$259.60: Cost of Components to an iPad 16GB

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You forgot to mention the amount apple pays to it's child labor overseas. Oh wait I see it now. It's in .000001 font. Tricky.
 

Yrahcaz91

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And they sold how many hundred thousand of these puppies? This is a fine example of capitalism. Good for Apple.
 

dimar

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I was thinking of getting the basic model to read comics. But now that I've seen this, I won't be getting it until the price goes to at least $359.60
 

MrHectorEric

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Normally I would say that the software development and testing would make up more of the cost, but in this case Apple basically ported everything over from the iPod touch and iPhone so my usual statement doesn't apply. There's probably a price drop built into the price like the iPhone. In my mind, the basic iPad should be $350-$400 tops considering the lack of features and what little effort apparently went into development.
 

jamoise

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not surprising actually, I'm not a fan of apple myself but it seems people don't consider all the costs involved in the overall product and only ever looks at the base cost of hardware, things like.. warranty, customer support, the cost of the software that runs the hardware (the costs involved in updating and supporting the software), nevermind the costs in actually setting up manufacturing facilities and prefab costs for all the items in it that are not a standard component. (im sure the mainboard inside it is not an "off the shelf item") obviously once they start recouping some of the costs of the initial outlay, the price will come down, as what usually happens to all things.
 

dannyaa

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I just knew there'd be a bunch of young.... errr... what's the nice world.... less sharp.... people commenting on insane markups, capitalism, greed, etc.

You do realize a company spends years working on a product and paying engineers and developers 6 figure salaries? Paying rent for their offices, retail stores? Paying salaries to staff retail store employees? Shipment fees? Marketing and advertising?

Certainly they will make a profit... then again that's kind of the point, isn't it? Would you go to your job if you didn't make a profit?
 

MrComputerTecho

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@dimar,
Do you KNOW Apple...look at tere MacBook Pro..(its still at 3200) ...THERE NOT GOING TO GO DOWN...WANT TO KNOW WHY>>>>>>.....Apple has a sort of monopoly on the OSX OS. Not Allowing Anyone To Use It Unless Its APPLE. there For they can put the price at 500000000 and people....well eventually buy it ..you know>
 

mianmian

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Let's do a comparison,
Intel 2009 Q4, gross margin percentage is 65%, which means only 35% of the sale price is production cost.
 

mrhappy50

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it probably costs less than that considering the part prices listed are "retail" in a sense. ALSO apple buys HUGE quantities of parts thus lowering the price further.
 

kingnoobe

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LOL do people do realize this very much a normal markup. Quit acting like apple is evil, because in this case their no different then any other company.

Before you cry fanboi I own literally nothing of apple, and would never buy a mac, iphone or i anything for that matter lol.
 

brianmoz

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yep im with danyaa
the whole hating apple for being a company is pathetic guys. Lets take a step back. Apple makes money selling things people want, employ thousands, make products for people who are not tech savvy. Jobs isnt just hording money for himself he is reinvesting it and pushing things forward. Im not saying apple is a godsend but lets not beat up on an imagined demon here.
 

nottheking

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I'm actually gonna say that the estimate was way too high. Especially given the margins of difference given between the different flash sizes. They suggest that the difference between 16GB and 32GB is $29.50US, and twice that, $59.00US, to go from 32 to 64. In other words, they're suggesting the chips are costing Apple ~$1.85US per gigabyte. ($118US for 64GB) That's the price you'd typically pay (or perhaps a little less) for a full flash product with controller, packaging, interface, etc; you'd be looking at the range of $130-150US or so for a 64GB flash drive or SSD.

Obviously, Apple isn't even buying SSDs; they're buying the flash chips and packaging them onto the motherboard themselves. And they're not buying them individually, with packaging and all; they're buying them in trays, packed into pallettes, like other OEMS do; they do it by the thousand. So a more reasonable estimate is that they'd be paying closer to $50US for 64GB, or less.

However, I can see the cost of the touchscreen. (it's ALWAYS been the most expensive part of portable electronics) Similarly, their estimate for the A4 sounds about right for an embedded logic chip of that size. I'd estimate that Apple spends maybe $60-100US for the circuit board and its contents, (depending on flash size) $20US for the battery, $10US for the other internal parts, (like the antennae) $95US for the screen, and $15US for the frame/casing.

So all told, I'd estimate perhaps $190US for the 16GB version, $205US for the 32GB version, and $230US for the 64GB version. 3G support would likely add in another $10-20US or so in hardware costs. So, for the non-3G versions, you're looking at respective cost ratios of 38.0%, 34.2%, and 32.9% respectively.

[citation][nom]kingnoobe[/nom]LOL do people do realize this very much a normal markup. Quit acting like apple is evil, because in this case their no different then any other company.[/citation]
Actually, that markup's a bit high for a high-profile piece of consumer electronics. ESPECIALLY upon launch, as those costs do not take into account economies of scale and miniaturization, both of which ensure the production cost will CONSTANTLY drop for Apple as they make and sell more.

Microsoft applied this with their Xbox 360; when it launched, they LOST MONEY on what they sold. Though with later cost reductions due to scale and miniaturization, the costs came down under the price they sold 'em at. Sony's done the same thing with the PS3. (actually, I still dunno if they're making a profit on the hardware itself)

And no, this applies to Apple as well; not only do they sell the hardware, but they ALSO make a killing in their cuts in downloaded aps, as well as the fact that they intend to charge for OS upgrades for this thing.

It's the simple matter of fact: Apple has higher markup than their competition. It shows when you compare their products to their competitors'; comparable ones are much cheaper (like Freescale's proposed tablet) and comparable-priced ones offer superior capabilities. (like Slate or CrunchPad) This applies to their other products, too; iPods ALWAYS cost more than otherwise-equal music players by other people.
 

zoemayne

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[citation][nom]Hollowtek[/nom]You forgot to mention the amount apple pays to it's child labor overseas. Oh wait I see it now. It's in .000001 font. Tricky.[/citation]

its not that significant. they only pay them .0024 yen.
 

r0x0r

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[citation][nom]otacon72[/nom]If you really think about Apple's business model it's so fundementally flawed.[/citation]

Which is why they've been one of the most profitable businesses over the past 10 years.

I dislike Apple as much as the next guy but to say that their business is flawed after looking at their profits (and their customer retention rate) would be obtuse.
 

tayb

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[citation][nom]MrHectorEric[/nom]Normally I would say that the software development and testing would make up more of the cost, but in this case Apple basically ported everything over from the iPod touch and iPhone so my usual statement doesn't apply. There's probably a price drop built into the price like the iPhone. In my mind, the basic iPad should be $350-$400 tops considering the lack of features and what little effort apparently went into development.[/citation]

The device has actually been in development for years now but it went through countless redesigns before a product was finalized. Honestly though this is supply and demand. Apple has no incentive to offer cheaper products if the demand is still high. If this thing continues flying off the shelf I would actually raise the price until demand started tapering off.
 

Von Death

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Companies make money off other people's lack on knowledge in that area.

I build computers, so I know that most companies which sell pre-built systems are either raising component parts pricing, or selling people stuff they don't need. Apple is the largest and largest offender of these two practices.

It's like if you get your car fixed, and the mechanic lays you a huge list of fees for things he fixed; you don't really know if your car needed them or not because in essence you're not a mechanic.
 
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