Teardown: iPad mini costs at least $188 to build | iLounge News

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Teardown: iPad mini costs at least $188 to build

Research firm IHS reports that the iPad mini costs at least $188 to build, after its teardown of a Wi-Fi-only 16GB mini. Adding additional memory increases the cost only slightly while adding a fair amount of profit — an additional $90 in profit for the 32GB model, and $162 for the 64GB model. It’s important to bear in mind that this teardown only includes cost of materials; manufacturing, labor, research and development, and any other expenses are unaccounted for in analyzing the actual profit of the tested device, which sells for $329. Apple CFO Peter Oppenheimer notably mentioned during the company’s fourth quarter conference call that iPad mini has higher costs, and said that the gross margin is significantly below Apple’s corporate average, suggesting that manufacturing expenses are higher than usual. [via AllThingsD]

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Comments

1

Given that for non-Apple companies, the retail price for tech devices is 1.3X to 1.5X over BOM, it’s clear the Apple could have released the 16GB for $249-$279, been competitive on pricing, and still been earning tech industry standard profit margins.

So, when you defenders of Apple’s choices want to try and tell me how the iPad mini is worth its $329 starting price, just remember, you’re paying an additional $50 for no other reason than to increase AAPL’s returns. You, as the customer, are getting absolutely NOTHING for that $50 - it’s purely a “tax” for choosing Apple over their many mini tablet competitors.

Posted by Code Monkey in Midstate New York on November 5, 2012 at 10:57 AM (CST)

2

I still believe the true “sweet spot” for iPad Mini pricing was $279-$299. That is where I expected (ok, hoped) the 16GB Wi-Fi model to hit the market. $329 raised my eyebrows.

With that said, I will still be looking at the iPad Mini for my daughters for Christmas. We are an Apple household with numerous MacBooks, numerous iPhones and a couple of iPad 2s. It is still not worth it to introduce a second platform into that ecosystem. The extra $50 is nothing compared to the apps and videos that I would have to repurchase, find replacements for, or simply write off on the odd mini tablets. Not to mention the ease of syncing all of these devices with iOS and OS X (it really is amazing how well they all interact together). And I feel that I am not alone in that. Though I would have liked to see Apple be aggressive in their pricing. They could have fired quite a shot across the bow of Amazon, Microsoft and Google. And still made money hand over fist…

As it stands, Apple will lose some business. Newcomers will look to the cheaper competitors that still offer very good, comparable devices. And those with a less extensive Apple/iTunes collection will consider those competitors as well. As well they should. Apple is no longer the clear cut “Best of Show” any longer. The lines have blurred, or altogether faded. Tim Cook and Co. need to step out of the Jobsian ideas that people will pay more for marginal build superiority.

Posted by Mitch on November 5, 2012 at 11:43 AM (CST)

3

Mitch, I think what you may be overstating is the importance of the Apple ecosystem for a *tablet*, which is what I see as Apple’s biggest Achilles heel right now. So much of what typical people do on a tablet is platform agnostic.

32GB Nexus 7 Wi-Fi has GPS, better screen, better processor, does everything I’ve ever used our iPad for, and costs $180 less than Apple’s option. That’s kind of a no-brainer in my book. I’ll probably keep dealing with Apple for “things that go in my pocket” because iTunes is still a pretty sweet piece of kit for media management, but Apple is pretty much dead to me for the tablet market.

Posted by Code Monkey in Midstate New York on November 5, 2012 at 12:44 PM (CST)

4

Code Monkey - My family uses tablets for a lot of entertainment, photo management/editing and some light “office” productivity at this point. But the fact is that I have roughly 80 movies in iTunes format. The current DRM will not allow those to be played outside the Apple ecosystem (not fully the fault of Apple, if at all). That alone would warrant my reluctance to move away. But add to that my photo editing apps (even though many were free or $.99) and the seamless syncing of my photos on all my Apple devices. Other platforms may have photo syncing capabilities, but I have yet to see one that does so in the same seamless manner as my iPad to MacBook to iPhone to Apple TV.

Then I have my “office” apps. Again, some cheap or free. But using Pages, Numbers and Keynote really excels when I can, again, seamlessly sync those documents with all of my devices without any effort whatsoever.

So I would respectfully disagree that I am overstating the importance of the Apple ecosystem for a tablet. If anything, I am understating how important the ecosystem (be that Apple, Google, Amazon) really is. Why should I introduce a tablet that operates outside of my given ecosystem? I am using the tablet for the same things I use my phone and laptop for. So it should be an extension of both of those, which my iPad is. It allows me to keep working when my laptop is not feasible (photo editing on a bleacher at a gymnastics meet). It provides my a larger screen when my phone is inadequate (movies especially). It just adds value when it truly feels like that extension I mentioned. And not an add on that requires a change in operations to use and integrate. To me, that is worth the $50-$100 difference in the long run. But if you do not benefit from all of this interoperability, then it is obviously not worth it to you. And that is fine. I am certainly not trying to recruit to the “Dark Side”. I am simply over/understating that others value it a little differently. ;)

Posted by Mitch on November 5, 2012 at 5:52 PM (CST)

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