Right, I should have been more clear. I didn't mean literally, just that Apple might be willing to accept lower margins, possibly much lower margins, on this machine for the time being, because it is such a critical piece for garnering good will for the transition.
Fair enough. That I could see happening. Plus, Apple has become more adept at working to shave pennies and nickels off the costs of their products to improve margins (as well as millimeters and ounces). Witness iPod. I get the sense that they are a very cost-concious company.
Much the same as it is now because Intel is in the habit of just dropping in new models and if Apple wants to stay competitive they will upgrade their machines to it. I expect far more frequent upgrades for Apple's machines now.
Much the same as it is now because Intel is in the habit of just dropping in new models and if Apple wants to stay competitive they will upgrade their machines to it. I expect far more frequent upgrades for Apple's machines now.
Intel drops the prices of its cpu's on a regular basis. What sells for $200 today, might sell for $150 3 months from now, and $125 3 months after that.
Well, at least we're getting past the "with Intel Apple can cut prices" notion that somehow got circulating. It never made any sense, and I think Apple has done well just to hold their price points.
It's probably the best we can expect from the rest of the Intel machines with IBM/FS equivalents this year, and at that Apple is probably giving up some margin to avoid negative impact on growing market share.
In fact, as has been suggested, I wouldn't be surprised if the iMac is acting as "loss leader" for the transition...
Very unlikely. Apple is in no position to be making one of their top selling products a loss leader. In fact, Apple is known for having the phattest profit margins in the business, and there's little reason to expect that to change with the transition to Intel. Check out other laptops with the same specs or better as the MacBook Pro - most of them cost less and use better parts, so are we to assume that every computer manufacturer, from Dell to Buttmunch, Inc., are making their Yonah laptops into "loss leaders"?
I read somewhere that the profit margins on the new iMacs are ~27%, but I'm not 100% sure of that number, and I forget the source. Suffice to say that I DO remember reading that the Intel iMac has normal profit margins for a Mac.
As for $30 video cards and so forth, remember that Apple buys millions of video chipsets per year from ATI, so of course they get a mondo deal on the purchase. It's the same as how Costco get's better prices on ketchup than the local indy grocery store.
I'd read that Bill of Sale (BOM) as simply BS. Nobody but Apple knows what the BOM is for an iMac, and they aren't telling.
If you add the price of OSX of $129 and iLife at $79 then you have a differant equasion all to gether, say a $100 profit
In the view of the BOM, the OS is worth nothing. The OS will be listed as a single part number to represent the CD and the BOM cost associated with it will be the 1 cent value. Installing the OS on the machine as its manufactured costs just a few dollars at the end of the manuacturing line.
In terms of cost to the customer for a complete machine with an OS installed, I would say that apportioning $100 of the retail price as the license fee for the operating system is about right.
As the previous poster mentions, don't confuse retail prices with BOM. Physical software costs merely cents to manufacture, and keyboards and mice are made for a few bucks at most as well.
Apple doesn't buy software from themselves. The only tangible cost is in the physical discs, which amounts to pennies.
Hard drive images (all of the pre-installed stuff) are copied at a rate of hundreds by the hour. The cost of which is also negligible and likely absorbed into the article's mentioned $25 manufacturing and testing.
In the view of the BOM, the OS is worth nothing. The OS will be listed as a single part number to represent the CD and the BOM cost associated with it will be the 1 cent value. Installing the OS on the machine as its manufactured costs just a few dollars at the end of the manuacturing line.
In the BOM, yes, but cost to get the product out is higher than that. I think it is odd that they estimate assembly cost but then not development cost, neither are materials and parts costs.
I think the development cost of the software, as well as the design and engineering of the unit should be factored into these estimates. If Apple had to licence the software from elsewhere, then they probably would have those costs factored in as well.
All this talk of the iMac's BOM and not one mention of the words "labor" or "overhead"?
Material costs represent only a small portion of the BOM for products involving significant engineering. The "M" in BOM isn't just for materials any more... BOMs now typically include all costs. Material cost seldom makes up the majority of a product's BOM anymore.
It doesn't matter if Jobs found a million Cure Duos in a cracker jack box making it cost $100 to produce. The price isn't determined by cost of production, it is determined by VOLUME.
Did you people come from the Henrico County School of Economics?!
Intel drops the prices of its cpu's on a regular basis. What sells for $200 today, might sell for $150 3 months from now, and $125 3 months after that.
I'm not sure you understand. For instance Intel currently has price changes for the desktop line planned in April and at the same time they will introduce a new model. In fact if you look really closely you see the new model replaces the old top model and everything else just drops down a price point.
So for Apple to get the equivalent processor 12 months down the line will cost them the same amount. Sure they could buy the old CPUs cheap but then they'd lag quite badly compared to what other PC manufacturers are doing. All they'll gain is frequency or features. The exception would be through competition.
Now if you wanted to know what Intel does with outdated processors well just take a look at Pentium M pricing. For low costs jump down to higher yield bins or to the Celeron ranges. If you want to see how it will change that's easy but it isn't going to effect Apple's current models unless they want to out date them.
Comments
Originally posted by addabox
Right, I should have been more clear. I didn't mean literally, just that Apple might be willing to accept lower margins, possibly much lower margins, on this machine for the time being, because it is such a critical piece for garnering good will for the transition.
Fair enough. That I could see happening. Plus, Apple has become more adept at working to shave pennies and nickels off the costs of their products to improve margins (as well as millimeters and ounces). Witness iPod. I get the sense that they are a very cost-concious company.
If you add the price of OSX of $129 and iLife at $79 then you have a differant equasion all to gether, say a $100 profit
Originally posted by Telomar
Much the same as it is now because Intel is in the habit of just dropping in new models and if Apple wants to stay competitive they will upgrade their machines to it. I expect far more frequent upgrades for Apple's machines now.
Intel drops the prices of its cpu's on a regular basis. What sells for $200 today, might sell for $150 3 months from now, and $125 3 months after that.
Originally posted by addabox
Well, at least we're getting past the "with Intel Apple can cut prices" notion that somehow got circulating. It never made any sense, and I think Apple has done well just to hold their price points.
It's probably the best we can expect from the rest of the Intel machines with IBM/FS equivalents this year, and at that Apple is probably giving up some margin to avoid negative impact on growing market share.
In fact, as has been suggested, I wouldn't be surprised if the iMac is acting as "loss leader" for the transition...
Very unlikely. Apple is in no position to be making one of their top selling products a loss leader. In fact, Apple is known for having the phattest profit margins in the business, and there's little reason to expect that to change with the transition to Intel. Check out other laptops with the same specs or better as the MacBook Pro - most of them cost less and use better parts, so are we to assume that every computer manufacturer, from Dell to Buttmunch, Inc., are making their Yonah laptops into "loss leaders"?
I read somewhere that the profit margins on the new iMacs are ~27%, but I'm not 100% sure of that number, and I forget the source. Suffice to say that I DO remember reading that the Intel iMac has normal profit margins for a Mac.
As for $30 video cards and so forth, remember that Apple buys millions of video chipsets per year from ATI, so of course they get a mondo deal on the purchase. It's the same as how Costco get's better prices on ketchup than the local indy grocery store.
I'd read that Bill of Sale (BOM) as simply BS. Nobody but Apple knows what the BOM is for an iMac, and they aren't telling.
Originally posted by a_greer
Is OSX worth nothing?
If you add the price of OSX of $129 and iLife at $79 then you have a differant equasion all to gether, say a $100 profit
In the view of the BOM, the OS is worth nothing. The OS will be listed as a single part number to represent the CD and the BOM cost associated with it will be the 1 cent value. Installing the OS on the machine as its manufactured costs just a few dollars at the end of the manuacturing line.
In terms of cost to the customer for a complete machine with an OS installed, I would say that apportioning $100 of the retail price as the license fee for the operating system is about right.
Apple doesn't buy software from themselves. The only tangible cost is in the physical discs, which amounts to pennies.
Hard drive images (all of the pre-installed stuff) are copied at a rate of hundreds by the hour. The cost of which is also negligible and likely absorbed into the article's mentioned $25 manufacturing and testing.
Originally posted by fisha
In the view of the BOM, the OS is worth nothing. The OS will be listed as a single part number to represent the CD and the BOM cost associated with it will be the 1 cent value. Installing the OS on the machine as its manufactured costs just a few dollars at the end of the manuacturing line.
In the BOM, yes, but cost to get the product out is higher than that. I think it is odd that they estimate assembly cost but then not development cost, neither are materials and parts costs.
I think the development cost of the software, as well as the design and engineering of the unit should be factored into these estimates. If Apple had to licence the software from elsewhere, then they probably would have those costs factored in as well.
Retail: $1299
Cost of parallel development of OS X on Intel for five years to guarantee a smooth transistion: priceless.
Originally posted by Junkyard Dawg
I'd read that Bill of Sale (BOM) as simply BS. Nobody but Apple knows what the BOM is for an iMac, and they aren't telling.
End of discussion
Material costs represent only a small portion of the BOM for products involving significant engineering. The "M" in BOM isn't just for materials any more... BOMs now typically include all costs. Material cost seldom makes up the majority of a product's BOM anymore.
Did you people come from the Henrico County School of Economics?!
Originally posted by melgross
Intel drops the prices of its cpu's on a regular basis. What sells for $200 today, might sell for $150 3 months from now, and $125 3 months after that.
I'm not sure you understand. For instance Intel currently has price changes for the desktop line planned in April and at the same time they will introduce a new model. In fact if you look really closely you see the new model replaces the old top model and everything else just drops down a price point.
So for Apple to get the equivalent processor 12 months down the line will cost them the same amount. Sure they could buy the old CPUs cheap but then they'd lag quite badly compared to what other PC manufacturers are doing. All they'll gain is frequency or features. The exception would be through competition.
Now if you wanted to know what Intel does with outdated processors well just take a look at Pentium M pricing. For low costs jump down to higher yield bins or to the Celeron ranges. If you want to see how it will change that's easy but it isn't going to effect Apple's current models unless they want to out date them.