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Apple's ultra-thin MacBook Air also slim on profits? - Page 2

post #41 of 69
Quote:
Originally Posted by JeffDM View Post

While I thought the quick price drop was a bit soon, pricing a new product steeply and reducing later it is a common practice, although it's often done a little differently. This might be called the "early adopter tax" and it's unfortunately levied by a lot of companies.

It's usually done to pay the R&D off up front. It's decided that a certain number of machines will bear the brunt of the costs. Once that number has been sold, and most of the R&D paid down, the priced is dropped by that amount. There may be another price drop later as a manufacturing price drop approaches. Then the cycle starts again with the next model.
post #42 of 69
Quote:
Originally Posted by Cory Bauer View Post

With both the Playstation I and II, when technological advances allowed for it, Sony released far slimmer versions with the same capabilities. Likewise, advances in technology has allowed Apple to make 2006's computer components (processor, motherboard) much smaller. The only difference is, Sony sold their far slimmer Playstations for considerably less than the original bulkier models, while Apple charges twice as much, and removes half the capabilities in the process.

Sigh!

You really don't see the difference, do you?

Sony is building a static product. From the beginning of the manufacturing cycle to the end, the specs remain EXACTLY the same. The difference that allowed them to build smaller, less expensive, models was because they sold about 110 million of the things. The same things.

The R&D costs were paid off after a couple of yeasrs. Then the price could be dropped a fair amount over what they were dropped because of manufacturing efficiencies, because of the large sales volume.

After that, while maintaining the same exact specs, several years later, smaller chip process technology allowed the SAME EXACT chips to be manufactured at much less cost, and to use less power, resulting in machines that were smaller, and simpler (smaller power supplies, less cooling). That alowed a smaller, cheaper case, and allowed smaller, cheaper packaging, which, in turn means lower shipping costs, etc.

So, the price can drop to a third of the original price.

So, what does this comparison you made have anything to do with the Mac Air?

Nothing!!!
post #43 of 69
Quote:
Originally Posted by JeffDM View Post

There is stuff that goes into the tapered volume. The antennas, wiring, IR reciever, both wireless modules, latches, ports, camera and even the battery seems to go into the taper a bit. Some But maybe the taper could be a bit steeper.

Half of the taper can be removed without changing the machine.
post #44 of 69
Quote:
Originally Posted by melgross View Post

Sigh!

You really don't see the difference, do you?

Sony is building a static product. From the beginning of the manufacturing cycle to the end, the specs remain EXACTLY the same. The difference that allowed them to build smaller, less expensive, models was because they sold about 110 million of the things. The same things.

The R&D costs were paid off after a couple of yeasrs. Then the price could be dropped a fair amount over what they were dropped because of manufacturing efficiencies, because of the large sales volume.

After that, while maintaining the same exact specs, several years later, smaller chip process technology allowed the SAME EXACT chips to be manufactured at much less cost, and to use less power, resulting in machines that were smaller, and simpler (smaller power supplies, less cooling). That alowed a smaller, cheaper case, and allowed smaller, cheaper packaging, which, in turn means lower shipping costs, etc.

So, the price can drop to a third of the original price.

So, what does this comparison you made have anything to do with the Mac Air?

Nothing!!!

You're right. Apart from volume, I don't see the difference. The motherboard and processor of the MacBook Air are a smaller cheaper version of what could be found in millions of notebooks two years ago. And if they're not cheaper, then surely eliminating half the components found in a consumer MacBook two years ago is enough to balance out the cost. People would scoff at paying double for the iPod Nano over the iPod Classic, so I don't know why paying double for the Macbook Air makes sense to anyone.
post #45 of 69
Quote:
Originally Posted by Cory Bauer View Post

You're right. Apart from volume, I don't see the difference. The motherboard and processor of the MacBook Air are a smaller cheaper version of what could be found in millions of notebooks two years ago. And if they're not cheaper, then surely eliminating half the components found in a consumer MacBook two years ago is enough to balance out the cost. People would scoff at paying double for the iPod Nano over the iPod Classic, so I don't know why paying double for the Macbook Air makes sense to anyone.

Nothing you've said is fact.

These are new components. The processor is a special, for Apple, though it MAY go into production for others, after a time. Apple is paying the price for that. MOBOs don't get cheaper. Look at the mobo's made for PC's and sold by third parties. The prices have risen over the years, not gone down.

It also uses an LED backlit display, which, as we all know, is more expensive than the CFL display backlights. No cheaper computers use them.

You're making geeralized statements that are easy to make, but aren't being backed up by any specific information.

You're also not bothering to refute anything I'm saying, leaving yourself to ignore it, and just come out with, "but its got to be cheaper, it's two years later than computers made two years ago!"

Which means nothing.
post #46 of 69
Quote:
Originally Posted by melgross View Post

Nothing you've said is fact.

These are new components. The processor is a special, for Apple, though it MAY go into production for others, after a time. Apple is paying the price for that.

It doesn't really matter to the end user if the Dalai Lama hand-crafts each processor himself, they still run at a clockspeed that was considered the low-end two years ago. If the MacBook Air got some phenomenal 8hrs of battery life there would be a consumer advantage here, but as it is we're just being charged more for a painfully slow processor because this time it's apparently more special.

Quote:
Originally Posted by melgross View Post

MOBOs don't get cheaper. Look at the mobo's made for PC's and sold by third parties. The prices have risen over the years, not gone down.

So tell me again why Sony can have a smaller, cheaper motherboard made for their Playstation and Playstation II after the tech is old, but no one else can?

Quote:
Originally Posted by melgross View Post

It also uses an LED backlit display, which, as we all know, is more expensive than the CFL display backlights. No cheaper computers use them.

Again, where's the significant battery life improvement that makes this of value? Just like the processor, if there's little to no perceivable improvement over two year old tech, then why pay twice as much for it?

If Apple replaced the clip on the back of the iPod Shuffle's with ones ionized in aluminum mined from the surface of Mars, would it suddenly make sense to pay $800 for a 1GB iPod Shuffle? It'd still clip the same.
post #47 of 69
Quote:
Originally Posted by Cory Bauer View Post

It doesn't really matter to the end user if the Dalai Lama hand-crafts each processor himself, they still run at a clockspeed that was considered the low-end two years ago. If the MacBook Air got some phenomenal 8hrs of battery life there would be a consumer advantage here, but as it is we're just being charged more for a painfully slow processor because this time it's apparently more special.

So now you're changing what you're saying. You admit it's a new chip, and just being sold to Apple right now.

Give it up!

You can backtrack all you want. you are still not giving a real reason, just showing your lack of understanding.

Quote:
So tell me again why Sony can have a smaller, cheaper motherboard made for their Playstation and Playstation II after the tech is old, but no one else can?

Because it enables no new circuitry, sells in the tens of millions, and Sony is willing to accept smaller profits than other companies making products that don't rely on sales of tens of millions of highly profitable games each year.

Quote:
Again, where's the significant battery life improvement that makes this of value? Just like the processor, if there's little to no perceivable improvement over two year old tech, then why pay twice as much for it?

Do you know anything at all about what would have happened if they didn't use these new, low power chips, which weren't available even a year ago, much less two years ago? Or the LED backlight, which also gives the screen a much better color gamut.

Where were the 3 pound portables with equivalent specs two years ago?

Quote:
If Apple replaced the clip on the back of the iPod Shuffle's with ones ionized in aluminum mined from the surface of Mars, would it suddenly make sense to pay $800 for a 1GB iPod Shuffle? It'd still clip the same.

The word is anodized. If the metal lasted longer, or had some other characteristic that was better, in a noticeable way, and people were willing to pay for that, then it would be worth it.

But, as you know, that's a pretty far out, and I might say, silly, example.

I'm sure you know that.

Another sign that you have no good response.
post #48 of 69
Quote:
Originally Posted by melgross View Post

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:
  • 1.8" HDD Vs. 2.5" HDD:
\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.

  • Custom processor:
\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.

  • Backlit keyboard:
\tLet's say this is $20 more than the standard keyboard

  • Aluminium case:
\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.

  • L.E.D. backlight:
\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.
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post #49 of 69
Quote:
Originally Posted by Cory Bauer View Post

It doesn't really matter to the end user if the Dalai Lama hand-crafts each processor himself, they still run at a clockspeed that was considered the low-end two years ago. If the MacBook Air got some phenomenal 8hrs of battery life there would be a consumer advantage here, but as it is we're just being charged more for a painfully slow processor because this time it's apparently more special.

Painfully slow processor?

You do know that other ultra-portables have maximum CPU speeds of 1.3 GHz, right?
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post #50 of 69
I don't know what's funnier, tired old macbook air hate at this point in the game or someone "breaking out the costs" to identify the margin....amusing.

Personally, I sold my macbook once the air came out, and I have to say, the base model air is the best laptop I've ever owned, for my use. In fact, after giving it a shot, I actually put my 24" iMac up for sale, transferred my iTunes library to my time capsule, synced it all to my appletvs and moved stuff off to my PS3 and got rid of my desktop altogether. The form factor, keyboard quality, and screen quality are RIDICULOUS and its low heat profile means actually USING it isn't a compromise at all, which is something that's often missed.

The ONLY thing it doesn't do well for me is play games, but that's intel, and the what, 85% of consumer laptops being sold with the X3100 all share the same issue. And even then, you can still play Starcraft, Diablo, Desktop Tower Defense, and Peggle just fine.

If you have lofty requirements for a system, that's one thing, and Apple still makes the standard Macbook and Pro, plus their desktop line. However, for MY uses, the air is perfect, and MAN do I love having an ultraportable road warrior that I can also use at home quite ideally.

I've been saying this since the beginning, but so much of the Air hate is because it doesn't meet the hater's needs, as if someone was forcing it upon them. I have no need or use to carry around an optical drive with me. I would never use a parallel port or a firewire port or anything. All that stuff is useless to me 99% of the time, and being able to hook up an optical drive ONLY when I need it is great since I need it so rarely. If your needs differ, super! There are PLENTY of lappers out there for you. What I love is that there's now one out there for me.

Oh, and anyone who complains about the speed of the processor or the HDD speed really hasn't used the system to any significant degree or has pro needs and shouldn't be buying the air in the first place. The system, in the REAL WORLD, is actually really snappy. Clock speed isn't everything, the C2D is a GREAT processor and it has a huge cache.
post #51 of 69
Quote:
Originally Posted by Cory Bauer View Post

a painfully slow processor

I'm going to have to call you a whiner. A dual core 1.6GHz notebook is painfully slow? Exactly what is in your notebook, and what do you do with it?

And 1.6GHz was not low end for 2006. It was mid- to upper-mid-range for the notebook line-up
post #52 of 69
Quote:
Originally Posted by noirdesir View Post

So, Steve Jobs walked into their offices and said: 'Get me something thin, I don't care about the rest".

(Why do people always have to exaggerate their often valid points to such a degree that they come across as ludicrous?)

Actually, that sounds like a very plausible quote from Steve "Fuck 'Em" Jobs.

When the dispshit who wrote the AT&T "Chilondoscow" campaign showed him a posterboard with "THINNOVATION" written on it--I think that sealed the deal.
post #53 of 69
yada yada yada blah blah blah hate hate hate whine whine whine...

Everyone that does this doesn't own a Macbook Air.
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post #54 of 69
Quote:
Originally Posted by His Dudeness View Post

yada yada yada blah blah blah hate hate hate whine whine whine...

Everyone that does this doesn't own a Macbook Air.

Makes for quite a majority.
post #55 of 69
Quote:
Originally Posted by JonathanC View Post

Actually, that sounds like a very plausible quote from Steve "Fuck 'Em" Jobs.

When the dispshit who wrote the AT&T "Chilondoscow" campaign showed him a posterboard with "THINNOVATION" written on it--I think that sealed the deal.

I will have to say that I agree there, "thinnovation" is pretty lame. Somebody got a little too uppity there.
post #56 of 69
Quote:
Originally Posted by JonathanC View Post

Makes for quite a majority.

That's fine. If people don't like it, they don't have to buy it. The Air didn't replace the whole of Apple's portable line, it's just another model.

Besides, I have no idea how I get away with using mine without a firewire port or an ethernet port. Probably because I don't own a firewire device and I have wireless in the house.
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post #57 of 69
Quote:
Originally Posted by JonathanC View Post

Makes for quite a majority.

So what?

Most people don't have the performance leading high end MBP either.

Different strokes for different folks (now, that REALLY dates me!)
post #58 of 69
Quote:
Originally Posted by Mr. H View Post

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:
  • 1.8" HDD Vs. 2.5" HDD:
\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.

  • Custom processor:
\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.

  • Backlit keyboard:
\tLet's say this is $20 more than the standard keyboard

  • Aluminium case:
\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.

  • L.E.D. backlight:
\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.

A number of your costs are suspect. How does one figure the price of an optical drive, for example? A player alone would cost Apple (even a thin one) $5. A recorder, a combo drive $25. A DVD recorder about $40.

The rest of the costs remaining to be removed are trivial. likely even less than you wrote.

The other estimates are just guesses as well, except for the drive, which is likely close.

The size of a mobo has little to do with its costs. There's more to it than that.

Estimates as to the cost for the processor are impossible to make, as so far, it is being produced in small quantities, the R&D for the new mount is not yet paid off (way too new for that), and so we can't say anything about it other that it will cost more than the equivalent cpu on the standard substrate.

An estimate for the case would be closer to $50 than $10.

The estimate for LED backlighting for a screen of that size is between $75 and $100 more than CFL lighting, not $5. which is so far off, its not imaginable. If it were even close to that, every Macbook would be using LED from January, or further back. And certainly the 17" MBP would have gotten one way back.

Add in Apple's R&D, which as I keep mentioning, is front loading prices, and you get much higher costs.
post #59 of 69
Quote:
What's more, Apple management appeared upbeat in stating that the Air has thus far shown little to no cannibalization effect on the company's other notebook offerings and thus could be considered largely responsible for helping push Mac unit growth to its highest rate in nearly two decades.

Something is wrong here. Didn't I read 3.4 gazillion posts on this forum and others when the Air was introduced that it was going to prove to be Apple "biggest blunder" since the Cube? Wasn't it going to be a catastrophic failure and cost the company millions if not billions (I never quite figured out how it would do that even if it hardly sold, but whatever)?

This sensationalistic article implies that Apple and those pesky financial analysts are actually PLEASED with how the Air is selling and contributing to the bottom line. Who are we to believe????

Disclaimer: I ordered mine the day it was announced and love it and get nothing but envious comments from my IT collegues.
post #60 of 69
Quote:
Originally Posted by malax View Post

Something is wrong here. Didn't I read 3.4 gazillion posts on this forum and others when the Air was introduced that it was going to prove to be Apple "biggest blunder" since the Cube? Wasn't it going to be a catastrophic failure and cost the company millions if not billions (I never quite figured out how it would do that even if it hardly sold, but whatever)?

This sensationalistic article implies that Apple and those pesky financial analysts are actually PLEASED with how the Air is selling and contributing to the bottom line. Who are we to believe????

Disclaimer: I ordered mine the day it was announced and love it and get nothing but envious comments from my IT collegues.

No, you didn't. A few people may have said that, but not a lot.
post #61 of 69
Quote:
Originally Posted by melgross View Post

The size of a mobo has little to do with its costs. There's more to it than that.

You do like to have it both ways don't you? Whenever we debate the xMac and I use the Mini as a comparison, I state that a larger motherboard would cost about $20 more. Then you say, "no, a bigger motherboard would be much more than that".

So which is it? If you want to be consistent, you have to tell me that my -$10 for a smaller PCB is an underestimate, not over. Or would you like to re-open discussions on the costs of an xMac and stick to your assertion that changing the size of a PCB doesn't do much to the cost of it?

Quote:
Originally Posted by melgross View Post

The estimate for LED backlighting for a screen of that size is between $75 and $100 more than CFL lighting

Bull. Total bull. If that's accurate, why did the price of the 15" MacBook Pro (which presumably would be more by virtue of being larger) not increase when it switched to L.E.D. backlighting from CFL?

Also, the 17" (which should be even more expensive again to switch from CFL to L.E.D.) has a high-resolution L.E.D. backlit display as an option. That screen costs $100 more than the standard version. The previous generation also had an optional high-res screen, but that wasn't LED backlit and IIRC, it cost $80 more. So that's $20 retail price of LED backlighting a 17" screen.

I stand by my $5 estimate.

Quote:
Originally Posted by melgross View Post

not $5. which is so far off, its not imaginable. If it were even close to that, every Macbook would be using LED from January

I'm 100% confident that the next MacBook revision will see a switch to L.E.D. backlighting with no increase in price.

Quote:
Originally Posted by melgross View Post

Add in Apple's R&D.

R&D has got nothing to do with margins.

Margin % = ((retail price - cost of manufacture)/retail price)*100

R&D doesn't figure anywhere in that.

A large R&D expenditure might require high margins in order for you to make an overall profit, but it does not intrinsically cause high margins, and it's the margins of the machine that we're discussing.

Even if we take your cost estimates instead of mine, we're left with cost of manufacture increases of $350 Vs. a $700 increase in price. If you think the $1099 MacBook has a 50% margin, then that means the MacBook Air has the same margin as the MacBook. However, we know that Apple's usual computer margins are in the high twenties, so the MacBook Air is higher than this.

What it comes down to is that this "analyst" is totally wrong. Apple's overall margin reduction has nothing to do with the MacBook Air, since its margins are at least as high as Apple's other machines, and likely much higher.
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post #62 of 69
Quote:
Originally Posted by Mr. H View Post

You do like to have it both ways don't you? Whenever we debate the xMac and I use the Mini as a comparison, I state that a larger motherboard would cost about $20 more. Then you say, "no, a bigger motherboard would be much more than that".

So which is it? If you want to be consistent, you have to tell me that my -$10 for a smaller PCB is an underestimate, not over. Or would you like to re-open discussions on the costs of an xMac and stick to your assertion that changing the size of a PCB doesn't do much to the cost of it?

I am. It has to do with the sophistication of the board, not just the size. Take a Mini, and make a slightly bigger board, with no more sophistication, and it won't cost too much more, but it could, if Apple adds to it.

Going the other way, if the board is just smaller because of less components, the price will be about the same. But, if the shrink required more sophisticated timing, sheilding, etc, it could cost a fair amount more.

It depends.

Quote:
Bull. Total bull. If that's accurate, why did the price of the 15" MacBook Pro (which presumably would be more by virtue of being larger) not increase when it switched to L.E.D. backlighting from CFL?

It's not bull, and you know it.

Why are you saying something that is so obviously wrong?

Each generation, Apple lowers the cost of its machines by a bit as prices for technology comes down. The fact that they added LED without doing that shows that it cosr more.

But, you are arguing without answering why Apple wouldn't want the sales boost from its ENTIRE line if the cost was so low.

Quote:
Also, the 17" (which should be even more expensive again to switch from CFL to L.E.D.) has a high-resolution L.E.D. backlit display as an option. That screen costs $100 more than the standard version. The previous generation also had an optional high-res screen, but that wasn't LED backlit and IIRC, it cost $80 more. So that's $20 retail price of LED backlighting a 17" screen.

No, it's not. There are too many factors going into a switch of several parts at once to say that.

Quote:
I stand by my $5 estimate.

Good.


Quote:
I'm 100% confident that the next MacBook revision will see a switch to L.E.D. backlighting with no increase in price.

I'd love that. As Apple finds lower priced components, they could afford to do it.

Quote:
R&D has got nothing to do with margins.

Margin % = ((retail price - cost of manufacture)/retail price)*100

R&D doesn't figure anywhere in that.

A large R&D expenditure might require high margins in order for you to make an overall profit, but it does not intrinsically cause high margins, and it's the margins of the machine that we're discussing.

Like it or not, R&D is added to the selling price of goods.

Quote:
Even if we take your cost estimates instead of mine, we're left with cost of manufacture increases of $350 Vs. a $700 increase in price. If you think the $1099 MacBook has a 50% margin, then that means the MacBook Air has the same margin as the MacBook. However, we know that Apple's usual computer margins are in the high twenties, so the MacBook Air is higher than this.

I don't think the MB margin is 50%. Parts are only part of the cost You can't use that number and come up with margins.

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What it comes down to is that this "analyst" is totally wrong. Apple's overall margin reduction has nothing to do with the MacBook Air, since its margins are at least as high as Apple's other machines, and likely much higher.

You really don't know. Your guesses are likely no better than his.
post #63 of 69
Quote:
Originally Posted by melgross View Post

Each generation, Apple lowers the cost of its machines by a bit as prices for technology comes down.

What do you mean by "generation"? Because Apple haven't ever changed the price of the MacBook or the MacBook Pro. The MacBook price points have always been $1099, $1299 and $1499, and the MacBook Pro price points have always been $1999, $2499 and $2799. In fact, the price points of the bottom two PowerBook G4s were $1999 and $2499 for quite a few iterations. The price of the 17" model has fallen.

I ask you again (third time now): if L.E.D. backlighting is so much more expensive (+$100 for a 13" screen means +$140 for a 15.4" one, the screen area of a 15.4" being 40% more than a 13" one), how come the 15.4" MacBook Pro didn't increase in price when they switched to L.E.D. backlighting?


Quote:
Originally Posted by melgross View Post

Like it or not, R&D is added to the selling price of goods.

Sure. And that makes their margins higher because margins having nothing to with R&D costs added to the price of the machine.

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Originally Posted by melgross View Post

I don't think the MB margin is 50%.

Great. So you concede that the MacBook Air has higher margins than the MacBook.

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Originally Posted by melgross View Post

Parts are only part of the cost You can't use that number and come up with margins.

You need to factor in manufacturing cost as well as parts. That's it. Like I said above, margin % = ((retail cost - cost of manufacture (inc. parts))/retail cost)*100. That's the definition of gross margin. Which is what we're talking about.

Quote:
Originally Posted by melgross View Post

Your guesses are likely no better than his.

He didn't provide any guesses. He just said "I know Apple gave all these sound, definitive reasons why their gross margins have dropped, but I think they're lying! It's all because of the MacBook Air!". He provided no reason whatsoever behind his accusation of low MacBook Air margins.

Just how low would the margins of the MacBook Air have to be for them to affect Apple's overall gross margins so considerably? Given the likely sales volume of the MacBook Air, they'd probably have to be selling them at a loss in order to result in the overall reduction in gross margin that we saw. I think we can at least agree that Apple aren't selling the Air at a loss.
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post #64 of 69
Quote:
Originally Posted by Mr. H View Post

I ask you again (third time now): if L.E.D. backlighting is so much more expensive (+$100 for a 13" screen means +$140 for a 15.4" one, the screen area of a 15.4" being 40% more than a 13" one), how come the 15.4" MacBook Pro didn't increase in price when they switched to L.E.D. backlighting?

Actually, this is an easy one. As you mentioned, Apple has kept its prices very stable accross their laptop lines. Suppose we talk about a $2K MBP and assume that at sometime in the past that computer had a (for example only) 20% profit margin. What did Apple do to the price when Intel lowered the chip costs? Nothing. And when RAM prices declined? Nothing. After 6 months, that 20% margin may have increased to 30% as componant prices have decreased.

Now I'm sure you have read as many threads as I have where people bemoan this and wail about Apple gouging their customers by not lowering thier prices in these situations, but it is what they do.

Now, when it is time for a revision, they can bump it to a faster, more expensive Intel chip and a nicer more expensive screen and keep the $2K price stable. Does that mean that the screen was the same price? Of course not! They just allowed the margin to drop back to (again still theoretical) 20%.

You cannot figure componant prices by Apples pricing--they do not work it that way as you well know.
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post #65 of 69
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Originally Posted by Bageljoey View Post

Actually, this is an easy one. As you mentioned, Apple has kept its prices very stable accross their laptop lines. Suppose we talk about a $2K MBP and assume that at sometime in the past that computer had a (for example only) 20% profit margin. What did Apple do to the price when Intel lowered the chip costs? Nothing. And when RAM prices declined? Nothing. After 6 months, that 20% margin may have increased to 30% as componant prices have decreased.

Now I'm sure you have read as many threads as I have where people bemoan this and wail about Apple gouging their customers by not lowering thier prices in these situations, but it is what they do.

I agree. It is something that I myself have suggested Apple should cease to do. They should aim to keep their margins constant by lowering prices as a model ages, rather than start with low (for Apple) margins and let them grow larger and larger until the next refresh.

Having said that, if the screen was $140 more than the previous model, I don't think Apple would be willing to absorb that. It would have made the margins on the 15.4" with L.E.D. upon launch much smaller than when the previous model was launched, when you consider that the screen wasn't the only thing that got upgraded.
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post #66 of 69
Quote:
Originally Posted by Mr. H View Post

Having said that, if the screen was $140 more than the previous model, I don't think Apple would be willing to absorb that. It would have made the margins on the 15.4" with L.E.D. upon launch much smaller than when the previous model was launched, when you consider that the screen wasn't the only thing that got upgraded.


"LED backlights are about half as thick as CCFL backlights, according to Luke Yao, an analyst at DisplaySearch.

The problem with LED backlights is still cost, but prices are coming down, he said during a conference in Taipei.

The price of an LED backlight is still twice as much as that of CCFL or more."

http://www.macworld.com/article/1330...okair_led.html.
post #67 of 69
Quote:
Originally Posted by Londor View Post

"LED backlights are about half as thick as CCFL backlights, according to Luke Yao, an analyst at DisplaySearch.

The problem with LED backlights is still cost, but prices are coming down, he said during a conference in Taipei.

The price of an LED backlight is still twice as much as that of CCFL or more."

http://www.macworld.com/article/1330...okair_led.html.

Thanks for the link. Perhaps my +$5 estimate was slightly wishful thinking, but I still think it's significantly less than +$75-100 as suggested by Melgross. If L.E.D. adds $75 and L.E.D. is double the price of CFL, that makes the cost of CFL $75. And I don't believe that for a second. It also doesn't tally with the +$100 retail price for Apple's high-res L.E.D. screen for the 17" MacBook Pro.
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post #68 of 69
Quote:
Originally Posted by Mr. H View Post

Perhaps my +$5 estimate was slightly wishful thinking, but I still think it's significantly less than +$75-100 as suggested by Melgross.

If you go to Dell website and configure an XPS M1330 to have a LED backlit screen it ups the price by $150 so I think Melgross's estimate is more likely to be correct than yours.
post #69 of 69
Quote:
Originally Posted by melgross View Post

It's usually done to pay the R&D off up front. It's decided that a certain number of machines will bear the brunt of the costs. Once that number has been sold, and most of the R&D paid down, the priced is dropped by that amount. There may be another price drop later as a manufacturing price drop approaches. Then the cycle starts again with the next model.

I agree with Mel and would also like to add that the higher prices are also used to control the supply/demand curve at the initial launch. I think this is especially the case with the iPhone launch. Apple has not been able to keep up with demand for many products including iPods in the past. If you can sell all your stock at $600, it would be foolish for any company to price those same units at $400 and not be able to make enough units to fulfill demand. When they realized that the demand wasn't large enough to meet the supply at that price point once a few months past, they lowered the price. The $100 gift certificates they gave out cost them less than $60 each and probably actually made them money as I am sure many customers used them toward a computer or other purchase much greater than $100. Overall, I believe it was brilliantly executed.
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