Teardown reveals iPad mini yields 43% gross margin for Apple - Page 2

Buying a new iPad is like voting... do it early and often.

Uhm... that's not the only "mistake"

If it weren't, then I would have to believe that in that BOM there are also the following "items"

Packaging

Cable

Power Adapter

Marketing / Advertising

Shipping

Corporate Salaries

Mortgages (1 Infinite Loop is "owned by Apple including land)

Capital Expenditures

Commercial Leasing expenditures (What? those Apple Stores pay no rent??)

Employee Salaries (unless Apple Store employees work for iDevices)
 

But that's okay.  Keep thinking that 43% "margin" really is a heck of a lot.  *rolls eyes*

 

Well you can order everyday, but how many are there? It's still the same question, how many units can AAPL produce everyday. I'm sure they'd solve this problem in a few months but right now they need to get a lot more units out before the end of this holiday season so people don't defect to other tablets, and that's the concern. 

By saying Apple makes at least a 43% gross margin, AI may be assuming that more expensive models have a higher margin. Nevertheless AI may have lost the meaning of "gross margin" and "estimate" according to others here.

Gross profit margin is simply what it costs to build and the sale price, no other factors are considered.

Are you seriously even trying? Haven't you read my last post?

 

You are trying to explain this to a "daharder", it's no good.

 

He just comes here to "dump" his opinion on us, not to have an healthy and/or useful discussion.

2 weeks = 14 days in case the math is too difficult to understand. Or second option, don't pass out before 10 PM and order next day pick up in store. Those are your two options. If you don't understand that then perhaps you should consider buying a different manufacturer's tablet. Then at least you will be among your peers.

That's not a gross margin. Similarly, the person who claimed that R&D costs are included in COGS is also wrong.

Once again (it seems like I have to do this every time iSuppli releases new numbers because no one seems to be able to remember how it works):

Revenue - selling price of product

COGS - Cost of goods sold (total cost of manufacturing the product. This typically includes all variable costs as well as costs directly related to manufacturing). This number is typically directly proportional to the number sold.

Gross margin - Revenue minus COGS

Overheads - costs that are not directly tied to manufacture of the product. These are typically fixed and do not depend on the number sold.

Net income - Gross margin minus overheads.


COGS includes:
Raw materials (this is the only thing iSuppli considered)
Labor and benefits
Outsourcing costs
QC cost
Shipping
Packaging
Manufacturing overheads
Cost of carrying inventory
Warranty costs (normally. They can be considered an overhead in some circumstances).

Overheads includes:
Selling cost (other than costs directly tied to the product such as seller rebates and/or commissions which can optionally be included in COGS if the company wishes)
Corporate overhead
Legal
R&D (could only be considered in COGS under very unusual circumstances that rarely occur)
Marketing costs
Most building costs (although under some circumstances, manufacturing space can be included in COGS)

There are a very few costs where the company has some flexibility - like some of the selling costs. A more common one is tech support costs. Most companies consider those to be an overhead, but they can be considered in COGS if desired.

They didn't put in, like $12 to build it? Dudes! Glad to see move away from polishing to anodized. I'd rather not have something shiny & know it didn't cause an explosion during manufacturing.

I AM SO WORRIED BY THIS!!!

In other news, I notice you can arrange next-day pickup at apple stores.

 

If you don't understand the issue here you should consider not commenting on it. Nobody is question the '2 options' you're talking about. The question is how many are they producing a day, which your comment never even tried to answer. In case you don't notice, a lot of retail stores are out of both iPhone5 and iPad mini right now, and in case of iPhone5, have been like that for quite a long time. 

Don;t be fooled, Apple is paying a cheaper price for its parts than ifixit or regular wholesale price suggest.

Volume=Discount!

I assume that is factored into the BOM cost.

I like the iPad Mikita balance hardware and display but it has a premium price when its 2 year old hardware.

that helps explain some 2008 election results

The reason why Apple priced the Mini so high isn't because they're greedy or because they're trying to maintain high margins.

 

It's because they flat out won't be able to make enough of the damn things between now and Christmas to come anywhere close to satisfying demand.  If they'd priced the Mini at $299 or even $199 they'd sell just as many units as they're gonna sell at $329.  So why sell it for less?

 

Look for either a price drop or a big spec bump to hit sometime around March, 2013 - or possibly both a spec bump and a price drop, if they can flush all the gremlins out of their supply chain and manufacturing process.

 

I'm betting the iPad will also see a price drop sometime next summer, in the run up to back to school shopping.  Apple will probably start to launch its new models sometime in the September - November timeframe from here on out, to best capitalize on the big holiday shopping season.

They are not going to lower the price when they can't keep up with demands...  sales number are bottleneck but supply issues

wow, fail

The most important part of the device is what iSupply can't calculate, the part that distinguishes an iOS device from others the most:
software and ecosystem

you do know the difference between gross margin and net margin right ??

one is before all what you are saiying and the other is after

Is Apple gonna gave to choke a bitch?!

Why report on some obviously misnamed "info"bit? Bill of parts is not "cost of iPad Mini"... It's not even build cost.

Bingo. I've read Apple has only one "committee" and that's the "Pricing Committee." 

 

Incidentally, I went to an Apple store to look at and hold the iPad Mini. It is a very impressive piece of gear. I'm glad I sold my iPad2 and waited for the Mini. I'll being buying it very soon.

 

And lastly, if you've never held and iP5...I would recommend doing so. Really impressive and very light. :)

Maybe, maybe not. Apple typically sets tighter specs than the industry standard, so may pay more. For example, Apple has consistently set much higher RAM specs than standard - which is why third party RAM sometimes fails in Macs. Apple's use of more expensive capacitors than everyone else was also noted at one time.

But, in the end, it does not matter one bit. Apple's price is set by the market. If Apple is efficient enough to obtain a great margin, that is the benefit of their great supply chain. Even if their cost were 50% lower, why would they sell the product for less than the market price?

Besides, if you want to complain about margins, why aren't you complaining about Intel (gross margins in the 60% range) or Microsoft (gross margins in the 80% range).

Well, no. How many multi million dollar GAAP businesses have you run? I shouldn't bother asking - the answer is obviously 'zero' since you don't have any idea what you're talking about.

COGS is the total of all costs that can be directly attributed to the product. Labor. Shipping. Packaging. Manufacturing overhead. Even things like electricity can be included in COGS if it can be directly attributed to the product.

And gross margin is always revenue minus COGS.

Another word for Gross Margin I know is Contribution Margin. That word has got the huge advantage of making a lot more obvious what it actually is: That part of the sales price that's available as contribution to the overall operation costs of the business that are incurred regardless of that certain piece of product sold. And costs of operations are just what jragosta has listed as selling costs (and maybe more). And if not all of the contribution margin is actually required as contribution for the operations, there may actually some profit.

A smaller screen and a year and a half old SoC make for a cheap device to make? I'm shocked. SHOCKED.

I suggest you read all comments before posting.

Uh, no.

 

Gross Margin = (Revenue − Cost of Goods Sold) ÷ (Revenue).

 

Cost of Goods Sold ≠ BOM.

 

Add: Just saw that jragosta addressed this point before I did.

No.

Only one correction. I think you mean 'Operating Income' (i.e., EBIT), not 'Net Income' (see bolded part).

 

http://www.investopedia.com/terms/c/contributionmargin.asp#axzz2BNRbqvX7

You shouldn't believe everything you read on the internets.