sold at cost. That was at launch, I imagine they're making a little profit on it now.
Apple could do that be a) they can afford to and b) getting people in their ecosystem is much more valuable because they'll probably be customers for years.
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Apple's October 23 Event | We've got a little more to show you.
- Thread starter giga
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sold at cost. That was at launch, I imagine they're making a little profit on it now.
Apple could do that be a) they can afford to and b) getting people in their ecosystem is much more valuable because they'll probably be customers for years.
Er what? Apple gives their margins for various products lines at their quarterly reports. We're not averaging the margin of a 99 cent rubber case sold for $30 with the margins for an iPad, Apple already breaks those out. Those margins are relatively stable and the analysis is predicated on Apple targeting the same margins for each new major product line. Apple is a premium hardware company so that's what you'd expect them to do in order to keep profits while maintaining growth.
Nexus 7 is sold at cost not loss (similar to how Apple operates the content storemusic, apps etcat cost not a loss). LCfiner guesstimates wasn't for the idea that Apple would sell an iPad mini for the same price as a Nexus 7 ($200) but that they would sell it for the price of Nexus7+margins i.e. their profit (for $250).
If its sold at cost, then Google is cutting Asus a check. That means a loss. Asus isn't a charity organization.
Apple doesn't need to do that. People want Apple's hardware at the current prices.
can you still buy the old minis? Mid range there had discrete graphics.
That's not what it means. The $200 price covers Asus's share for manufacturing but Google themselves aren't keeping any profit for design, retail, promotion etc.
Ok. I still don't why Apple would need to do that. Consumers want their product.
... nobody is saying that Apple needs to sell their product at cost!**
Nexus 7 = $200
iPad Mini = $250
Not sold at cost
**although Cook did say that he'd like to not leave a price umbrella for other products to sneak in under
Right but that would be a 8GB model, which would be an inferior experience.
They don't break them out. Horace Dediu does estimates, but that's it. Show me where they break it out.
The only way we got close to iPad margins are from court documents, which reported the iPad margin to be as low as 23%.
What are you talking about?
Aye you're right. I'm misremembering analyst estimates for official confirmations.
Usually the analyst estimates aren't too far off but they've been getting it wrong lately.
So, back to the original question: is that it, did LCfiner simply not estimate properly what Apple's cost was and that Apple can't match Asus' manufacturing?
(I'm not suggesting that Apple should sell at cost)
LC's analysis was an 8GB model at $250. I think that's a bad idea, as 8GB would have been a lousy experience.
Nexus 7 came out in June. That's a long time ago in tech world (at that time Apple was still selling 8GB iPhones despite the retina iPad already leading to jumps in app sizes). A few months ago 8GB for $350 didn't seem like a bad idea:
Anyway, as I already pointed out when posing my question, LCfiner's analysis doesn't rely on an 8GB model at $250. The Kindle HD and Nook HD 16GB models had already been announced at $200 and $230 respectively. There were strong rumors that Google was going to have a price drop on the 8GB to $99/put the 16GB model at $200. 16GB was the new baseline. LCfiner suggested that Apple would be factoring this into their price already especially as Apple doesn't refresh models/change prices often.
LC, where are you lol?
It doesn't bother Apple on the low end iPhone.
Oh lol, I thought Apple changed that. At least the iPhone 4S has 16GB now (last year the iPhone 4 in that position in the lineup was still 8GB, guess that's the same iPhone they are still selling.)
well, multiple mistakes.
1. I thought Apple would want to offer a model under 300 to basically kill the competition and give almost no one a reason to buy them over an ipad. And I maintain that they wouldn't need to sell at a loss to do this. I also thought they would offer a 16GB model at their typical inflated storage price markups but I never stressed that point or thought much of it. turns out they wanted the baseline to be 16GB and to stay out of the <300 market (for now).
2. I really do think they're gonna be making really high margins on this. The cost to design and build might be slightly higher than 200 (I was figuring it would be slightly under) but assuming that they would make their typical 40% margins on key products was a mistake. I think this will be closer to 50%. I guess we'll have some data at the next quarter earnings report.
3. the other thing - and this is obvious in hindsight - is that they almost surely looked at their current production capability and figured out the maximum number they could build, then asked "what's the max price we could put on this and still sell all of them?" If they make X million and they'll sell them all at 250 or 330 in the next 4 to 6 months, then why charge 250? or 300? or anything less than what they think their maximum price can be and still sell all of the units they can make this cycle.
4. they may have priced it this high to give them some room to lower price in the next model revision or two (or to offer one year old minis at a reduced price after the new model is launched)
regarding 8Gb being a bad experience, I disagree with that. I mean, Apple already said that the number one use of tablets is web browsing and that requires almost no space. and most apps aren't that big in size. With itunes match, icloud movie streaming, a few apps and a greater focus on reading on-the-go, I think 8GB is enough for a decent experience for a device not intended to be a full laptop replacement.
Personally, I think a macbook air with 64 GB is more hobbled than an iOS device with 8GB storage. But Apple will happily sell you that 1000 dollar laptop with 64 GB on it.
well, multiple mistakes.
1. I thought Apple would want to offer a model under 300 to basically kill the competition and give almost no one a reason to buy them over an ipad. And I maintain that they wouldn't need to sell at a loss to do this. I also thought they would offer a 16GB model at their typical inflated storage price markups but I never stressed that point or thought much of it. turns out they wanted the baseline to be 16GB and to stay out of the <300 market (for now).
2. I really do think they're gonna be making really high margins on this. The cost to design and build might be slightly higher than 200 (I was figuring it would be slightly under) but assuming that they would make their typical 40% margins on key products was a mistake. I think this will be closer to 50%. I guess we'll have some data at the next quarter earnings report.
3. the other thing - and this is obvious in hindsight - is that they almost surely looked at their current production capability and figured out the maximum number they could build, then asked "what's the max price we could put on this and still sell all of them?" If they make X million and they'll sell them all at 250 or 330 in the next 4 to 6 months, then why charge 250? or 300? or anything less than what they think their maximum price can be and still sell all of the units they can make this cycle.
4. they may have priced it this high to give them some room to lower price in the next model revision or two (or to offer one year old minis at a reduced price after the new model is launched)
regarding 8Gb being a bad experience, I disagree with that. I mean, Apple already said that the number one use of tablets is web browsing and that requires almost no space. and most apps aren't that big in size. With itunes match, icloud movie streaming, a few apps and a greater focus on reading on-the-go, I think 8GB is enough for a decent experience for a device not intended to be a full laptop replacement.
Personally, I think a macbook air with 64 GB is more hobbled than an iOS device with 8GB storage. But Apple will happily sell you that 1000 dollar laptop with 64 GB on it.
This is exactly what I think is going on.
lol good points all-round though.well, multiple mistakes.
Points 1 and 3 are closely related, i think. Sure Apple could sell a lot at either price. But everybody else is also selling out it seems. Even Microsoft is reporting sold out Surfaces :0. Clearly demand is high for tablets this season and all the good ones will be flying off the shelves. But even though Apple is making the most (rumored to be 10 million Minis in production for this year) they'll mostly be attracting people who would have got an iPad anyway not people looking for a ~$200 tablet. That's good for Apple's balance line I thought the whole point of this was to take on the Nexus. Can't Apple afford to compete on price? *shrug* they don't want that sub $300 market like you say.
Based on Apple's recent track record I wouldn't be surprised to see no updates to the iPod Touch next year and an iPad mini retina introduced at $400 to replace the iPad 2
That,s just business though.
You don't make a product then sell a little higher to make a profit.
You plan out a road map, and you decide what the market would bear. Prices are reflective of economy, not merely of the product. They,re priced at what they ink they can sell them at. Also, the road map dictates price drops in future. You can,t raise the price of a product over time.
It's analogous to Coke. You think they make it then mark up a bit to make profit? Nope, they make it for pennies, and then sell it for what people will pay. Similarly the sizes of coke have nothing to do with the amount they,re selling, again it's just priced at what the market will bear.
badcrumble
Member
I feel like my main questions at this point are:
1) Where's iTunes 11?
2) What on earth is Apple going to do for the entire first half of 2013, given that they've updated every Mac model to Ivy Bridge and Haswell doesn't come out until late 2013?
I think that we're going to see a real Mac Pro update, and a new Thunderbolt Display closely resembling the new iMac, in the first half of 2013. Very possibly at the same event that introduces us to Mac OS X 10.9 sometime early in the spring. We *might* see an even further updated fifth-gen iPad in the spring, too, though I have my doubts; and I suppose speed bumps to existing products are possible.
If there were ever a gap in Apple's schedule that sure looked like a TV-shaped gap, though, this is it.
1) Where's iTunes 11?
2) What on earth is Apple going to do for the entire first half of 2013, given that they've updated every Mac model to Ivy Bridge and Haswell doesn't come out until late 2013?
I think that we're going to see a real Mac Pro update, and a new Thunderbolt Display closely resembling the new iMac, in the first half of 2013. Very possibly at the same event that introduces us to Mac OS X 10.9 sometime early in the spring. We *might* see an even further updated fifth-gen iPad in the spring, too, though I have my doubts; and I suppose speed bumps to existing products are possible.
If there were ever a gap in Apple's schedule that sure looked like a TV-shaped gap, though, this is it.
I'm not sure what you're rebutting here. We're in total agreement.
I think they know that $400 10" iPads are really popular, and ought to keep a SKU there. I'd like for them to have a $400 updated A6 iPad 10" (thinner, lighter, diamond cut chamfers!) next to the A7X iPad with Retina, because I really still don't like the weight of even just the iPad 2, and I hate having to wait years before we'll get below the iPad 2 weight.
The other scenario is that the A7X with IGZO will finally allow for a lighter iPad with Retina. And the 1.5 lb A6X iPad drops into the $400 space--easy $100 upsell to the lighter iPad A7X, with its chamfers and anodized back.
Anyway, every iPad since the iPad 2 is a stopgap unless it has a Jonny Ive video, he even refuses to put diamond cut chamfers on the 4th gen iPad, so disgusted is he about the weight and thickness downgrade.
Man, I hope they just release iTunes 11 during that conference call.
It's the TV. BELIEVE.
It's the TV. BELIEVE.
Eh, sorry wasn't really rebutting. Just using your comment as a spring board to elaborate.
Also, pointig out it's not unique to the way Apple does things.
Khalifa Jayy
Banned
Q: I've got a 2008 iMac. I upgraded the HDD myself to a 1tb wd drive, but I've been wanting to get something faster and newer.
What would you guys do? Buy a Mac Mini and use the iMac as a display? Sell the old iMac and buy a new one? What are those models going for anyway? Mines the 24" model.
What would you guys do? Buy a Mac Mini and use the iMac as a display? Sell the old iMac and buy a new one? What are those models going for anyway? Mines the 24" model.
njean777
Member
Depends on if you can live with your imac now, if not I would just sell it and get the 27in and be done with it. If you can live with the one you have now then wait a bit longer. The new ones will be many times faster then yours right now, but it depends on how bad you want a new one. I wouldnt go with the 21in due to the soldered ram unless you bump up the ram to 8gb with a BTO order.
lunarworks
Member
The next Mac Pro has got to "wow" people, or the fallout from the pro crowd will be ridiculous. I know Apple loves consumers, but they can't totally abandon the people who got them through the tough times.
Also, iTunes 11... I'm waiting for it too.
IHaveCandy
Banned
The problem with the Mac Pro is that over the years, Macbook Pros and iMacs have become powerful enough to make Mac Pros unnecessary for a lot of people who needed Mac Pros. There are still people that need more horsepower than what even the best MBP and iMac can offer, but that number has shrunk as the MBP and iMac have improved. It's too small of a market to address.
lunarworks
Member
The fact that Mac is still the favourite of the "creative professional" crowd, and stuff like FCPX is still being released, just shows that Apple needs to address this.
infiniteloop
Member
TV Set. Believe.
Isn't the iPhone sold for double or triple it's cost price? Can't remember.
I'm sure some website will post a pretty close analysis of the cost price soon but given Apple's supply chain and price power they're making more money on the iPad mini than most tech companies could hope to with most of their catalogue.
in terms of the BOM, yeah, it's around 3 times. but their net profit margin, taking into account design, R&D and marketing, etc, is around 40%.
Apple is saying the ipad mini margin is lower than this (well, lower than their average margin). I was not expecting that at all.
Chittagong
Gold Member
It's clear that iPad Mini margins are super low compared to other Apple products. I mean, the BOM of the parts must come in significantly higher than iPhone 5. Part for part, everything is equal or more expensive than in an iPhone 5
- Display (significantly more expensive in iPad mini compared to iPhone 5)
- Battery (significantly more expensive)
- Casing and glass (significantly more expensive)
- Cellular radio (same cost)
- Memory (same cost)
- A6 (same cost)
- Sensors (same cost)
- Connectors (same cost)
+ 5MP camera (cheaper)
iPhone 5 16GB cellular unlocked price - $649
iPad mini 16GB cellular unlocked price - $459 (30% cheaper)
In fact, it's almost incredible how cheap the iPad mini is compared to iPhone. It only feels expensive, because Android tablets have been undesirable and thus sold at rock bottom prices. And iPhone 5 is sold subsidized, which masks the real cost.
So looking at the iPad mini BOM implications above, the BOM must be some 30% higher than iPhone, and the price for consumers is 30% lower, that translates to one massive margin hit.
Apple is doing iPad mini mainly to further cement their table market domination.
- Display (significantly more expensive in iPad mini compared to iPhone 5)
- Battery (significantly more expensive)
- Casing and glass (significantly more expensive)
- Cellular radio (same cost)
- Memory (same cost)
- A6 (same cost)
- Sensors (same cost)
- Connectors (same cost)
+ 5MP camera (cheaper)
iPhone 5 16GB cellular unlocked price - $649
iPad mini 16GB cellular unlocked price - $459 (30% cheaper)
In fact, it's almost incredible how cheap the iPad mini is compared to iPhone. It only feels expensive, because Android tablets have been undesirable and thus sold at rock bottom prices. And iPhone 5 is sold subsidized, which masks the real cost.
So looking at the iPad mini BOM implications above, the BOM must be some 30% higher than iPhone, and the price for consumers is 30% lower, that translates to one massive margin hit.
Apple is doing iPad mini mainly to further cement their table market domination.
smokeandmirrors
Banned
To be fair, aren't Apple's margin on the iphone at, near, or greater than 50%?
The iPad margin according to court documents was 23 to 32 percent up to March 2012:
http://www.reuters.com/article/2012/07/26/us-apple-margins-idUSBRE86P1NI20120726
I tried finding that court document but couldn't--I'd love to see how it was broken down, if it was broken down. I wonder if the $399 iPad was on the high or low end of that scale, if it was included at all (it was released in March 2012).
Chittagong
Gold Member
It is, and probably even more. It's their main profit driver, an insane money maker beause the carrier subsidies mask the real cost.
iPad enjoys no such benefit, thus it has to be sold at a much lower margin to consumers. The reason Apple missed market estimates for profit today both relate to iPad - flattening iPad growth, and lower margins from iPads.
Ultimately it doesn't matter much as iPad brings still a hugely profitable business, and has a great ARPU during lifetime via AppStore and iTunes, it's just that Apple stock seems to have been calibrated against the phones margin as a future assumption, rather than the lower margin tablet and computers business.
iPhone margins will follow iPad once competition starts to squeeze Apple harder with competitive product.
I have preordered an iPhone through Apple, and received it on launch day. IIRC that's pretty much what they are shooting for.
I'm really torn between black and white. Traditionally I always preferred black since the bezel disappears in the dark, but I do like my white GS3 so I'm not sure anymore.
edit: as much as I like the white, I think this has sold me on the black:
http://www.youtube.com/watch?v=xQaquAe4GjU#t=2m20s
White seems really distracting with letterboxed material.
edit: as much as I like the white, I think this has sold me on the black:
http://www.youtube.com/watch?v=xQaquAe4GjU#t=2m20s
White seems really distracting with letterboxed material.
BuggyDClown
Member
Fuck, I can't believe I'm about to buy this thing.
32GB White with LTE and Blue Smart Cover
I hate cases, love covers. Having the black it's going to get scratched and look worse than the silver. Also the silver has that amazing bezel. Not to mention there will be less white with the smaller bezel.
I did prefer black on the large iPad but now that i'm going to mini i'm pumped for white
32GB White with LTE and Blue Smart Cover
I'm really torn between black and white. Traditionally I always preferred black since the bezel disappears in the dark, but I do like my white GS3 so I'm not sure anymore.
edit: as much as I like the white, I think this has sold me on the black:
http://www.youtube.com/watch?v=xQaquAe4GjU#t=2m20s
White seems really distracting with letterboxed material.
I hate cases, love covers. Having the black it's going to get scratched and look worse than the silver. Also the silver has that amazing bezel. Not to mention there will be less white with the smaller bezel.
I did prefer black on the large iPad but now that i'm going to mini i'm pumped for white
I'm really torn between black and white. Traditionally I always preferred black since the bezel disappears in the dark, but I do like my white GS3 so I'm not sure anymore.
edit: as much as I like the white, I think this has sold me on the black:
http://www.youtube.com/watch?v=xQaquAe4GjU#t=2m20s
White seems really distracting with letterboxed material.
I had to make that choice with the iPhone 5. All my previous phones were black, and my two tablets (Nexus 7 and iPad3) are both black, but man the phone looked sharp in both. I think in the end I just was getting a little bored and tried to mix it up so I got the white phone.
I've found the white bezel-screen combo is not at all distracting as I had feared. The screen on the 5 is so awesome is actually kind of makes it stand out more, like it's being framed, if that makes any sense. You might have experienced this with your white GS3.
Of course, that may not apply to tablets....so basically what I'm saying is I haven't helped you at all.
Dr_Boris_Goltz
Banned
Just got my pre-order for a Mini in.
What's wrong with me?
What's wrong with me?
BuggyDClown
Member
WTF its not open yet for me
Dr_Boris_Goltz
Banned
Did it through the Apple Store app.
Battlezone
Member
Damn, store's still showing as down for me. What's the deal?
BuggyDClown
Member
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