Originally Posted by melgross
How is it obvious? [that the Air is a high margin machine]
Take a $1099 MacBook
Remove the optical drive (-$50)
Remove the firewire port (-$0.5)
Remove a USB port (-$0.1)
Remove optical audio in and out (-$0.5)
Remove audio in (-$0.1)
Remove ethernet (-$0.2)
As well as all these things providing obvious savings in terms of cost of the physical drive/connectors (noted above in brackets), there's also the saving in IC count on the motherboard - there's no Firewire chip (-$7), no ethernet chip (-$1) and a smaller, cheaper audio chip (-$1). The Air's motherboard is therefore much smaller than the standard MacBook's (-$10 for smaller PCB).
So, we've saved money on all these things. The machine is also smaller and lighter so packaging and shipping is cheaper than the MacBook (-$10).
So, that's savings of $79.40
Now, what's going to be potentially more expensive?
The HDD is a 1.8" drive rather than a 2.5" drive.
The processor is a small-form-factor Merom.
The keyboard has a backlight.
The case is aluminium.
The screen is L.E.D. backlit rather than CFL.
Manufacture is probably more expensive.
Let's take each in turn:
\tThe HDD in the $1099 MacBook has a capacity of 120 GB. The cheapest 120 GB SATA HDD costs $63 at newegg. The 80 GB iPod, which uses the same HDD as the MacBook Air, costs $249. I reckon the 1.8" HDD probably costs Apple $20 more than the 120 GB HDD.
\tThere are two things that determine the price of the CPU: the cost of the die, and the cost of the packaging.
\tStarting with the die: Intel's standard line of Core 2 Duos comes in three different voltage specifications: "Normal", Low Voltage (LV), and Ultra-low Voltage (ULV). There's nothing particularly special about the LV and ULV in terms of silicon, they are simply the highest-performing dies from a given wafer. As such, LV and ULV effective yields are low and the price correspondingly higher than the "normal" voltage CPU.
\tFrom Intel's latest price list
, a "normal" 1.83 GHz Merom costs $241, a 1.6 LV Merom costs $284. The voltage rating of the MacBook Air's processor is between "normal" and "LV"
. It therefore stands to reason that the die of the Air's processor costs somewhere between the cost of the normal die and the cost of an LV die.
\tOn the packaging front, I've really no idea. It'll be nice when Intel finally releases the processor properly so we can find out, but I reckon the 1.6 version of the Air's processor costs no more than $300. (cheaper die than the 1.6 LV, but more expensive package).
\tThe processor in the current $1099 MacBook costs $209, so that's a $91 premium for the CPU.
\tLet's say this is $20 more than the standard keyboard
\tThere are rumours that the whole line is going to switch to aluminium, and when the iMac went aluminium, its price didn't go up. I reckon the difference is therefore pretty small. Let's say $10.
\tWhen the 15" MacBook Pro went L.E.D., the price didn't go up. L.E.D. is more expensive but not that much more. We all know that the whole line of Apple displays will go L.E.D. by the end of this year (Apple effectively said as much when they promised no mercury in their displays by the end of 2008) and I don't expect the price of the MacBook to increase when that happens. Let's say $5 more for L.E.D. backlighting.
- Higher manufacturing costs:
\tLet's say $25.
O.K. so that's increased costs of $171.
Take away the savings of $79.40, and you are left with an overall cost increase of $91.60. But the retail price is $700 more than the MacBook. That makes for much higher margins.