So you're saying that there is no extra work and therefore extra costs associated with new products...
Yes, that's how it happens. SJ calls the factory and says "Hey, you know them iPod Touches? Can you knock off a couple of million of those but make them bigger, but the same. Right? And change the writing on the back. I'll get Jonathan to fax you the copy. What? Yeah, 10 inches is about right."
Bish bosh and Apple is back at it ripping us all off, again. Can you imagine how much they make on the MacBokPro line? No development, a bit more metal, and double the price!
Yes, that's how it happens. SJ calls the factory and says "Hey, you know them iPod Touches? Can you knock off a couple of million of those but make them bigger, but the same. Right? And change the writing on the back. I'll get Jonathan to fax you the copy. What? Yeah, 10 inches is about right."
Bish bosh and Apple is back at it ripping us all off, again. Can you imagine how much they make on the MacBokPro line? No development, a bit more metal, and double the price!
It's funny, the trolls that come here to call people fanboys are often the ones that think Apple has magically powers to do anything.
Quote:
Originally Posted by sflocal
Clearly you do not know the level of Teckstud's reading and comprehension skills.
I don't think we yet possess the technology to measure something so infinitesimal.
Here's (part of) the problem, and I'm not referring to anyone in particular here.
If I'm not mistaken, the posts of users you have ignored still show up, but their comments are collapsed. This creates a situation in which the user might be tempted to view the ignored post and then possibly respond to it. Ignored users' posts should not appear at all for those who have ignored them via User CP.
This is true, It would be nice if the commenter disappeared completely instead of just being collapsed. Also, if you leave the site and then come back, you are logged out and all the ignore list people show up until you log-in or hit reply for the first time.
I've done similar myself, especially with Teckstud. Just so no one can accuse me of ever complementing him, ... if there is one thing teckstud does really well is be a troll. At least a couple of times I have been so incensed by his general behaviour on a thread that I click on his hidden comments just to see, and then am immediately so angry that I simply have to respond.
So if his goal is to be a shallow, angry fool that has the power to rile up people both smarter and more knowledgeable than himself, I guess he totally wins at that. I've seen a lot of trolls and he is one of the best/worst.
Yes, that's how it happens. SJ calls the factory and says "Hey, you know them iPod Touches? Can you knock off a couple of million of those but make them bigger, but the same. Right? And change the writing on the back. I'll get Jonathan to fax you the copy. What? Yeah, 10 inches is about right."
Bish bosh and Apple is back at it ripping us all off, again. Can you imagine how much they make on the MacBokPro line? No development, a bit more metal, and double the price!
It seems most, if not all, the complainers also forgot that Apple bought an entire semiconductor design company. Licensed CPU and GPU core designs. How many devices does it take to pay that off?
What I don't get is why an IPS panel is supposedly so inexpensive.
Oh well, it cost them 230 to make. People forget to mention over all cost for development, advertising, prototypes, etc. They didn't just decide one day to make an ipad, and start building the next day. MILLIONS of dollars have gone into this ipad already. Its not always unit cost that people need to look at.
Its a new product line mate, not a new company. Kinda blowing it our of all proportion. Apple is making a nice profit on its hardware simple as that. Its a big ipod touch, me thinks the same developers/engineers might have been used, along with legal and accounting, and the ipads will not get delivered in their own special trucks
You are making the same mistake as most everyone else here today. Do not confuse Gross Profit with Net Profit. Just because a company is established does not mean that future product lines can be sold for less mark up than previous product lines. If Apple only sold one single product would it have the same operating costs that it does now? ... of course not.
A company will typically add up total company operating costs in one column and total company revenues in another and using that info will figure out what % figure of revenue can be attributed as total expenses. That % figure is used to figure out what a new product should sell for. This is a starting point only as other factors come into play, i.e. anticipated demand, competition in same marketplace area, etc. .... but for the most part prices will start off on the high side as it is always easier to lower future prices than it is to raise them, and lowering them can be seen as a positive while raising would be seen as a negative.
As stated in a previous post ... Apple, or any other company, can only establish a starting price .... the marketplace will quickly establish the real price ... by buying or not.
I don't want to put words in your mouth, but your post reads like you're blaming iSuppli for the (clearly widespread) misapplication of their manufacturing cost breakdowns.
From all the articles I've read, I've never seen iSuppli's analysts state (or even imply) that R&D, packaging, and marketing don't factor into the retail price. In fact, their original breakdown (from here) explicitly states: "Please note these cost estimates account only for hardware and manufacturing costs and do not include other expenses such as software, royalties and licensing fees."
I don't think it's iSuppli's fault that trolls with an axe to grind against Apple (or just the iPad) ignore all those other factors just so they can continue to bitch about something on the internet.
Yes, thank you for clarifying the intent of my comments. I've never seen iSuppli try to claim that the difference between the component cost and selling price is all profit. There is benefit in understanding the component cost. It's the folks who misapply their analysis who need to think about what they are saying.
However, I will say that iSuppli seems to relish the controversy their analysis of products seem to stir up. Lately their numbers have been quoted by the big time news agencies. And the fact that now they are publishing results for a product that they haven't examined and tore apart to see what's inside is a bit self serving. For all they know Apple is using an uber-expensive battery in order to get the 10-hour run time. Just seems they were motived to rush this analysis for the attention they are sure to get for it.
Edit: In fact, Fortune has an online article right now parroting iSuppli's analysis and that article is linked to from the front page of CNN's Money section. The article does state that R&D, licensing and advertising costs aren't factored in (at the very end of the article). So good on them for mentioning it. But I bet most people have no clue how much those cost could represent.
My point there was that people shouldn't keep trying to excuse Apple for keeping high margins by listing expenses everyone else in the industry has.
Of course every company wants to make as much profit as they can - no one of them is registered as charitable, non-profit organization. For various reasons, Apple can do that more than the others. Good on them. I don't have any doubts HP, Dell... would not go for even higher margins if they could.
End of story.
Apple has higher margins because they provide customer support. Guess what if you try to get your Dell fixed you talk on the phone endlessly and throw up your hands whatever the cause your fault or Dell's. If you have a similar problem with an Apple product and you take it to the Genius they either fix it or replace it on the spot in most cases. Apple has a great rep because they provide service to their customers so people are willing to pay a little bit more and avoid some of the hassles.
Apple has higher margins because they provide customer support. Guess what if you try to get your Dell fixed you talk on the phone endlessly and throw up your hands whatever the cause your fault or Dell's. If you have a similar problem with an Apple product and you take it to the Genius they either fix it or replace it on the spot in most cases. Apple has a great rep because they provide service to their customers so people are willing to pay a little bit more and avoid some of the hassles.
I'm not sure if you get the idea of margins. If Apple spends more on support, then all others things being equal, their margins would be lower.
It seems most, if not all, the complainers also forgot that Apple bought an entire semiconductor design company. Licensed CPU and GPU core designs. How many devices does it take to pay that off?
What I don't get is why an IPS panel is supposedly so inexpensive.
The panel is inexpensive for Apple because they prepaid to LG .5B for displays. For the rest of the folks buying one will be quite a bit more. Dell just came out with the display used in the Imac and guess what price for display only with no computer? $1099. I can't get how Dell can overcharge everyone as the low cost leader. Apple provides the same display integrated. So you pay $600 for the computer.
I'm not sure if you get the idea of margins. If Apple spends more on support, then all others things being equal, their margins would be lower.
I will state it more clearly then Apple sets their hardware margins higher then Dell and HP so they can provide things to the customer that Dell and HP don't, Like good customer support or best in class software or including applications on the system which are not trialware or bloat. All these things cost real money, but if you focus on hardware BOM and hardware margins you miss what Apple is all about. Apple is vertically integrated so they care about customer experience and they actually want you to live in their ecosystem. They may charge more upfront but the total cost overtime is about the same and the experience is much better. You are free to pick your own path.
what's the component cost for a Starbucks mucho grande latte? For the movie Avatar? DVDs cost a dime or less to burn, don't they, so the component cost of the latest movie DVD would be no more than a couple nickels rubbing together?
This about the second or third time a report like this has posted. Even this report is posted on several sites and I have made my comment on Mac 9 to 5. I don't know which of these posted first, but I responded to the first one I read.
thanks for telling us. that was fascinating to learn.
...Why would Apple be getting a gross margin of closer to 75% on (3G) (as opposed to around 50% for everything else)? I wonder if there a payment to ATT embedded in the pricing (to make up for the seemingly very good $30 per month unlimited data 3G deal).
i've wondered that too. therefore, you are incredibly insightful! but i do suspect sooner or later SEC accounting rules would require disclosure of such an arrangement.
Also let's remember iSuppli simply stated some facts or conclusions gleaned from considerable industry knowledge (I couldn't have come up with those component parts and i think that's true for most of us here). If we're gonna be good media consumers--that is, good critical readers--it's important to acknowledge what they said (probably fairly spot-on) and what they didn't say, which a number of people here have been faulting them for. It's the job of those who report on iSuppli's conclusions to put them in perspective. IMHO.
Quote:
Originally Posted by someone else
]Remember, a economy works when what goes around, comes around.
Keep "take, take, take" and nobody will have nothing eventually.
In less than a decade apple's opened what, 180 retail stores? Just those operations probably employ at least 10 or 20 fulltime staffers or equivalents (anyone know exactly?) That's two to four thousand employees, minimum, not counting the people who find the sites and build out the stores and are constantly working on redesigns. That's putting lots of money into circulation. Not to be cruel, but have you looked at staffing in a sony or microsoft store? I think you're being too critical of Apple's contributions to the economy.
Lastly, good thread: thanks to all the contributors. Some smart folk here. I've been reminded of things I knew, and taught new things. That's cool.
Apple has higher margins because they provide customer support. Guess what if you try to get your Dell fixed you talk on the phone endlessly and throw up your hands whatever the cause your fault or Dell's. If you have a similar problem with an Apple product and you take it to the Genius they either fix it or replace it on the spot in most cases. Apple has a great rep because they provide service to their customers so people are willing to pay a little bit more and avoid some of the hassles.
I have never dealt with Apple support so I can't really talk about that... considering string of problems some of their new machines are plagued with recently (and Apple's inability to sort them), it doesn't look much better than the others to me, but I might be wrong.
Dell is not overly popular here in New Zealand (so I can't talk about them either), but regarding brands we do sell to our customers - mostly HP and Lenovo - their business grade units come with 1 or 3 years on-site warranty, and both companies are good (if not perfect) in fulfilling their obligations. Yes you do have to sit on phone for a while in order to log the case, but they usually provide next business day response and we had couple of cases where problems were physical damage (like broken battery latch) yet company accepted to fix them under warranty, even if they didn't have to. Overall, perfectly acceptable - and even more so considering that some of those notebooks are not much above half price of basic 13" Macbook Pro.
Comments
I gather you have the expertise to price out the variables and other fixed costs.
What do you think that they should charge/assign/account just for:
- Research & Development
- Packaging
- Advertising/Promotion
- Sales & Marketing
- Distribution/Shipping
- Accounting
- Legal
- On-line/In-Store Support
- OS
- Apps
- iTunes App/iBook Book Store
- Third-Party Licenses
- Liability Insurance
- Fixed Overheads, e.g., equipment depreciations/property taxes/salaries
- Keeping Green
Or don't you believe in free enterprise?He mostly believes in talking out of his banned and now re-registered ass.
So you're saying that there is no extra work and therefore extra costs associated with new products...
Yes, that's how it happens. SJ calls the factory and says "Hey, you know them iPod Touches? Can you knock off a couple of million of those but make them bigger, but the same. Right? And change the writing on the back. I'll get Jonathan to fax you the copy. What? Yeah, 10 inches is about right."
Bish bosh and Apple is back at it ripping us all off, again. Can you imagine how much they make on the MacBokPro line? No development, a bit more metal, and double the price!
It clearly states in the title "components" but believe me some people here have reading deficiency and lack of comprehension
Clearly you do not know the level of Teckstud's reading and comprehension skills.
Yes, that's how it happens. SJ calls the factory and says "Hey, you know them iPod Touches? Can you knock off a couple of million of those but make them bigger, but the same. Right? And change the writing on the back. I'll get Jonathan to fax you the copy. What? Yeah, 10 inches is about right."
Bish bosh and Apple is back at it ripping us all off, again. Can you imagine how much they make on the MacBokPro line? No development, a bit more metal, and double the price!
It's funny, the trolls that come here to call people fanboys are often the ones that think Apple has magically powers to do anything.
Clearly you do not know the level of Teckstud's reading and comprehension skills.
I don't think we yet possess the technology to measure something so infinitesimal.
Here's (part of) the problem, and I'm not referring to anyone in particular here.
If I'm not mistaken, the posts of users you have ignored still show up, but their comments are collapsed. This creates a situation in which the user might be tempted to view the ignored post and then possibly respond to it. Ignored users' posts should not appear at all for those who have ignored them via User CP.
This is true, It would be nice if the commenter disappeared completely instead of just being collapsed. Also, if you leave the site and then come back, you are logged out and all the ignore list people show up until you log-in or hit reply for the first time.
I've done similar myself, especially with Teckstud. Just so no one can accuse me of ever complementing him, ... if there is one thing teckstud does really well is be a troll. At least a couple of times I have been so incensed by his general behaviour on a thread that I click on his hidden comments just to see, and then am immediately so angry that I simply have to respond.
So if his goal is to be a shallow, angry fool that has the power to rile up people both smarter and more knowledgeable than himself, I guess he totally wins at that. I've seen a lot of trolls and he is one of the best/worst.
Yes, that's how it happens. SJ calls the factory and says "Hey, you know them iPod Touches? Can you knock off a couple of million of those but make them bigger, but the same. Right? And change the writing on the back. I'll get Jonathan to fax you the copy. What? Yeah, 10 inches is about right."
Bish bosh and Apple is back at it ripping us all off, again. Can you imagine how much they make on the MacBokPro line? No development, a bit more metal, and double the price!
hahahha, very funny post thanks....
User CP (toward upper left of forum window » Edit Ignore List (lefthand column)
Thank you. If I want to read posts by unsocilized 12 year olds, I'll read gaming forums.
What do you think that they should charge/assign/account just for:
$11 per unit.
What I don't get is why an IPS panel is supposedly so inexpensive.
Its a new product line mate, not a new company. Kinda blowing it our of all proportion. Apple is making a nice profit on its hardware simple as that. Its a big ipod touch, me thinks the same developers/engineers might have been used, along with legal and accounting, and the ipads will not get delivered in their own special trucks
You are making the same mistake as most everyone else here today. Do not confuse Gross Profit with Net Profit. Just because a company is established does not mean that future product lines can be sold for less mark up than previous product lines. If Apple only sold one single product would it have the same operating costs that it does now? ... of course not.
A company will typically add up total company operating costs in one column and total company revenues in another and using that info will figure out what % figure of revenue can be attributed as total expenses. That % figure is used to figure out what a new product should sell for. This is a starting point only as other factors come into play, i.e. anticipated demand, competition in same marketplace area, etc. .... but for the most part prices will start off on the high side as it is always easier to lower future prices than it is to raise them, and lowering them can be seen as a positive while raising would be seen as a negative.
As stated in a previous post ... Apple, or any other company, can only establish a starting price .... the marketplace will quickly establish the real price ... by buying or not.
I don't want to put words in your mouth, but your post reads like you're blaming iSuppli for the (clearly widespread) misapplication of their manufacturing cost breakdowns.
From all the articles I've read, I've never seen iSuppli's analysts state (or even imply) that R&D, packaging, and marketing don't factor into the retail price. In fact, their original breakdown (from here) explicitly states: "Please note these cost estimates account only for hardware and manufacturing costs and do not include other expenses such as software, royalties and licensing fees."
I don't think it's iSuppli's fault that trolls with an axe to grind against Apple (or just the iPad) ignore all those other factors just so they can continue to bitch about something on the internet.
Yes, thank you for clarifying the intent of my comments. I've never seen iSuppli try to claim that the difference between the component cost and selling price is all profit. There is benefit in understanding the component cost. It's the folks who misapply their analysis who need to think about what they are saying.
However, I will say that iSuppli seems to relish the controversy their analysis of products seem to stir up. Lately their numbers have been quoted by the big time news agencies. And the fact that now they are publishing results for a product that they haven't examined and tore apart to see what's inside is a bit self serving. For all they know Apple is using an uber-expensive battery in order to get the 10-hour run time. Just seems they were motived to rush this analysis for the attention they are sure to get for it.
Edit: In fact, Fortune has an online article right now parroting iSuppli's analysis and that article is linked to from the front page of CNN's Money section. The article does state that R&D, licensing and advertising costs aren't factored in (at the very end of the article). So good on them for mentioning it. But I bet most people have no clue how much those cost could represent.
No complains here.
My point there was that people shouldn't keep trying to excuse Apple for keeping high margins by listing expenses everyone else in the industry has.
Of course every company wants to make as much profit as they can - no one of them is registered as charitable, non-profit organization. For various reasons, Apple can do that more than the others. Good on them. I don't have any doubts HP, Dell... would not go for even higher margins if they could.
End of story.
Apple has higher margins because they provide customer support. Guess what if you try to get your Dell fixed you talk on the phone endlessly and throw up your hands whatever the cause your fault or Dell's. If you have a similar problem with an Apple product and you take it to the Genius they either fix it or replace it on the spot in most cases. Apple has a great rep because they provide service to their customers so people are willing to pay a little bit more and avoid some of the hassles.
Apple has higher margins because they provide customer support. Guess what if you try to get your Dell fixed you talk on the phone endlessly and throw up your hands whatever the cause your fault or Dell's. If you have a similar problem with an Apple product and you take it to the Genius they either fix it or replace it on the spot in most cases. Apple has a great rep because they provide service to their customers so people are willing to pay a little bit more and avoid some of the hassles.
I'm not sure if you get the idea of margins. If Apple spends more on support, then all others things being equal, their margins would be lower.
It seems most, if not all, the complainers also forgot that Apple bought an entire semiconductor design company. Licensed CPU and GPU core designs. How many devices does it take to pay that off?
What I don't get is why an IPS panel is supposedly so inexpensive.
The panel is inexpensive for Apple because they prepaid to LG .5B for displays. For the rest of the folks buying one will be quite a bit more. Dell just came out with the display used in the Imac and guess what price for display only with no computer? $1099. I can't get how Dell can overcharge everyone as the low cost leader. Apple provides the same display integrated. So you pay $600 for the computer.
I'm not sure if you get the idea of margins. If Apple spends more on support, then all others things being equal, their margins would be lower.
I will state it more clearly then Apple sets their hardware margins higher then Dell and HP so they can provide things to the customer that Dell and HP don't, Like good customer support or best in class software or including applications on the system which are not trialware or bloat. All these things cost real money, but if you focus on hardware BOM and hardware margins you miss what Apple is all about. Apple is vertically integrated so they care about customer experience and they actually want you to live in their ecosystem. They may charge more upfront but the total cost overtime is about the same and the experience is much better. You are free to pick your own path.
This about the second or third time a report like this has posted. Even this report is posted on several sites and I have made my comment on Mac 9 to 5. I don't know which of these posted first, but I responded to the first one I read.
thanks for telling us. that was fascinating to learn.
...Why would Apple be getting a gross margin of closer to 75% on (3G) (as opposed to around 50% for everything else)? I wonder if there a payment to ATT embedded in the pricing (to make up for the seemingly very good $30 per month unlimited data 3G deal).
i've wondered that too. therefore, you are incredibly insightful!
Also let's remember iSuppli simply stated some facts or conclusions gleaned from considerable industry knowledge (I couldn't have come up with those component parts and i think that's true for most of us here). If we're gonna be good media consumers--that is, good critical readers--it's important to acknowledge what they said (probably fairly spot-on) and what they didn't say, which a number of people here have been faulting them for. It's the job of those who report on iSuppli's conclusions to put them in perspective. IMHO.
]Remember, a economy works when what goes around, comes around.
Keep "take, take, take" and nobody will have nothing eventually.
In less than a decade apple's opened what, 180 retail stores? Just those operations probably employ at least 10 or 20 fulltime staffers or equivalents (anyone know exactly?) That's two to four thousand employees, minimum, not counting the people who find the sites and build out the stores and are constantly working on redesigns. That's putting lots of money into circulation. Not to be cruel, but have you looked at staffing in a sony or microsoft store? I think you're being too critical of Apple's contributions to the economy.
Lastly, good thread: thanks to all the contributors. Some smart folk here. I've been reminded of things I knew, and taught new things. That's cool.
Apple has higher margins because they provide customer support. Guess what if you try to get your Dell fixed you talk on the phone endlessly and throw up your hands whatever the cause your fault or Dell's. If you have a similar problem with an Apple product and you take it to the Genius they either fix it or replace it on the spot in most cases. Apple has a great rep because they provide service to their customers so people are willing to pay a little bit more and avoid some of the hassles.
I have never dealt with Apple support so I can't really talk about that... considering string of problems some of their new machines are plagued with recently (and Apple's inability to sort them), it doesn't look much better than the others to me, but I might be wrong.
Dell is not overly popular here in New Zealand (so I can't talk about them either), but regarding brands we do sell to our customers - mostly HP and Lenovo - their business grade units come with 1 or 3 years on-site warranty, and both companies are good (if not perfect) in fulfilling their obligations. Yes you do have to sit on phone for a while in order to log the case, but they usually provide next business day response and we had couple of cases where problems were physical damage (like broken battery latch) yet company accepted to fix them under warranty, even if they didn't have to. Overall, perfectly acceptable - and even more so considering that some of those notebooks are not much above half price of basic 13" Macbook Pro.