple's not alone in charging higher margins for upgrades. Happens in the auto biz all the time - where the "packs" add higher margins and then depreciate faster in the resale market than the rest of the car - as also happens with Apple gear.
In fact I buy 1-3 year old cars with all the upgrades for that very reason - it's like getting the leather, moon roof, and such for nearly nothing - but I want 4G and 64 GB NOW - and so will - being presumably of somewhat sound mind - pay the going freight for my iPad.
I'm also not questioning Apple's right to charge whatever they want, just suggesting that there are other approaches to consider that might work out as well or better for them AND their customers.
I'm definitely not anti-capitalist or anti-profit and I am anti-any-form-of-price-control, but I'm also always looking for the best win-win solutions, and find some value in Tony Blair's notions about "stakeholder capitalism" - with we buyers as one of the stakeholders to be considered.
So on second thought, your point is well taken
and I wish I'd chosen a less "loaded" term (except, perhaps for still charging an extra $130 for the 3G
radio on the iP 2!). Given that the $399 pricing for the iPad 2 is genius (and, yes, yes, yes, certainly "fair" to buyers for the value delivered), that one markup's, uhh, well, how about "arch" at least?
And, no, I don't know the figures I calculated from are accurate - but they're closer than anything else I have ready access to. At least AI keeps quoting iSuppli all the time.
However, the calculation I made was simple and simply taken from the chart by subtracting the estimated BOM's of the various devices from their selling prices to isolate the costs and prices of the upgrades, and therefore the margins on the upgrades alone. Just arithmetic from the charts.
Originally Posted by SolipsismX
For instance, Moore's Law doesn't work with NAND flash so you can't expect that NAND will will get twice the capacity every two years. We're still dealing with the same density chips so only refinements to the process will effect the cost per GB.
Q: Do you think it would have been wise for Apple to not release the Retina Display iPad this year so it can double the capacity of the NAND flash?
I certainly don't think that would have been smart looking at the iPad APR being closer to the cheapest iPad price, not the most expensive. Apple surely knows what customers are buying.
PS: Doubling the capacity will come next year.
I think they got the feature set - AND PRICE - of the base model exactly right if the cost figures are fairly close. Totally a home run. Especially granting your point about NAND flash which I'm less knowledgeable about than you. (And my post led with that observation, in fact, as in describing it as "amazing.")
And I can settle for a 64GB being the top 2012 model with all the cloud options around. And am thrilled that 4G AND Retina resolution AND usable 1080p/5MP shooting AND great programs to edit and post them - all on one device - are all available this year
. This IS far from an "incremental" or "modest" upgrade - and is in ways more than I'd even thought they could accomplish.
But I do think Apple's predilection for numbers ending in $99 could be revisited
- and it might even boost sales (and eventual net profits) more IF it is even close to true that the 32GB model has a BOM of only $16 more than the 16GB, and the 64 costs Apple something like $50 more - i.e., in that case to reconsider the price of the models with more storage.
That is, I suggest (and it's just my suggestion, granted, though I have run several businesses for over 25 years - if far below AAPL scale), it might have been sound biz strategy
to price the models at $499, $549 and $599 for the different NAND capacities
- which would more than maintain gross margins and
stimulate sales of the higher models (and be more useful to users
And leave the rest of the tab manufacturers even more forlorn.
further going to say that adding $85 - or even $100 - for the (presumed) $43 radio costs rather than $130 would also have been a "good" move for both Apple and buyers - but on second thought
, there were certainly R&D costs
involved in moving to 4G - and the fact of the novelty of 4G
being there with the battery life intact
for a few grams of weight above the non-4G model - so I'll totally take back my grouse about that part
based on your useful feedback.
But if the cost differential remains the same next year (when 4G has become a more power efficient and "commodity feature" in cell network devices)..... ...I'd re-make my suggestion then.
Originally Posted by irnchriz
Yet again, these tools at iSuppli publish figures that they effectively pull out of their arses and sites like this make comment based on them being valid. iSuppli have no insider knowledge, they have no idea what deals Apple or others made with manufacturers or assemblers and this 'estimates' should be taken with an iceberg sized pinch of salt.
This fact alone should nullify any comments based on their fanciful estimates.
As above, what else do we have to go on? And some of this info has to be based on real industry sources - it's not ALL made up, even if you allow likely overall variances of, say, +/- 15% overall and much more on any particular component. Firms like iSuppli can be wrong a fair amount of the time, but can't go on for years on nothing (unlike many stock touts and "analysts," who can!).