I think they need to stay competitive on the price.
$499 is fine for now with no real competition out there.
Once Android and Chrome tablets enter the market, I would like to see a drop in the price or a bump in the specs.
For only $30 difference in cost between the 32GB and 16GB models, there isn't much justification in even offering a 16GB model.
Pricing should have been more like:
$499 32GB
$599 64GB
You got some pretty good points..
I think there is no way Apple is going to drop the prices..they'll just wait a few months (4-6 i guess) and bump the specs..
probably: $499 for 32GB and maybe double the RAM (since its likely that we'll get multitasking that'll make sense). Same thing with the 64GB and maybe a new 128 GB..but the 16GB will be dropped.
And maybe in early 2011 they'll upgrade it again with a slight design change (camera), faster processor..my guess is also that not later than 2011 they'll drop the wi-fi only version and every ipad will have 3G and GPS..at this point they might go with the same concept than the ipod touch.. the top-end ipads will have haster hadware..but again: its just guessing ^^
Oh and all my "predictions" depend on how successful the ipad as a product is going to be..however there is always going to be a "cheap" version of the ipad since the low price is very important for this product category.
ps.: Sorry for kinda missing the subject of the thread xD
//EDIT:
Now that i think about it:
Apple surprised most of us with the $499 price for the lo-end ipad..they might do the trick again since a low-end ipad for like $389 or something would most certainly bash the competition.. Doesn't sound very apple"ish" to be though ^^
The article implies that Apple might lower the price of the iPad if sales were weak, but I've never known them to do that before. Sometimes they lower the price when sales are strong. I think they use their own secret formula for setting price and sales volume is a minor factor.
Volume is a major factor in pricing theory. Apple sets prices in an attempt to maximize total profits. Just like every other company.
To all the people complaining that they got ripped off, this is what it costs to be on the bleeding edge. I just got the new ATI 5970 for my gaming rig, and paid an arm and a leg for it - alas I don't complain because I wanted the best of the best. I think the same applies here. These are really healthy margins, which will help Apple stay competitive and keep churning out great products in the future. Now I'm off to play with my new toy... err iPad.
I think they need to stay competitive on the price.
$499 is fine for now with no real competition out there.
Once Android and Chrome tablets enter the market, I would like to see a drop in the price or a bump in the specs.
For only $30 difference in cost between the 32GB and 16GB models, there isn't much justification in even offering a 16GB model.
Pricing should have been more like:
$499 32GB
$599 64GB
If the iPhone is any indication, your wishes will likely come true. The specs have a lot of room to be bumped. Lots of folks have identified areas of weakness, and once competition comes on full-force, Apple has a lot of room to maneuver.
Maybe they will discontinue the WiFi only models, and reprice the 3G models to the lower level? The Wifi models are missing GPS, which might become a competative disadvantage once other tablets start hitting he market.
This will not happen with the iPad. It will not have a worthwhile tablet competitor for quite some time. Rather, it will compete with netbooks and low-end notebooks.
Why do you say that they will not have a worthwhile tablet competitor for quite some time? Dozens of them were shown at CES.
Is that just some kind of "nobody could possibly be as good as Apple" sort of thing?
I have never seen a single iSupply report and I am not sure about their cost calculation methods, but I really doubt in their numbers.
Let us just compare the numbers for commodity part, 8GB MLC NAND FLASH in TSOP48:
- today's average spot price of 8GB MLC FLASH is $15, so spot price for 16GB corresponds to iSupply number of $29.50
- i am sure that Apple, as biggest consumer of FLASH memory in the world, pays a lot less then today's spot prices for FLASH:
-- the scheduled order quantities for iPhone, iPod and now iPad are huge!
-- Apple paid big amounts of money well in advance to Samsung and Toshiba to assure capacity and delivery as well as price
Thus, there are good reasons to believe that Apple negotiated FLASH prices that are well double-digit below spot prices. And because of relatively limited list of chips used in iPhone, iPod and iPad and their high volumes, it can be true for the other parts in iPad BOM, too.
Did you check spot prices at the time Apple would have placed their order? Does it really matter what spot prices are today? Given the spot market, is there a futures market?
Maybe my sarcasm perimeter broke today, but I think you might have missed the prediction that this baby cost well over $1,000 leading to the unveiling, and the overwhelming applaud when Jobs announced $499 as starting price.
My comment was a criticism of a poor piece of journalism, and the sarcastic tone was a reflection of just how poor. That the component cost is lower than the retail cost is so obvious as to not need stating, so presumably the article did not pass in front of an editor first as they surely would have excised the sentence. I'm afraid I don't see how your comment is relevant either to the article or my comment.
On topic: iSuppli do specify 'component costs' and so does not purport to cover other costs listed by various posters above, but surely it would make more sense to use the wholesale rather than retail price for comparison. I would estimate the retailers' mark-up to be between 10-12%, and even where Apple is the retailer they would use such a margin for accounting purposes. Also, I would argue that the OS is a component, because without it the device would not work, although calculating that cost per unit would be practically impossible.
XBox 360. They sold them at a loss as a "strategic investment" to really break in to the gaming console market.
But anyway, as many have stated before: there is more to the device cost than just the components. Plus, if people are willing to buy the iPad at $499, and Apple's pricing analysts see this as the best price to maximize profit, then the iPad should be sold at $499. Apple is a business just like any other: their main goal is to maximize profit.
Xbox and Zune, for a start. In fact it would be a challenge to name any product outside of software where Microsoft has made a profit at the start, or even a long way down the road in some instances. Apple has never been granted that sort of luxury.
Although you can state that certain abuses do exist, you have to see what Apple does to alleviate the violations of its standards. To be sure the workers do not rise to the US in terms of wages, however you have to consider that the workers earn more than state worker employees.
Some highlights from the Reoprt:
"To extend the reach of this training while preserving its quality, Apple implemented a train-the-trainer program that would enable our suppliers to deliver their own social responsibility courses. We collaborated with Verité?an internationally recognized leader dedicated to ensuring safe, fair, and legal conditions in the workplace?to design and deliver a five-day workshop to train human resources staff from all of our final assembly manufacturers.
Working hours
Apple?s Code sets a maximum of 60 work hours per week and requires at least one day of rest per seven days of work, while allowing exceptions in unusual or emergency circumstances.
2010 Progress ReportClarifying standards
To reduce the frequency of common violations, Apple has developed detailed standards that educate our suppliers and clarify our expectations on the following subjects:
? Dormitories ? Juvenile Worker Protections ? Medical Non-Discrimination ? Pregnancy Non-Discrimination ? Prevention of Involuntary Labor ? Wages and Benefits ? Working Hours
2010 Progress Report
At each facility we audit, we examine multiple records across shifts and production lines. At 60 facilities, we found records that indicated workers had exceeded weekly work-hour limits more than 50 percent of the time. Similarly, at 65 facilities, more than half of the records we reviewed indicated that workers had worked more than six consecutive days at least once
per month. To address these issues, we required each facility to develop management systems?or improve existing systems?to drive compliance with Apple?s limits on work hours and required days of rest.
Wages and benefits
Our Code addresses several areas of compensation, including base wages, overtime wages, pay structures, legally mandated benefits, and prohibition of base wage deductions for disciplinary purposes.
At 48 of the facilities audited, we found that overtime wages had been calculated improperly, resulting in underpayment of overtime wages. At 24 facilities, our auditors found that workers had been paid less than minimum wage for regular working hours. In most of these cases, the facility?s pay structure for regular hours depended on attendance-related bonuses to meet minimum wage requirements; without these bonuses, there was no guarantee that the minimum wage would be met. We also found 15 facilities where the facility?s pay structure was unnecessarily complex and could result in underpayment of wages.
In all cases where workers were underpaid?or where the complexity of the pay structure could cause underpayment?we required facilities to complete many actions, including calculation of underpayments, repayment of underpaid wages, and implementation of management systems to ensure accurate payment in the future.
Another common violation we found was underpayment of legally required benefits. We found 57 facilities with deficient payments in worker benefits, such as sick leave, maternity leave, or social insurance for retirement. In all cases, Apple has required management to pay the full amount of facility-paid benefits according to local law.
Audits also revealed 45 facilities where wage deductions were used for disciplinary purposes. While the deductions we discovered may be legal under local laws, Apple has required an end to this practice.
That number is rather meaningless, since it does not include research and development costs. I hope no one takes it seriously.
It's the only number that the public sees. No company publishes all of the costs that it takes to develop, manufacture and sell a given product. There is a competitive disadvantage by disclosing such information. Apple does not break out figures for individual SKUs.
The BOM analysis is useful because it is relative to other BOM analyses. The only visibility that outsiders have are the estimated cost of the parts. The BOM figure is the closest thing the outsider has to COGS.
Apple lists R&D and SG&A separately under operating expenses in their quarterly income statements. How Apple distributes these operating expenses per product is none of our business.
Interesting comparison of selected specs of the HP Slate and the iPad.
the HP Slate,
--has a smaller screen
--a larger battery
...and 1/2 the battery life!
Why???
*
Because HP stopped Inventing a long time ago...
HP probably just buy the cheapest battery it can find on the market to include in its cheaply designed device...
Apple has been investing a lot recently in battery R&D, making them lasting longer, being smaller, greener, and rechargeable many times more than the average inexpensive good enough crap every other company is satisfied with...
Comments
I think they need to stay competitive on the price.
$499 is fine for now with no real competition out there.
Once Android and Chrome tablets enter the market, I would like to see a drop in the price or a bump in the specs.
For only $30 difference in cost between the 32GB and 16GB models, there isn't much justification in even offering a 16GB model.
Pricing should have been more like:
$499 32GB
$599 64GB
You got some pretty good points..
I think there is no way Apple is going to drop the prices..they'll just wait a few months (4-6 i guess) and bump the specs..
probably: $499 for 32GB and maybe double the RAM (since its likely that we'll get multitasking that'll make sense). Same thing with the 64GB and maybe a new 128 GB..but the 16GB will be dropped.
And maybe in early 2011 they'll upgrade it again with a slight design change (camera), faster processor..my guess is also that not later than 2011 they'll drop the wi-fi only version and every ipad will have 3G and GPS..at this point they might go with the same concept than the ipod touch.. the top-end ipads will have haster hadware..but again: its just guessing ^^
Oh and all my "predictions" depend on how successful the ipad as a product is going to be..however there is always going to be a "cheap" version of the ipad since the low price is very important for this product category.
ps.: Sorry for kinda missing the subject of the thread xD
//EDIT:
Now that i think about it:
Apple surprised most of us with the $499 price for the lo-end ipad..they might do the trick again since a low-end ipad for like $389 or something would most certainly bash the competition.. Doesn't sound very apple"ish" to be though ^^
That number is rather meaningless, since it does not include research and development costs. I hope no one takes it seriously.
Cost of goods sold is a major accounting concept. And material costs are a major component of COG. It is hardly meaningless.
The article implies that Apple might lower the price of the iPad if sales were weak, but I've never known them to do that before. Sometimes they lower the price when sales are strong. I think they use their own secret formula for setting price and sales volume is a minor factor.
Volume is a major factor in pricing theory. Apple sets prices in an attempt to maximize total profits. Just like every other company.
Amen. I wonder what the assembly labor costs are?
Nearly nothing. A half-step above slave wages. The lowest in the world. Sub-poverty level by our standards. Take your pick.
I think they need to stay competitive on the price.
$499 is fine for now with no real competition out there.
Once Android and Chrome tablets enter the market, I would like to see a drop in the price or a bump in the specs.
For only $30 difference in cost between the 32GB and 16GB models, there isn't much justification in even offering a 16GB model.
Pricing should have been more like:
$499 32GB
$599 64GB
If the iPhone is any indication, your wishes will likely come true. The specs have a lot of room to be bumped. Lots of folks have identified areas of weakness, and once competition comes on full-force, Apple has a lot of room to maneuver.
Maybe they will discontinue the WiFi only models, and reprice the 3G models to the lower level? The Wifi models are missing GPS, which might become a competative disadvantage once other tablets start hitting he market.
There are a number of possibilities.
Well one would hardly expect it to be over the $499 starting price, would one?
Only if it was made by Microsoft. They are excused for selling at a loss when it can be called a "strategic investment."
, its hard to say what industry they're actually in anymore.
- Computer Industry?
- CE Industry?
- Cell Phone Industry?
- Music Industry?
- Movie Industry?
- Publishing Industry?
If you can believe the corporate spin, they consider themselves to be a mobile device company. Not a computer company.
Which puts them into the CE category, I would think
This will not happen with the iPad. It will not have a worthwhile tablet competitor for quite some time. Rather, it will compete with netbooks and low-end notebooks.
Why do you say that they will not have a worthwhile tablet competitor for quite some time? Dozens of them were shown at CES.
Is that just some kind of "nobody could possibly be as good as Apple" sort of thing?
I have never seen a single iSupply report and I am not sure about their cost calculation methods, but I really doubt in their numbers.
Let us just compare the numbers for commodity part, 8GB MLC NAND FLASH in TSOP48:
- today's average spot price of 8GB MLC FLASH is $15, so spot price for 16GB corresponds to iSupply number of $29.50
- i am sure that Apple, as biggest consumer of FLASH memory in the world, pays a lot less then today's spot prices for FLASH:
-- the scheduled order quantities for iPhone, iPod and now iPad are huge!
-- Apple paid big amounts of money well in advance to Samsung and Toshiba to assure capacity and delivery as well as price
Thus, there are good reasons to believe that Apple negotiated FLASH prices that are well double-digit below spot prices. And because of relatively limited list of chips used in iPhone, iPod and iPad and their high volumes, it can be true for the other parts in iPad BOM, too.
Did you check spot prices at the time Apple would have placed their order? Does it really matter what spot prices are today? Given the spot market, is there a futures market?
Only if it was made by Microsoft. They are excused for selling at a loss when it can be called a "strategic investment."
Which product do you have in mind? IE?
Maybe my sarcasm perimeter broke today, but I think you might have missed the prediction that this baby cost well over $1,000 leading to the unveiling, and the overwhelming applaud when Jobs announced $499 as starting price.
My comment was a criticism of a poor piece of journalism, and the sarcastic tone was a reflection of just how poor. That the component cost is lower than the retail cost is so obvious as to not need stating, so presumably the article did not pass in front of an editor first as they surely would have excised the sentence. I'm afraid I don't see how your comment is relevant either to the article or my comment.
On topic: iSuppli do specify 'component costs' and so does not purport to cover other costs listed by various posters above, but surely it would make more sense to use the wholesale rather than retail price for comparison. I would estimate the retailers' mark-up to be between 10-12%, and even where Apple is the retailer they would use such a margin for accounting purposes. Also, I would argue that the OS is a component, because without it the device would not work, although calculating that cost per unit would be practically impossible.
Which product do you have in mind? IE?
XBox 360. They sold them at a loss as a "strategic investment" to really break in to the gaming console market.
But anyway, as many have stated before: there is more to the device cost than just the components. Plus, if people are willing to buy the iPad at $499, and Apple's pricing analysts see this as the best price to maximize profit, then the iPad should be sold at $499. Apple is a business just like any other: their main goal is to maximize profit.
Which product do you have in mind? IE?
Xbox and Zune, for a start. In fact it would be a challenge to name any product outside of software where Microsoft has made a profit at the start, or even a long way down the road in some instances. Apple has never been granted that sort of luxury.
Nearly nothing. A half-step above slave wages. The lowest in the world. Sub-poverty level by our standards. Take your pick.
You should read Apple Supplier Responsibility Report 2010 @
http://images.apple.com/supplierresp...0Report_FF.pdf
Although you can state that certain abuses do exist, you have to see what Apple does to alleviate the violations of its standards. To be sure the workers do not rise to the US in terms of wages, however you have to consider that the workers earn more than state worker employees.
Some highlights from the Reoprt:
"To extend the reach of this training while preserving its quality, Apple implemented a train-the-trainer program that would enable our suppliers to deliver their own social responsibility courses. We collaborated with Verité?an internationally recognized leader dedicated to ensuring safe, fair, and legal conditions in the workplace?to design and deliver a five-day workshop to train human resources staff from all of our final assembly manufacturers.
Working hours
Apple?s Code sets a maximum of 60 work hours per week and requires at least one day of rest per seven days of work, while allowing exceptions in unusual or emergency circumstances.
2010 Progress ReportClarifying standards
To reduce the frequency of common violations, Apple has developed detailed standards that educate our suppliers and clarify our expectations on the following subjects:
? Dormitories ? Juvenile Worker Protections ? Medical Non-Discrimination ? Pregnancy Non-Discrimination ? Prevention of Involuntary Labor ? Wages and Benefits ? Working Hours
2010 Progress Report
At each facility we audit, we examine multiple records across shifts and production lines. At 60 facilities, we found records that indicated workers had exceeded weekly work-hour limits more than 50 percent of the time. Similarly, at 65 facilities, more than half of the records we reviewed indicated that workers had worked more than six consecutive days at least once
per month. To address these issues, we required each facility to develop management systems?or improve existing systems?to drive compliance with Apple?s limits on work hours and required days of rest.
Wages and benefits
Our Code addresses several areas of compensation, including base wages, overtime wages, pay structures, legally mandated benefits, and prohibition of base wage deductions for disciplinary purposes.
At 48 of the facilities audited, we found that overtime wages had been calculated improperly, resulting in underpayment of overtime wages. At 24 facilities, our auditors found that workers had been paid less than minimum wage for regular working hours. In most of these cases, the facility?s pay structure for regular hours depended on attendance-related bonuses to meet minimum wage requirements; without these bonuses, there was no guarantee that the minimum wage would be met. We also found 15 facilities where the facility?s pay structure was unnecessarily complex and could result in underpayment of wages.
In all cases where workers were underpaid?or where the complexity of the pay structure could cause underpayment?we required facilities to complete many actions, including calculation of underpayments, repayment of underpaid wages, and implementation of management systems to ensure accurate payment in the future.
Another common violation we found was underpayment of legally required benefits. We found 57 facilities with deficient payments in worker benefits, such as sick leave, maternity leave, or social insurance for retirement. In all cases, Apple has required management to pay the full amount of facility-paid benefits according to local law.
Audits also revealed 45 facilities where wage deductions were used for disciplinary purposes. While the deductions we discovered may be legal under local laws, Apple has required an end to this practice.
Nearly nothing. A half-step above slave wages. The lowest in the world. Sub-poverty level by our standards. Take your pick.
Again ill-informed person with concern to cost of living in the countries outside of US/Europe and minimum wage.
Do your homework, here is a link below, not going to do all work for you and give you the direct link because i do not believe in handouts
http://www.ilo.org/global/What_we_do...--en/index.htm
the HP Slate,
--has a smaller screen
--a larger battery
...and 1/2 the battery life!
Why???
*
That number is rather meaningless, since it does not include research and development costs. I hope no one takes it seriously.
It's the only number that the public sees. No company publishes all of the costs that it takes to develop, manufacture and sell a given product. There is a competitive disadvantage by disclosing such information. Apple does not break out figures for individual SKUs.
The BOM analysis is useful because it is relative to other BOM analyses. The only visibility that outsiders have are the estimated cost of the parts. The BOM figure is the closest thing the outsider has to COGS.
Apple lists R&D and SG&A separately under operating expenses in their quarterly income statements. How Apple distributes these operating expenses per product is none of our business.
Interesting comparison of selected specs of the HP Slate and the iPad.
the HP Slate,
--has a smaller screen
--a larger battery
...and 1/2 the battery life!
Why???
*
To put simply, Inefficient OS and inefficient HW.
PS: Why are you replying to Josh.B (aka iGenius) trollish remarks?
Interesting comparison of selected specs of the HP Slate and the iPad.
the HP Slate,
--has a smaller screen
--a larger battery
...and 1/2 the battery life!
Why???
*
Because HP stopped Inventing a long time ago...
HP probably just buy the cheapest battery it can find on the market to include in its cheaply designed device...
Apple has been investing a lot recently in battery R&D, making them lasting longer, being smaller, greener, and rechargeable many times more than the average inexpensive good enough crap every other company is satisfied with...