Company wide gross margins are about 38%.
Cook has said time and time again that iPadMini margins are much lower than other products.
Most estimates are at 30% gross margins.
Apple had about $170B in revenue in previous fiscal year
Admin/Selling/Tax was $29B.
That equals a 17% SGA allocation
Sell Price: $399
Gross Cost: $280 (based on 30% Gross Margin)
Admin/Sell/Tax: $68 (based on 17% SGA)
Profit: $50
A pathetic $50 profit per unit does not fly and cannot support the costs it takes to run the Apple ecosystem and R&D. With lower profits R&D will suffer, employee quality will suffer, investment will suffer.
If Apple can't support a retina mini at $399 they should never have introduced it in first place. I have a hard time believing Apple had no idea what margins would be like when they announced this product last year.
The reason for iPad mini 3 stuck with an A7 is the same reason for iPhone base model starts with 16 Gb: To upsell the "better" product. I think last year's iPad mini with retina (which I own) took a larger share of overall iPad sales then Apple would like.
This year, iPad Air and iPad mini are differentiated more than just size and price, but also performance.
The reason for iPad mini 3 stuck with an A7 is the same reason for iPhone base model starts with 16 Gb: To upsell the "better" product. I think last year's iPad mini with retina (which I own) took a larger share of overall iPad sales then Apple would like.
This year, iPad Air and iPad mini are differentiated more than just size and price, but also performance.
But why have two different models of the same size at two different prices with the same chip? Again you get back to whether Touch ID is worth $100 more and I think most would argue it isn't.
Let the consumer decide that. Some will choose to pay for the touchID and some won't.
That's like saying consumers won't pay $100 for 32GB vs 16GB.
IMO its better to just consider the Mini2 and Mini3 as the same line. Just the Mini3 has TouchID.
The consumers will chose and I predict they'll chose the mini 2 in much larger numbers. My guess is within 6 months either the mini 3 will have A8 or the mini 1 and 2 will be gone and the mini 3 will get a price cut.
Its not that they can't support it. Its that they did not know what the mix of Mini vs Air was going to be. Same thing happenned with the 5C vs 5S last year. So you want apple to be stubborn and not be dynamic like the market? Silly.
Also with the introduction of the PLUS there is more reason to discourage Mini sales.
The Mini is now a specialized product. Its for people who need to get the cheapest device or need a screen smaller than 9.7 inches. There really isn't any incentive for Apple to push the Mini.
Apple's mini line up right now is stupid and confusing. Why are they still selling products with an A5 chip? And they knock Android for fragmentation. If there isn't any incentive for Apple to push the mini then the mini 3 has no reason to exist. Tell people if they want Touch ID they need to buy an Air or an iPhone. Don't sell a gimped product because you want people to buy something else. Phil Schiller and his obsession with upselling need to go.
The question people should ask themselves is: what do they use iPad for?
Most not all, use iPad for basic tasks such as emails, social networks, media and some games. Those wouldn't see any need for the upgrade. For those who heavily use iPad for video/picture editing, music studio and hardcore games, maybe upgrade is needed. For those complaining about Safari tabs loading, just S.T.F.U'
Since when was the A7 a gimped product? You are speaking drivel. The Mini3 is an AMAZING tablet and literally the 2nd best tablet in the entire world.
This is like expecting a BMW 325 to have all the features the BMW 750 has. Its not called a FLAGSHIP for nothing.
The A5 mini is targeted at little kids and extremely price sensitive people. Like a gateway drug, it will introduce many to the Apple ecosystem.
Again why the fuk are you questioning Apple management? Have they not done ENOUGH to prove they are the best in the business? I mean SERIOUSLY GUY!!! You really think you know more about the market than Apple? Apple spends hundreds of millions on market research and knows EXACTLY what the market wants and at what price. Your arrogance is shocking.
One correction in this tongue lashing: it should be "SERIOUSLY GAL." Rogifan alternates between logical on some days and highly emotionally negative on other days. Or it varies by the issue.
About the mini retina, another factor to consider is that it has been a difficult product for Apple from the beginning last year. Ray Soneira of DisplayMate thought it was apparent to him that the panel was destined to have been an IGZO one, like the Air was, but no doubt there was no supply yet, and as a result, we got gimped color gamut screens and so-so battery life. I'm betting that there may be a mid-term silent update on the mini that will have a better color range, or maybe that's already happened. I haven't seen any complaints about the weaker colors on the new mini. You'd think there would be by now.
No reason to kill it as long as they can incremental sales out of it and stops competitors from dominating the small tablet niche.
Apple has all bases covered:
4.0
4.7
5.5
7.9
9.7
If you need anything bigger go get a MacBook
In 2 years, the line up will be:
4.7
5.5
9.7
12.9
Simplify the resolution: 2 for iPad, 2 for iPhone. Apple can ignore the 6"-9" for scavengers Android.
BTW, I would buy Mini 2 when the price goes down to $250 this Thanksgiving. I'm considering returning my iPhone 6+ since I almost dropped it a few times with one hand use.
Just got an Airport Extreme and my iPhone6+ is BLAZING FAST now. My Wifi speed is now 2x to 4x faster than before.
How is Airport Extreme signal coverage? I have my N-router on second floor and signal wasn't good downstairs in some spots. Even when I was up stair in the farthest side from the router (10-15 yards), I got 1 bar signal.
Coverage is excellent. My home is 2 stories about 2300 square feet and I get good coverage everywhere in the house.
Full bars everywhere. Before the Airport I was getting 5-8 Mbps at the farthest point away from the router. Now I'm getting 20-30 Mbps.
Good to know. I'm getting rid of shi.tty N-routers at home. I'm using 2 routers as repeaters on top of Comcast Router to cover 2-story 2000 sq-ft house. That's pathetic.
Since when was the A7 a gimped product? You are speaking drivel. The Mini3 is an AMAZING tablet and literally the 2nd best tablet in the entire world.
This is like expecting a BMW 325 to have all the features the BMW 750 has. Its not called a FLAGSHIP for nothing.
The A5 mini is targeted at little kids and extremely price sensitive people. Like a gateway drug, it will introduce many to the Apple ecosystem.
Again why the fuk are you questioning Apple management? Have they not done ENOUGH to prove they are the best in the business? I mean SERIOUSLY GUY!!! You really think you know more about the market than Apple? Apple spends hundreds of millions on market research and knows EXACTLY what the market wants and at what price. Your arrogance is shocking.
I said the mini 3 was gimped. It's just the mini 2 with Touch ID. I don't think Touch ID is worth $100 and I'll bet I'm not alone in that. As far as the A5 goes, I'll point to you to this post John Gruber linked to:
The only thing we can do as developers to disavow support for these devices is require a version of iOS that won’t run on them. Unfortunately, Apple will surely continue support for the A5 in iOS 9. If they do so, we won’t have a mechanism to cut off support for these old iPads mini and iPods touch until iOS 10 has reached wide adoption, likely in early 2017.
And here's a Macworld post from John Moltz (who it would be hard to call an Apple hater) basically taking Apple to task for offering not so great products at the low end in order to upsell you to something else.
The iPad mini with an A5 and 512MB runs iOS 8 but it doesn't run it well. I would never recommend that device to anyone. The only reason it exists in the lineup is so Cook can tout he's hitting all these different price points. I'd say the same thing with the $1099 iMac that basically has MacBook Air guts.
You know, we want to really enrich people’s lives at the end of the day, not just make money. Making money might be a byproduct, but it’s not our North Star.
"We are really pleased with our revenues but our goal isn't to make money. It sounds a little flippant, but it's the truth. Our goal and what makes us excited is to make great products. If we are successful people will like them and if we are operationally competent, we will make money,"
How is Apple's current iPad lineup about selling the best products? I'd ask the same question about the new Mac Mini. Seems to me these days it's more about money. It's more about upselling. I don't like this trend and it is contrary to Cook and Ive's comments about making the best products being #1 goal.
One correction in this tongue lashing: it should be "SERIOUSLY GAL." Rogifan alternates between logical on some days and highly emotionally negative on other days. Or it varies by the issue. But reason doesn't always work when she's in one of her hissy moods. Sorry about the sexism, but that's what I've seen over the last year or so.
About the mini retina, another factor to consider is that it has been a difficult product for Apple from the beginning last year. Ray Soneira of DisplayMate thought it was apparent to him that the panel was destined to have been an IGZO one, like the Air was, but no doubt there was no supply yet, and as a result, we got gimped color gamut screens and so-so battery life. I'm betting that there may be a mid-term silent update on the mini that will have a better color range, or maybe that's already happened. I haven't seen any complaints about the weaker colors on the new mini. You'd think there would be by now.
Hmm...I was one who complained (I'm sure some here would call it whining) about the iPad having 1GB RAM and the poor Safari performance because of it. Others here pooh-poohed that providing all these reasons 1GB was sufficient. Now we're finding out from Air 2 owners that they can have many tabs open in Safari and flip back and forth between them with NO page reloads. In fact there was one poster on MacRumors who had 10 tabs open and was easily going back and forth between them without any refreshes. So all you 1GB supporters....I'd love for you to explain why the Air 2 has 2GB. Seems clear to me the iPad should've had 2GB for a long time now. Certainly the first Air should've had it. And probably the 6 Plus as well. But I'm an Air owner and I just ordered an Air 2 so I guess Apple is getting what it wants. I'm 99% certain the next iPhone Plus will have 2GB RAM.
Fact is the Mini3 is the best tablet in the world.....besides the Air2. Don't see how anyone can call that gimped.
That's an Apple fans perspective. He probably would also want the iPhone6 to start with 64GB for $199.
I'm bringing you the investor perspective and financial perspective. Selling a $399 iPadMini3 with exact specs as the Air would be financial suicide for the tablet line up. Did you not see my analysis that shows they only make $50 on a Mini sale?
For freaking $200 what do you expect? The A5 mini is for little kids or people who only need to check email or web surf.
It is all about the products.
The iPhone6 is the best smartphone in the world
The iPhone6+ is the best phablet
The Mini is the best mini tablet
The Air is the best tablet
The iMac is the best all in one
The MacBook is the best laptop
If you want the ULTIMATE best you need to buy the Flagship.
You attitude is like expecting a Toyota Corolla to have the EXACT SAME features as a Lexus LS600. I mean really!
See and this is where you and I part ways. I'm thinking about Apple providing the best products and experiences at all price levels. You're saying only the flagship matters. And only high profit margins matter. For me, regardless of price point the experience should be top notch. And if Apple can't provide a top notch experience at lower price points then don't offer stuff at the low end. As I said before I expect the 1st gen mini to be gone within 6 months and the mini 3 to either be updated or get a price cut as Apple finds out people aren't going to spend $100 for Touch ID. I think people are smarter than Phil "upsell" Schiller
You do realize that every year Apple makes their devices faster, thinner, lighter, better screen, better services, better CPU, better GPU........................yet charges the same price as 7 years ago?
Its Apple's profits that fuel innovation, R&D, free OS updates, services, customer service, ect.
You can't have one without the other........unless you are a scam like Amazon.
Using your logic I could say:
"Apple should put 4GB of ram in the iPad. It will be better."
And I will be right......maybe 5 years from now. Should I get a cookie for that?
I'm certainly not suggesting Apple forgo profits. But it's not like they're struggling to make money. $8B quarterly profit isn't chump change. My concern people will start wondering if they're getting the best 'bang for their buck', if they're getting the best products or if Apple is more concerned about upselling so ASPs and margins remain high. The 1st gen iPad mini only exists so Apple can say "for $50 more you can get a much better product". Same with the mini 3. In this case it's "only $100 more" to get a much better chip, screen and 2GB RAM. The mini and mini 3 exist to upsell you to a higher priced product, period. Eventually consumers will catch on to this and my fear is they'll tell Phil Schiller where he can stick his upsell.
The only reason why you think the Mini3 sucks is because you are comparing it to the Air2. Try comparing it to Android/Windows tablets. It DESTROYS them.
Find me a better tablet/ecosystem than the Mini at $199
Find me a better tablet/ecosystem than the Mini3 at $399
Find me a better compact PC than the MacMini at $499
You can't. Especially when you factor in resale value.
Your flaw in logic is you are comparing Apple products with Apple products. You need to compare the 'low end' Apple products to the competition. If you do you will see the Apple 'low end' products are an amazing value.
Wow you're really setting a low bar there. iOS 8 on an A5 chip with 512MB ram is not a great experience. It might be marginally better than a cheap Android tablet but that's not saying much. I would expect Apple's bar to be set higher than that.
If the iPad Mini had everything the Air had than it would cost the same as the Air. Making things smaller usually costs more.
Not really, it's not IPad vs iphone, iPad mini is now thicker then air, as with battery, screen, and materials all are smaller, thus cheaper, $100 is a simple difference in price, keep in mind the same difference currently was in IPad mini 1 but $170
That's fine, and they could've demonstrated that by giving the iPad mini 3 the plain A8 chipset while keeping A8X for iPad Air 2. That would've made more sense than what they did. It's a head scratcher to charge $100 more for Touch ID alone.
One theory I have is then mini 3 is a placeholder right now and will get A8 once 6/6 Plus demand isn't so high, perhaps next spring. Otherwise there is zero reason for the mini 3 to exist. No way is Touch ID worth $100.
interesting theory, maybe true, it may be the demand of hardware in total, seeing a new mini and plus model IPad alongside an Apple TV in March isn't unheard of.
I think that many people will be choosing the iPad Mini 2, because of the cheaper price tag, but there is also one more category of people who will have no choice but to choose the iPad Mini 3. That category is people who want the smaller sized Mini iPad, but who also demands more storage space, as the iPad Mini 2 doesn't go larger than 32 GB.
some people are price sensitive. $50-$100 could be alot.
again show me a better non Apple tablet/ecosystem than the mini at $199?
or Mini3 at $399?
Let me remind you that in 2013 Apple's profits was down 10%. Just because you are raking in big profits does not mean it lasts forever. Tim Cook won't allow Apple to be financially lazy.
Who says profits were down because products were too cheap? And who's to say 2012 was the norm and not the exception?
some people are price sensitive. $50-$100 could be alot.
again show me a better non Apple tablet/ecosystem than the mini at $199?
or Mini3 at $399?
Let me remind you that in 2013 Apple's profits was down 10%. Just because you are raking in big profits does not mean it lasts forever. Tim Cook won't allow Apple to be financially lazy.
I have no idea because I don't use Android tablets. And honestly I don't care. I care about a great user experience, not well it's better than a piece of garbage Android tablet.
See and this is where you and I part ways. I'm thinking about Apple providing the best products and experiences at all price levels. You're saying only the flagship matters. And only high profit margins matter. For me, regardless of price point the experience should be top notch. And if Apple can't provide a top notch experience at lower price points then don't offer stuff at the low end. As I said before I expect the 1st gen mini to be gone within 6 months and the mini 3 to either be updated or get a price cut as Apple finds out people aren't going to spend $100 for Touch ID. I think people are smarter than Phil "upsell" Schiller
Mini1 will be gone soon when Apple sell off what they have in the inventory. What made me feel itchy was that they dropped the stupid price to $249, $50 less than a kick-ass Mini 2 instead of $199. It's pathetic that they didn't do that last year when they released the Mini 2. It appears that they want to sell more Mini 2 and less Mini 1.
Comments
If Apple can't support a retina mini at $399 they should never have introduced it in first place. I have a hard time believing Apple had no idea what margins would be like when they announced this product last year.
The reason for iPad mini 3 stuck with an A7 is the same reason for iPhone base model starts with 16 Gb: To upsell the "better" product. I think last year's iPad mini with retina (which I own) took a larger share of overall iPad sales then Apple would like.
This year, iPad Air and iPad mini are differentiated more than just size and price, but also performance.
The consumers will chose and I predict they'll chose the mini 2 in much larger numbers. My guess is within 6 months either the mini 3 will have A8 or the mini 1 and 2 will be gone and the mini 3 will get a price cut.
Apple's mini line up right now is stupid and confusing. Why are they still selling products with an A5 chip? And they knock Android for fragmentation. If there isn't any incentive for Apple to push the mini then the mini 3 has no reason to exist. Tell people if they want Touch ID they need to buy an Air or an iPhone. Don't sell a gimped product because you want people to buy something else. Phil Schiller and his obsession with upselling need to go.
Well, it's the "S" model of the iPad Air, isn't it?
Yup...but it's hella "S" with killing performance. Mini3? It's a flop. They should've killed the Mini already.
The question people should ask themselves is: what do they use iPad for?
Most not all, use iPad for basic tasks such as emails, social networks, media and some games. Those wouldn't see any need for the upgrade. For those who heavily use iPad for video/picture editing, music studio and hardcore games, maybe upgrade is needed. For those complaining about Safari tabs loading, just S.T.F.U'
One correction in this tongue lashing: it should be "SERIOUSLY GAL." Rogifan alternates between logical on some days and highly emotionally negative on other days. Or it varies by the issue.
About the mini retina, another factor to consider is that it has been a difficult product for Apple from the beginning last year. Ray Soneira of DisplayMate thought it was apparent to him that the panel was destined to have been an IGZO one, like the Air was, but no doubt there was no supply yet, and as a result, we got gimped color gamut screens and so-so battery life. I'm betting that there may be a mid-term silent update on the mini that will have a better color range, or maybe that's already happened. I haven't seen any complaints about the weaker colors on the new mini. You'd think there would be by now.
No reason to kill it as long as they can incremental sales out of it and stops competitors from dominating the small tablet niche.
Apple has all bases covered:
4.0
4.7
5.5
7.9
9.7
If you need anything bigger go get a MacBook
In 2 years, the line up will be:
4.7
5.5
9.7
12.9
Simplify the resolution: 2 for iPad, 2 for iPhone. Apple can ignore the 6"-9" for scavengers Android.
BTW, I would buy Mini 2 when the price goes down to $250 this Thanksgiving. I'm considering returning my iPhone 6+ since I almost dropped it a few times with one hand use.
I can vouch for this.
Just got an Airport Extreme and my iPhone6+ is BLAZING FAST now. My Wifi speed is now 2x to 4x faster than before.
How is Airport Extreme signal coverage? I have my N-router on second floor and signal wasn't good downstairs in some spots. Even when I was up stair in the farthest side from the router (10-15 yards), I got 1 bar signal.
Coverage is excellent. My home is 2 stories about 2300 square feet and I get good coverage everywhere in the house.
Full bars everywhere. Before the Airport I was getting 5-8 Mbps at the farthest point away from the router. Now I'm getting 20-30 Mbps.
Good to know. I'm getting rid of shi.tty N-routers at home. I'm using 2 routers as repeaters on top of Comcast Router to cover 2-story 2000 sq-ft house. That's pathetic.
http://www.allenpike.com/2014/the-ipad-zombie/
And here's a Macworld post from John Moltz (who it would be hard to call an Apple hater) basically taking Apple to task for offering not so great products at the low end in order to upsell you to something else.
http://www.macworld.com/article/2834761/low-end-theory-apple-could-do-better-to-price-its-products-more-evenly.html
The iPad mini with an A5 and 512MB runs iOS 8 but it doesn't run it well. I would never recommend that device to anyone. The only reason it exists in the lineup is so Cook can tout he's hitting all these different price points. I'd say the same thing with the $1099 iMac that basically has MacBook Air guts.
Here's what Tim Cook said in a 2012 Businessweek interview:
And we have this quote from Jony Ive from 2012:
http://www.wired.co.uk/news/archive/2012-07/30/jonathan-ive-revenue-good-design
How is Apple's current iPad lineup about selling the best products? I'd ask the same question about the new Mac Mini. Seems to me these days it's more about money. It's more about upselling. I don't like this trend and it is contrary to Cook and Ive's comments about making the best products being #1 goal.
Hmm...I was one who complained (I'm sure some here would call it whining) about the iPad having 1GB RAM and the poor Safari performance because of it. Others here pooh-poohed that providing all these reasons 1GB was sufficient. Now we're finding out from Air 2 owners that they can have many tabs open in Safari and flip back and forth between them with NO page reloads. In fact there was one poster on MacRumors who had 10 tabs open and was easily going back and forth between them without any refreshes. So all you 1GB supporters....I'd love for you to explain why the Air 2 has 2GB. Seems clear to me the iPad should've had 2GB for a long time now. Certainly the first Air should've had it. And probably the 6 Plus as well. But I'm an Air owner and I just ordered an Air 2 so I guess Apple is getting what it wants. I'm 99% certain the next iPhone Plus will have 2GB RAM.
See and this is where you and I part ways. I'm thinking about Apple providing the best products and experiences at all price levels. You're saying only the flagship matters. And only high profit margins matter. For me, regardless of price point the experience should be top notch. And if Apple can't provide a top notch experience at lower price points then don't offer stuff at the low end. As I said before I expect the 1st gen mini to be gone within 6 months and the mini 3 to either be updated or get a price cut as Apple finds out people aren't going to spend $100 for Touch ID. I think people are smarter than Phil "upsell" Schiller
Wow you're really setting a low bar there. iOS 8 on an A5 chip with 512MB ram is not a great experience. It might be marginally better than a cheap Android tablet but that's not saying much. I would expect Apple's bar to be set higher than that.
agree with you
Not really, it's not IPad vs iphone, iPad mini is now thicker then air, as with battery, screen, and materials all are smaller, thus cheaper, $100 is a simple difference in price, keep in mind the same difference currently was in IPad mini 1 but $170
No, this is a mid step, forcing people views.
Still the point.
interesting theory, maybe true, it may be the demand of hardware in total, seeing a new mini and plus model IPad alongside an Apple TV in March isn't unheard of.
Who says profits were down because products were too cheap? And who's to say 2012 was the norm and not the exception?
See and this is where you and I part ways. I'm thinking about Apple providing the best products and experiences at all price levels. You're saying only the flagship matters. And only high profit margins matter. For me, regardless of price point the experience should be top notch. And if Apple can't provide a top notch experience at lower price points then don't offer stuff at the low end. As I said before I expect the 1st gen mini to be gone within 6 months and the mini 3 to either be updated or get a price cut as Apple finds out people aren't going to spend $100 for Touch ID. I think people are smarter than Phil "upsell" Schiller
Mini1 will be gone soon when Apple sell off what they have in the inventory. What made me feel itchy was that they dropped the stupid price to $249, $50 less than a kick-ass Mini 2 instead of $199. It's pathetic that they didn't do that last year when they released the Mini 2. It appears that they want to sell more Mini 2 and less Mini 1.