back to article Researchers rip iPad apart to reveal Apple's profits

Apple stands to make a profit of up to $483 per unit on its iPad according to a very literal breakdown by industry analysts iSuppli. The research firm said the total cost of materials and manufacture for Apple's big iPhone ranged from $229.35 for the 3G-less, 16GB version, which sells for $499 to $346.5 for the top of the …

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  1. Toastan Buttar
    Pint

    User experience is the primary consideration.

    Until you've actually used an iPhone/ iPod Touch, you can't fully understand the user experience. I think that once people start getting hands-on demos of the iPad, they might decide that it is in fact exactly the kind of thing they'd find useful / enjoyable to have around the house.

    Logical criticisms can sometimes evaporate once you try a device in real life. The lack of app multitasking for example, becomes a non-issue for most people, especially when each app occupies the entire screen area when it has focus.

    Pint, because you have to drink it to appreciate it fully.

    1. Anonymous Coward
      Jobs Horns

      It's all about the 'experience'

      Yes you have to drink the pint to appreciate it fully, however do you drink pint A at your local boozer at a max price of £2.50 or do you drink pint B made by the same brewer and may even be from the same batch, it tastes the same and has the same effect but costs £5 at the 'trendy' bar because it's all about 'the experience'?

      I'll be at the boozer spending half as much and wilI have cash left over for a kebab and taxi home. Plus the boozer keeps me away from those irritating twats who think 'image' is everything and throwing money away on a product that is inferior to other offerings but costs twice as much is a sensible thing to do.

    2. This post has been deleted by a moderator

      1. Anonymous Coward
        Anonymous Coward

        Horses for courses

        You were doing so well before that last clause.

        I know lots of people who are more productive on Apple kit than they are on other systems. The UI fits some people better than it fits other people. Personally I hated the OS 9 UI - yuk. On the other hand, I like the OS X UI. So what...

      2. Bilgepipe
        FAIL

        Okay...

        "Sorry, but fuck loads of us have tried Apple's various UIs through the years and found no real benefits, we have tried it, we do get it, we still don't like it."

        Fair enough, just stop trolling Apple news stories all the time. Don't like it? Don't use it, and stop reading the bloody articles about it.

        1. RegisterThis

          ... sounds interesting?

          How did they measure it? ... let's see .. a single thread is more productive than multiple threads in a PC? Don't get it ...

      3. Anonymous Coward
        Anonymous Coward

        OK..

        Actually, you are wrong when you say that the UI is only a minor part of the equation. Regardless of what hardware you have under the bonnet, if you have a bad UI, it will feel slow and inefficient.

        When designing proper computing systems (and I am not talking games here, games use their own UIs instead of whatever the system provides), user interface design is a MAJOR consideration.

        If it were not, Apple and Microsoft would not spend £millions each year running user interface design teams

        You are right when you say User interface design is subjective. However, I will say that although I have done no real scientific testing, I have found that amongst my friends, those who use Macs have had a much easier time learning the OS than those who use Windows..

        1. Anonymous Coward
          Flame

          UI design teams are just a tax reduction

          "If it were not, Apple and Microsoft would not spend £millions each year running user interface design teams"

          Yepp. MS obviously uses that team as a tax evasive action and throws the results away, while Apple isn't much better. Both exist because you have to have "research" unit.

          See-through windows on a screen? Who is the idiot who thought that would be a good idea? Or "3D"-windows?

          Bunch of crack-addicts which don't have a clue about ergonomy, all of them.

      4. Anonymous Coward
        Flame

        Simple= easy to use

        "but it's a myth that they're any better for actual usability and they certainly don't make you any more productive."

        Depends on what is the reference point. Definetely easier to use and more usable than anything MS has produced. That spells productivity in long term. Simple=easy to use, it's that simple.

        Apple also has done good job of making many maintenance jobs automatic, while MS has "wizards", which are extremely dumb.

        You could easily "adjust" everything a couple days just to "get it right" in Windows, while there's not so many configurations available in Mac, thus making you to do more work and less play.

        If that's a good thing or not, depends of the point of view.

        1. This post has been deleted by a moderator

    3. Richard 120

      Nah, my mind is made up

      If it's expensive and you can touch it without being at least 4 foot tall I don't want one.

      I have a toddler.

    4. caffeine addict

      Tried it. Hated it.

      In this office, the multi-tasking is a major issue.

      We're all HTC or Nokia users, and (to a man) we hate our office iPhone. It's very, very shiny and swish and it it makes everyone go 'ooooo...' But then when people use it, they have all hated it.

      It's the keyboard. And the layouts. And the lack of multi-tasking (hell, my WinMob 6.1 had that). And the control. And iTunes. It even refuses to let you turn it on unless it thinks it has enough battery - ignoring the fact that it's on charge.

      The only saving grace is the multi-touch, and non-US androids do that...

    5. RegisterThis
      Megaphone

      He's got one ...

      So I assume you have tried it and decided it has a function in your life alongside your iPhone, iPod Touch, Macbook and Big mac?

    6. blackworx

      Pint

      "Pint, because you have to drink it to appreciate it fully."

      One might easily misread that to infer you'd have to be drunk to decide that buying an iPad is a good idea.

  2. Haydies
    FAIL

    Buy in to the life style

    Every one knows, that when you buy an apple product its not just a product, it's a way of life. So why not make 50% profit on it? The iPas is 'magical', so that probably accounts for half the cost. It can't be cheap to install magic.

    Still, its nothing new. Every thing apple sells costs more for less. Just look at the archos 9, it's more or less the same price but does so much more. I don't get it, why do people actually want apple to tell them what they can do with their machine? I like the choice, weather its MY choice of media player, or browser... it's still my choice and thats what you get with windows, the choice.

    1. Ed Blackshaw Silver badge
      Stop

      They don't make a 50% profit on it though

      It's 100% profit; they buy the components for $400, inject the magic cult juice into them, or whatever it is they do, and sell them for $800. I seriously doubt the manufacturing costs approach anything like the $400 markup.

      1. blackworx
        Boffin

        @ Ed Blackshaw

        You can never have 100% profit unless you magic stuff out of thin air and sell it on the spot.

        Selling something for £2 that cost you £1 including your overheads means you generated 50% profit off a 100% markup.

        Also, according to the article, iSuppli include manufacturing costs in their calculations.

    2. Anonymous Coward
      Anonymous Coward

      Still, its nothing new. Every thing apple sells costs more for less

      Take a look at the imac pro, £450 for a 2TB Hard drive and £287 for a ATI Radeon HD 4870 (512mb). I am sure they have bets on how high they can over price things and still get away with it

    3. Volker Hett
      Thumb Down

      Are you sure about the Archos 9?

      Windows 7 on an ATOM Z510 at 1.1GHz with a very limited Poulsbo U515W graphics chip and only 1GB of RAM is not that fast, even with all the bells and whistles turned off. In my experience, even XP Home is very slow on this combination.

      I have a nano ITX Board with this CPU and chipset but 2GB RAM and tried it with XP.

    4. Anonymous Coward
      Grenade

      Simple.

      If you had a gorgeous girlfriend you would expect her to be a bit more expensive than your average plain one.

      And thus it is for gadgets.

      1. blackworx
        Jobs Halo

        @AC 14:10

        How dare you!

        You have sullied His Jobsness' good name by seeking to compare the iPad with mere objects.

  3. Laffer
    FAIL

    Not from me........

    They will not be making any profit from me. Having experienced one apple product (iPhone) thats enough to put me off for life. Its not the device - it's the level of control over it's usage etc that grates. With apple that will only get worse.

    It's win or linux slates for me and an android based phone..........

    1. Anonymous Coward
      Linux

      Have you tried ...

      wearing a tinfoil hat?

    2. Anonymous Coward
      FAIL

      @laffer

      "Having experienced one apple product (iPhone) thats enough to put me off for life. Its not the device - it's the level of control over it's usage etc that grates"

      What didn't you like about it? Couldn't make phone calls? Couldn't send texts? Couldn't browse the internet? Apple don't have any control over any of these things, once it's in your hands, you control how it's used...

    3. Danny 14
      Stop

      really?

      I can tell you havent used a windows slate. Awful things with dire battery life. And android phones? Dont make me laugh, try using it in a modern car (ours wont sync properly in the BMW 530 or the mondeo convers+) . Have you been able to use an authenticated proxy over wifi yet - which sort of makes it useless in any normal business environment?

      Its horses for courses, if the ipad works then great, but simply saying "its apple, trash it" is silly. No-one seems to have the perfect solution yet.

  4. David 105
    Jobs Horns

    Apple haven't lost the art of ripping people off

    In other news, bear given ASBO for defecating in woods, and Pope confesses to Catholic tendancies

  5. RichyS
    Gates Horns

    Gah!

    I don't know where to begin with the pointlessness of this story.

    iSupply did not rip apart an iPad. They've speculated on the parts involved, and the typical price for these to come up with a Bill of Materials (BoM).

    Now, unless Apple can get all their R&D done for free, marketing for free, everyone works for free. Free electricity, water and rent. Indeed, free everything else; the margin between the BoM and selling price is not profit.

    As for Bill Gates? Why can't he just let it rest? His concept of touch, pen and keyboard tablets have been around for nearly 10 years now. And hardly anyone wants one. Bill, you concept failed. Get over it. Let's see what happens to Apple's take on the tablet...

    1. Annihilator Silver badge
      Stop

      Bill G - no comment?

      "As for Bill Gates? Why can't he just let it rest? "

      Do you really think he called a journalist to bitch about the iPad? Or do you think he was asked in passing what he thought by the blog writer? He gave a response of general indifference, but also said "It’s a nice reader". What more do you want? Not to mention he was a fan of the iPhone.

    2. No, I will not fix your computer
      Jobs Horns

      Ahhh... but.....

      They cannot comment on R&D etc. as they would need direct access to the company details etc.

      Besides, it's just a big iPhone, how much R&D do you need? Seriously! how about "Let's make a big one".

      Apple make more money because iCustomers will pay it, I could be cruel and say iSuckers, but to be fair, it's their money and if they think they are getting value then it's worth what they are willing to pay, Apple have a higher proffit margin because people are willing to pay it, my girlfriend bought a Balenciaga handbag for some obscene amount of money, used if for a year and sold it for more than she paid, cost is absolute, value is not.

      Apple's business model depends on charging a premium for their products, simple as that, to some people an Aston Martin DB9 will be worth the extra £50k over a Jaguar XKR, most of us wouldn't have to struggle with that particular choice, but people will often find an extra £150 to have the Apple logo on their gizmo of choice, me? I don't need it, I don't consider it worth the extra cash but some people do, I bought a Creative Zen for the same price an iPod Video because it had better features, I'll probably never own an iPhone as I prefer a small phone in my pocket and a large archos 705 in my rucksack, but that's just me.

  6. Torben Mogensen

    Bill of meterials != cost

    Not all the gap between the cost of materials to the sales price is profit. First of all, assembly does cost something. Even of it is automated, the machines that do the assembly and the buildings that house these machines must be paid for. Secondly, development costs must be paid over the price of the sold units. Apple designed their own SoC for the iPad, which is not cheap. And there are lots of other such costs that need to be recovered through the sales price.

    That said, the incremental cost of producing one more iPad is fairly low, so when Apple have recouped the fixed expenses, the price of the iPad is likely to fall.

    1. Haydies
      Gates Halo

      No chance

      "so when Apple have recouped the fixed expenses, the price of the iPad is likely to fall."... no chance of that, look at the mac book. The price hasn't really come down, yet apples profits jumped up 50% in the last quater. Given the global enconomy you have to wonder why?

      Answer? They are selling the same old c**p for the same price, even though as every one knows the price of the PC parts inside is falling like a lead brick.

      That glowing apple on the front is what your paying for, and its got nothing at all to do with the costs of making the damn thing.

      1. Anonymous Coward
        FAIL

        @Haydies

        The price of the Macbook maybe has not fallen... but the spec has got better. If you purchased one two years ago, the one you would buy today for the same price would be better specced...

        1. Haydies
          WTF?

          2 years ago?

          I wasn't talking about 2 years ago, more like 6 months ago.

          The MAC book is a cheap, low spec dell in a white plastic case, infact at one point they where made by asus. They are PCs, there is NOTHING in there other then basic, low end kit. Right down to the gpu, what is it? a Nvidia 9400? my £400 acer has a better spec...

          Every one else in PC (and apple do make pc's) drops their prices all the time. Apple only did that to turn the old model in to a 'budget' model when the new one came out.

          Trurth of the matter is apple sell a comodity, their brand and the image that goes with it. I'm clearly not a fan boi, I buy my hardware based on getting the best value for my money, and it being able to do the things I want to do.

          1. mchaggis
            Thumb Up

            Design != looks

            "I buy my hardware based on getting the best value for my money, and it being able to do the things I want to do."

            I want something to read books, papers, feeds and web pages on the sofa; and listen to music and watch videos when travelling. I want it to be an easy and enjoyable experience (i.e. not a big heavy, hot thing, not something that'll run out of batteries straight away, and take time to 'wake up'), and I want it at a price which I feel is good value for money. Show me an alternative to the iPad for what I want it for.

            Functional design costs money, just as does aesthetic design. Making it a few grams lighter, a few mm thinner, last a few minutes longer etc: all of these things take design time, which costs money. Any fool can throw some components into the form factor flavour of the month; it takes a lot of time and effort to really design something.

            I just don't get what's wrong with something that does most of what you need/want and not a lot more? I really don't care that I can't run an exchange server off it or use it for programming in C#...

            1. Dan 10
              Thumb Up

              Yep

              And the thing that interests me even further is this: People keep talking about the ipad only being for 'consumption' and never creation, but look at the apps for the iphone - despite the small screen with so-so resolution, there's all kinds of little painting and graphics apps etc. I'm not that impressed with the ipad so far, but the crucial thing isn't the device itself; it's what the app devs will do with that bigger screen. I reckon the naysayers have jumped too early.

          2. Anonymous Coward
            FAIL

            We get it Haydies...

            you don't like Apple! Well done! Do you want a fucking medal now?!

            Right. First. Its Mac; a contraction of Macintosh. MAC would be Media Access Control when discussing computers, or if you have a girlfriend , you'll know it's also a popular brand of make-up. We are all aware that Macs are 'just PC's', they always have been 'just PC's', when discussing computers its quicker to type Mac vs PC then Macintosh vs Windows.

            "...cheap low spec dell in a white plastic case." Really? A similar spec'd Dell (Studio XPS 13) is £36 cheaper. Not really a lot in it, is there? In fact if you choose Win 7 ultimate, it becomes £54 MORE expensive! Once the Inspiron 13z spec'd to match it is £200 cheaper, but then the GFX card isn't as good and the processor is shite (an Intel SU7300 1.3GHz). Similary, the Vostro 13 was significantly cheaper, but also had a significantly inferior spec. The Latitude E4300 is £143 more and that is after a £139 discount BEFORE VAT! I'll concede that this model is more inline with the MBP 13", which is £50 cheaper after VAT has been added! the point? To show you that you are talking BOLLOCKS! Apple just aren't overpriced. QED. So what if ASUS, who used to make Dell motherboards and other parts BTW, made Macs? It's irrelevant. The NVidia M9400 is an excellent mobile graphics card. Sure, there are more powerful ones out there, but so what?! Unless you are a gamer or 3D designer/modellor it doesn't matter! Even then the 9400 performs well enough.

            "Trurth of the matter is apple sell a comodity, their brand and the image that goes with it." What is so bad about that? Many, in fact ALL businesses do that, it how you SELL!

            "I'm clearly not a fan boi" No, you clearly are! Just not of Apple...

            "I buy my hardware based on getting the best value for my money, and it being able to do the things I want to do." Funny, that is EXACTLY what everybody else does. Value for money != cheap. I use Windows, Mac and Linux based PC's 'cause I'm a geek and I like to play with computers. I'm a professional web designer and developer, my weapon of choice is the Mac, because IMHO it has the best apps available for that job and therefore as a platform it offers the best value for money TO ME!!!

            1. Anonymous Coward
              FAIL

              My apologies for poor grammar...

              and bad spelling. I have no excuses other than stupidity from birth...

          3. Anonymous Coward
            Grenade

            Apples, oranges

            "Right down to the gpu, what is it? a Nvidia 9400? my £400 acer has a better spec..."

            And how long your Acer will function? 3 years? If you are lucky, yes.

            I bet that £400 don't include any OS, while Apple is selling it bundled.

            Basically you are comparing apples and oranges and then whine because the others are so expensive.

            I've been using Apple's products (family support, my parents have MacBook Pro) and I know that support calls to me have dropped to 1/10 since they changed to Apple (3 years ago) from earlier machine (generic XP laptop). You can bet your ass that I'd put a couple hundred more to that Apple machine,again, just to save my own trouble during the years.

            You learn to think ahead when you get old enough.

            1. M Gale
              Badgers

              Long lasting macs?

              I've got a G4 Power Mac sitting upstairs. It has a blown PSU. My desktop machine has a 500w PSU in it that's about the same age and has been chugging away happily for years.

              If my PC's PSU blows, I spend maybe £50 at most and get a new one.

              A new G4 PSU? That'll be between £150 and £200 please. Same shape, same size, same basic construction, same cheap Chinese manufacturer, but it has a different pin-out for the motherboard plug and a 28v line. "Think Different" my arse.

          4. Anonymous Coward
            Anonymous Coward

            Duh

            my £400 acer has a better spec...

            But doesn't run OSX

            Next...

      2. Volker Hett

        same old crap for same price?

        Answer? They are selling the same old c**p for the same price, even though as every one knows the price of the PC parts inside is falling like a lead brick.

        Let's have a look.

        White Macbook September 2007, 2.1GHz C2D, Intel GMA 950, 160GB IDE Harddisk, double layer 6x DVD, 2GB DDR II RAM and VGA Adapter

        Total 1308 Euro

        White Macbook February 2010, 2.25GHz C2D, Nvidia 9400, 250GB S-ATA2 Harddisk. double layer 8x DVD, 2GB DDR III RAM and VGA Adapter

        Total 928 Euro

        Besides the faster CPU, faster GPU, faster RAM, faster and bigger Harddisk and faster DVD drive it's only 380 Euros cheaper than 2.5 years ago. What a rip off!

    2. Ed Blackshaw Silver badge
      Stop

      Okay, lets do a little maths here, shall we?

      Lets say that these ar assmebled by hand, and that a worker is paid $20 an hour to assemble them. Lets say it takes a whole hour to assemble one device. That gives you an assembly cost of $20. In reality, they will be made on a construction line in an existing factory, so the cost will be a tiny fraction of that.

      In terms of R&D costs, the software is essentially the same as that on the iPhone, the R&D for which has already been done, and presumably paid for several times over in profits. I calculate the cost of this to be approximately zero.

      I don't know how much the magic pixie juice they fill them up with costs though.

    3. JeffShortland
      Thumb Up

      This is usually where the PC arguement pops up...

      It's all a trade off, and you hit the nail right on the head. LABOUR and ASSESMBLY does cost money, and for the people constantly harping about how much cheaper it is to maintain a PC = better product, they obviously equate their time to a fairly low dollar figure.

      It's not like apple is the only company to mark up a product after all, I don't see why this is surprising when just about every retail product you purchase is upped about 300%.

      1. Rod MacLean
        Stop

        PCs

        I can only comment on my own experience but when I had a PC, I seemed to spend a lot of time repairing things, reinstalling the OS and gernally fannying about instead of getting things done...

        Say I was normally paid £10 an hour, the amount of time I spent "fixing" the PC would have been worth about £500 or more. Since my last PC cost £1500 and the last Mac I bought was £750, I feel like I've saved a LOT of money....

    4. Michael C
      Go

      exactly

      parts cost + manufacturing cost certainly is not equal to actual cost. This is something the press keeps running with that no one gets, and iSuppli doens't help the matter.

      This cost doers not include R&D, which likely cost Apple over 200m, if not a lot more considering this thing's been in development for more than a decade in multiple revisions and iterations. It does not account for logistics and supply concerns, warehouse storage, nor any FACILITIES costs for assembly (only labor estimates and component costs from 3rd parties are considdered). How about what apple spent on that A4 processor as well?

      Then there's the fact that Apple's retail price has to account for them still making a profit when they sell these through 3rd parties, like BestBuy, MacMall, and Authorized resellers, who themselves would like to clear a fairly standard 10-20%. When apple sells direct, they've got people to pay that make that sale too, and that washes most of the difference between retail and wholesale prices.

      Finally, there's warranty support costs. The people that answer apple's phones (or more regularly call you at a scheduled, convenient time so you don't have to wait on hold), also cost money.

      If Apple clears, end over end, $50 per device, they'll be doing GREAT. Yes, the high end will reap a lot of profit, especially if that $130 3G connector price holds (I think that will drop to $79 real fast, and $50-100 come off the base model within 6 months).

  7. Annihilator Silver badge

    No surprise

    I did wonder how much the costs could really vary when I saw the options. A 3G chip, GPS and a bit of extra flash memory could never have explained the price difference between the models. What is amazing is the folks that think Apple have done them a favour by introducing a "budget" option.

  8. James 47
    Thumb Down

    What about...

    the cost of licensing patents from other companies?

    oh right...

    move on

  9. Andrew James

    What about the indirect costs?

    Assuming iSupply have factored in the other direct costs, such as labour and machine hours, this still only gives you a gross profit margin.

    I'm a management accountant. I used to work for an accoutnancy practice that specialised in the licenced trade. Your typical pub would make a gross profit of about 35% on drinks, and 65% on food. But look... pubs are shutting down at a ridiculous rate, because they can't make a profit. How can this be if they make an average gross profit of around 55%? Well... because they have to pay all their staff, their accountant, advertising, rent, rates, gas, electricity... etc.

    Claiming that Apple is ripping everyone off because they sell their brand new consumer electronics at a high initial markup is just ridiculous. Everyone knows that consumer electronics are always pitched at a high price at first to soak up the early adopters money. This is a common marketing strategy. Anyone who doesnt understand this should look up the Product Life Cycle. It explains the way this works quite well.

    In the real world, profits (actual profits) are as low in the early stages as they are when the product is out of date and the market is in decline. Profits peak before the market reaches maturity, and then start to fall again.

    1. Nuno

      warranties

      Let's not forget about the cost of warranties. In the end, if a product fails, we all want a new/repaired product, which will add to the cost of the original

      1. Andrew James

        yupp

        They'll factor in a provision for that too.

  10. chr0m4t1c
    FAIL

    Is all the other stuff free then?

    I'm thinking of product development, factory tooling, packaging, marketing, etc, etc.

    Really, I can see how this kind of stuff might be relevant on a mature product, but for one that isn't even on sale yet?

    Maybe these guys could just buy all the bits and make their own.

    Might want to start by reading a "Dummy's" book about business basics first, though.

    They haven't shown Apple's profit margin at all, they've just shown that Apple won't be likely to be selling each unit as a loss leader for other services (like Kindle might have been) and they have a large scope for price reductions to stimulate the market or allow carriers to offer discounts with data contracts if necessary.

    Don't forget that anyone buying one of these who previously owned an iPhone or one of the various iPod models may well have a library of media and applications that can just be used to fill the thing up without spending any additional cash - how often do you encounter that?

    1. Daniel Owen

      Do we need all the Sales - BoM doesn't = profit comments?

      "Apple stands to make a profit of up to $483 per unit on its iPad according to a very literal breakdown by industry analysts iSuppli."

      They already said it was very literal!

    2. Haydies
      Gates Halo

      Not all apps are free

      "Don't forget that anyone buying one of these who previously owned an iPhone or one of the various iPod models may well have a library of media and applications that can just be used to fill the thing up without spending any additional cash - how often do you encounter that?"

      Now I wonder how the people that wrote the apps feel about apple giving away their liecense? Sure you paid for a licesen for one device, but you didn't pay to use it on as many as you like. Thats called Piracy? Or maybe iPad owners will throw away their iPod or iPhone?

      Oh, and lets not forget, as every one seem to be doing.... that any one with a PC also has a library of apps and media they can use on a windows slate..... pirated or not...

      1. Stuart Castle Silver badge

        App licences

        As I understand it, by default, when you purchase an app (even free apps are counted as zero cost purchases), the licence is assigned to the itunes store account. As such, it can be installed on as many devices as use the account. The App Publisher can request that the licences be restricted to one machine.

        I haven't looked too deeply into this so could be wrong.

      2. chr0m4t1c
        FAIL

        Not all apps are restricted.

        "Now I wonder how the people that wrote the apps feel about apple giving away their liecense? Sure you paid for a licesen for one device, but you didn't pay to use it on as many as you like. Thats called Piracy? Or maybe iPad owners will throw away their iPod or iPhone?"

        Well, no, that's no the way iTunes licensing works. Unless specifically restricted anything you buy through iTunes is licensed against the account and the account can be registered for use on up to five machines at any one time (*not* five devices). Each of those computers can sync a number of devices (I don't know if there is a limit, but I haven't encountered one) and transfer any compatable stuff to the device.

        So, you can own an iPod, iPhone and iPad and sync all of them with one machine (or each with seperate machines using the same account) and use all movies, TV programmes, applications, etc. with whichever devices support them.

        So, *no*, this would not be piracy.

        "Oh, and lets not forget, as every one seem to be doing.... that any one with a PC also has a library of apps and media they can use on a windows slate..... pirated or not..."

        But that *would* be piracy (well, breach of licensing terms anyway) unless the license for the software specifically allows the use on more than one machine, which most commercial PC software does not allow by default in my experience. Granted, in practice most manufacturers don't make any serious attempt to restrict you from doing that and probably wouldn't persue you anyway, but if you're going to suggest that one system has an advantage over another you probably want to make sure which way around they are first.

        That said, you appear to have missed my point anyway, here it is in a plainer form:

        Apple make money from every sale though the iTunes store (apps, movies, music, etc.). People who buy the iPad will almost certainly already have an iPod and/or an iPhone, so may well not purchase as much content for the iPad as they will already own it, thus reducing the after-sale revenue stream.

        It's a bit like the VHS->DVD->Bluray thing. When people moved from VHS to DVD they bought DVD copies of stuff they already owned on VHS, but it's unlikely they will buy Bluray copies of anything they already own on DVD. If the hardware manufacturers were getting a cut of every disc sold you can bet your life that either they wouldn't be compatable or the hardware would be more expensive (probably both, in fact).

  11. I know better
    Gates Horns

    What the....?

    How can Bill Gates lecture anyone about pricing when he rolls out a new version of office every few years with the same old crap and a few more buttons tacked on with a subtle colour change thrown in for good measure?

    Yes,the iPad is expensive. So are BMWs. Yes I'm a (trying to be realistic) fan boy. No I can't afford one! :-(

    1. Anonymous Coward
      Anonymous Coward

      RE: What the...?

      Don't foget the f**king ribbon.

      I still can't find half the functionality I used to have in Excel 2007.

      ...and I've been using it for longer than I ever used Excel 2003.

  12. Gav
    FAIL

    Naive and insulting

    Any analysis of the cost of producing a high-value technological product that considers simply the raw material and manufacturing costs is naive and insulting. Still, no doubt it will attract comment from those who are under the delude impression that the purpose of a company in a capitalist market is to make as many items they can for as many people as possible at the cheapest price.

    The suggestion that large profits are a bad bad thing is valid, but is rather out of the scope of any discussion about a single product or company. We live in a capitalist society which Apple is obliged to operate in like anyone else. Why shouldn't they strive to maximize their profits like anyone else? The price they sell the iPad at is dictated by the market. Customers have other options if Apple have misread the price their intended market will bear.

    1. Anonymous Coward
      Anonymous Coward

      Immediate costs are very important

      "Any analysis of the cost of producing a high-value technological product that considers simply the raw material and manufacturing costs is naive and insulting."

      No it's not. You don't just get the whole picture.

      It tells how much it costs to make a single unit, ie. _immediate costs_. Very important part of overall costs. If you make 10, immediate costs are 10-fold.

      Everything else is secondary costs and more often than not, they are constant. If you make 10, this cost is usually 1-1.05-fold of making one. Make 100 and the cost is 1.5 to 2-fold.

      Assembly work can be bought at $1/h and 30 phones per hour is normal. And now here's somebody talking about assembly costs? In a device which cost than $400?

      Constant cost per unit manufactured is very strongly dependent on how many units you are going to make (or manage to make) and Apple obviously is going to make many millions of these, so everything else but immediate costs are either neglible or totally irrelevant.

      Anybody doing any meaningful analysis should grasp that fact.

      I could also calculate that the cost of one Windows-licence for MS is practically zero and thus the selling price is pure profit, infinite percentage. When you sell 100M licences per year, your development team cost (100 people) is lost in rounding errors. No wonder that net profit is 40%, after the taxes. Drop sales force, advertising and legal department and that's 80%.

  13. This post has been deleted by a moderator

  14. Mike Richards

    Bill Gates

    Wasn't Bill Gates also unimpressed by the iPod and the iPhone? As a techno pundit he's somewhat lacking.

    1. Stuart Castle Silver badge

      Ahh Bill G..

      Not to mention the fact that he thought Tablet PCs were the future (they weren't), and we'd give up the internet and just use MSN..

      1. Anonymous Coward
        Anonymous Coward

        looks like Internet usage...

        is heading toward private networks not unlike AOL or MSN. Just not in the way Bill Gates had imagined/hoped at the time.

  15. Simon Neill
    FAIL

    Missing costs...

    Adding to the lists of costs not mentioned in the article above parts:

    1) Aftermarket care - warrenty repairs/replacements aren't free and no matter how good your product there will be some of those

    2) Taxes. You say apple take $400 over materials, even if your cost includes EVERYTHING to get all the parts all the way to a finished product in my hand, apple doesn't get to keep it all.

    Might as well say my car is a rip off because it cost £12k new but is made up of only £100 of steel, might as well go buy a big lump of steel and make one myself right?

    1. TeeCee Gold badge
      FAIL

      That car analogy.

      Really bloody awful that and worthy of the icon all on its own. The iPad costs were for components, not raw materials (probably down to a few pennies there).

      Your car though. Look up the price of each component and add 'em all up to get the DIY cost. Costs quite a bit more than buying a bloody car, doesn't it? So, in that case at least, the cost of assembly, marketing, product design etc is somewhat more than outweighed by the advantages inherent in mass production and bulk purchase.

      Ok, your car manufacturer isn't paying even trade rates for components, but I'll bet a sack of cash that Apple aren't paying manufacturer's quoted bulk prices for 10,000 units for their bits 'n pieces either, so iSuppli's "costs" will probably be on the conservative side.

      Apple are coining it.

      1. SirTainleyBarking
        Badgers

        The car spares analogy isn't a good one

        Yes a 10 grand car will cost 20-30 grand if assembled from manufacturers spares, but remember that in this instance the stupidly high price you pay for a specific part is, I would estimate, around 90% covering the costs of stock holding and logistics. It also depends on demand as well.

        For instance, an oil filter is a high demand part, routinely replaced. Large market for this, retail costs will be competitive.

        An obscure bit of trim will be extremely expensive, and the mark-up will be percieved to extortionate, but in reality it will sit in the warehouse, individually bagged and tagged for years, eating up the storeage costs.

        Oh and in the FMCG arena, overall mark-up is often 100%+, as there are 3 chunks of profit that need to be accounted for. The manufacturer / assembler, the Branded owner, and the retailer.

        Leaving out taxes, the manufacturer will be making 10% tops, the brand and the retailer probably evenly split at a 30-50% margin.

      2. My New Handle
        FAIL

        Fail to that, sir

        Everyone knows that if you tried to buy all the individual part to a car/motorcycle/WHY at retail/trade you will end up paying more than twice what you would pay for the fully assembled item. So not much of an analogy there then.

        Like others have said - Apple have a whole set of operating costs that many others do not. You could start with the Apple stores worldwide. You could then go on to their after sales service both in-store (extraordinary by any measure) and on-line. Apple's prices generally reflect a premium product delivered and support by a premium route. Of course, you get to choose whether or not you actually want any of that or not. Don't like it? Then don't moan about Apple's pricing, go by Acer or something more budget.

        The iPad may make it on its own merits or not. For sure, there will be those that buy it just because. Others will not. Who cares really? None of this is newsworthy, just a bit of muck-raking for the fun of seeing the anti-anything-Apple got into the ritual mouth-frothing at the latest morsel to vent their faux rage at. Oh well, if it floats you boat, I suppose.

  16. Anonymous Coward
    FAIL

    @RegisterFail

    "it's a much lower performer than the majority of Netbooks which costs half the price"

    ...and which don't have a touch screen, have a bloated resource-hog of an OS and require a reinstall of Windows every 6 months (or they slow to a crawl) and are mostly just used for email and a little light surfing.

    1. Mark McC
      Stop

      RE: @RegisterFail

      My bloated resource-hog of an OS is currently using 278MB of the 1GB RAM on my netbook, including a browser with 5 tabs open, e-mail client and PDF reader. It's still running perfectly on the XP install I did almost 2 years ago.

      While it is easy to get a Windows installation bogged down with so much crap that reinstallation is the only option, it's equally possible to keep a Windows install bloat-free and running smoothly. The only difference between the two is the user.

    2. Paul 4

      Or for even less

      You can buy an linux one that is only missing the touch screen.

  17. JohnG Silver badge

    Religion

    Apple is a religion whose followers will buy whatever they sell, regardless of price or function. It is pointless to argue with those who have seen the light and if they are happy, does it really matter?

  18. LinkOfHyrule

    This news just in...

    Company charges customers more for assembled product than it cost them to produce it.

    And in other news, Apple accused in undercover operation by the 'anti cruelty to pixies league' of literally squeezing pixies dry to obtain their magical juices!

  19. Bilgepipe
    Gates Horns

    Gates Should Pipe Down

    Gates just wishes he'd done it. Remember the prediction of Tablet PCs being the dominant device by 2005? And the best we have is Steve Ballmer's prototype photo-frame PC, that he couldn't even use, in 2010.

    The 'tards on here might not like Apple kit, but Apple did it first and they did it better, and it just bites, doesn't it? See you when everyone else catches up!

    1. Haydies
      FAIL

      Apple didn't do it first

      Ok, so you point out the MS made tablet PCs many years ago, and they didn't sell.... but apple did is first?

      Some thing wrong there.

      Also, Arcos 9, Balmar at CES? Clearly these are also tablet PCs with the nicer hardware that is now avalible, and yet... apple did it first?

      I can go buy the archos 9 right now. Can I buy an iPad?

      I like to argue, and this is providing me with much entertainment. Apple fans live in some magical world where the things Steve says are true. Only, for the rest of us in the REAL world we know he lies.

      Just look what he said about netbooks. Under powered with low quality screens. I'm sorry steve, but thats just not true. Mine has a better screen then the iPad (higher res and wide screen) and way more processing power.

      The iPad is just a big iPhone, its not the magical wonderfull thing steve tells you it is. It can't even do flash.... lots of flash on the web. Sliver light?

    2. RegisterThis
      FAIL

      One word ...

      Newton?

      1. Frank Bough
        WTF?

        In case you hadn't noticed

        ...the iPad is NOT A TABLET PC.

        And why do people keep claiming it offers poor performance, what benchmarks are you using for this assessment? We have no idea what Apple's SoC can do at this point, but we can bet it's decently powerful and nicely power efficient.

    3. No, I will not fix your computer
      FAIL

      Re: Gates Should Pipe Down

      hehe... Apple are the latest newcomer to the tablet market, perhaps the iPhone GUI lends itself to a tablet format better than all the tablet versions of Windows, better than Android, Symbian etc. but there's nothing new about it, nothing exciting (I think the border is too fat personally), I suspect that MS will let Apple spend a huge amount of money telling everybody to buy a tablet then they will release the Courier, which is far more inovative, folds up smaller etc. the tablet has (so far) always been a flop, is the Apple interface so good that people will forget this?

      IMNSHO the tablet has always failed because it's too big but... dichotomy... people like big screens, therefore the iPad will fail and a folding book like the Courier will succeed.

  20. Anonymous Coward
    FAIL

    Remarkable.

    Given that they have no idea what is actually inside an iPad as NOT A SINGLE FUCKER OUTSIDE OF APPLE HAS ACCESS TO ONE.

    Pure BS guesswork.

    1. Anonymous Coward
      Thumb Up

      Post of the day!

      Surely!?

    2. Anonymous Coward
      Anonymous Coward

      Not quite.

      Partially right - partially wrong.

      http://blog.missionrepair.com/2010/02/01/ipad-camera-rumor-becoming-a-reality-we-think-so/

      Granted, they don't have every part, but they have some.

  21. Matthew 17

    another pointless Apple article designed to cause an argument

    I'm sure the Reg like nothing more than trying to cause an Apple-based argument.

    Every article is worded as a dig so that the fanbois will respond and then the Linux/MS fanbois will counter.

    Apple makes a lot of money, they do this by selling the things they make for a profit, it's not really a unique business model. No-one complains that Porches are too expensive despite the fact there are cheaper cars that are faster so I can't fathom why so many people get upset when ever Apple do anything.

    1. Neill Mitchell

      The difference is...

      Porsches actually cost more to produce than the cheaper faster cars. They don't enjoy a 40%+ mark up like Apple do. Apple has by far the highest mark up of any vendor in this market. They milk their customers for every cent. The thing is people are daft enough to pay, which just encourages them to continue with practice. Not sure they are going to get away with it with the iPad though.

      1. Anonymous Coward
        Jobs Horns

        Re: Neill Mitchell

        "They milk their customers for every cent. [...] Not sure they are going to get away with it with the iPad though."

        Of course they'll get away with it. No one has figured out what the iPad is even for yet and already the media are fawning over it as if it has the capability to raise their relatives from the dead.

        1. Neill Mitchell

          Really?

          Seems to me that it's actually getting quite a lot of flak in the media.

          I was really surprised at a recent Wired article called "Ten reasons not to buy an iPad". However, far from matching the title, the article actually tried to justify the 10 flaws with some really tenuous spin. For the first time there were dozens and dozens of comments saying the article was total rubbish and the iPad is a disappointment. It's the first time I've seen more negative comments than positive with a Apple based Wired article. It's usually fanboy city.

          I seriously doubt this sell anywhere near the numbers Apple is used to. I guess only time will tell.

  22. Bilgepipe
    Troll

    Trolls

    My my, it's a trolls convention - there's a veritable bridge full of them in this article alone. A load of people dislike Apple kit so much that they just have to come and comment about it.

    Bitter and twisted much?

    1. Anonymous Coward
      Troll

      And yet..

      Here you are!!!!

      Pot, Kettle, no emmited photons!!!

    2. Anonymous Coward
      Troll

      Typical Apple control freak

      Negative opinions not allowed.

      (Jobs 10:4)

  23. cyb_at

    ... but its more than just manufacturing cost

    The price of a product does not only include manufacturing cost, but also the cost of labor, the cost of producing intellectual property, the development cost, advertising, marketing, transportation and packaging. So these estimates of profit are not accurate as they do not consider any one of these additional cost in this "rip" analysis. But then again its an Apple product and they should make profit on the demand of their product. You are not only paying for the product and its capability but also for the brand name and the expected reputation that you think you will have owning a Apple product. That is how a lot of people justify the cost, if they think it is an expensive product. :)

    1. Andrew James

      Goodwill

      In accounting terms goodwill is the difference between what a company is actually worth (assets less liabilities) and what you actually pay for it. An intangible asset.

      iPad sale price = cost of production + non production costs + reasonable profit margin + tax + Apple badge

      In this case, apple badge = goodwill per item.

      1. Frank Bough
        Stop

        Christ, don't ANY of you know

        ...that the price is WHAT PEOPLE ARE PREPARED TO PAY, not what you want it to be or what it cost you to make and sell something. Are you all this baffled when buying or selling houses?

  24. Prag Fest

    OMG

    Quite frankly I'm shocked and disgusted that Apple, as a company, are attempting to make a profit on their products. Who the hell do they think they are?

  25. Anonymous Coward
    Anonymous Coward

    Diferent horses for diferent courses...

    I would suggest diferent products for diferent people:

    With iPad I can set up their facebook so they can see their grandkids pictures, set up email so they can email from their comfy sofa etc.

    They don't care if they can install random game from random company, or random application, but they do care that once something is set up; it works seamlessly everytime without them needing to uderstand how, or care how! and if something does go wrong they want to be able to phone a person who understands the product to get it fixed.

    Personally I'd rather have a linux O/S on the hardware that I can tweak and customise, occasionally break and fix, but I work in IT and enjoy doing that. Others don't!

    1. Andrew James

      Grandparents - huuuuge market

      The population is ageing, so we keep getting told. There will be more grandparents and great grand parents than ever in the coming years. The silver surfer is an ideal market for this product, i completely agree.

      My grandparents live a couple of hours away from me, my sister lives further away still in the opposite direction, and my uncle and cousins an hour from them, but not in the direction of me or my sister. They try and stay in touch by email but my grandfather, much as he likes to think he is an IT pro, manages to make things worse more than he makes them better. Something fully locked down thats really easy to use would mean he couldnt mess it up, and my grandmother wouldnt be too scared to use it on her own.

      Not sure on the ergonomics of it for oldies though. Arthrytic fingers might struggle to hold it and type with the other hand while they perch on the edge of their favourite chair, which they insist on using despite the fact that when they sit back properly they cant get back out of it.

      oh... and re the "theres loads of flash on the internet" ... flash is blocked here at work. I dont miss it.

  26. Jon 52

    3g costs

    Take 3G for eaxmple it probably costs apple a bit more than only material to get it in there.

    What about extra software, are there any licenses to pay off, do the insides require smaller componants or a complete rework (R&D costs) to fit more in or power it effectivly?

  27. billmccool

    Excited & disappointed

    I am both excited and disappointed in the iPad, though I only know what I have read. The device sounds like an enlarged iPod Touch. My wife has one and I can see how an enlarged iPod Touch would be a great device, bigger screen, easier to read, easier to use. I would get one for those reasons alone. But I also would like to see other features on it. I would like to be able to write on it with an electronic pen, like the Tablet PCs, and then convert those notes into Word. That is the application that I want most, at a much lower price than a Tablet PC, and in an Apple device that I can use with my Mac Book Pro. I would enjoy reading more about features that the device needs to have.

  28. James Hughes 1

    Its quite simple

    If you think it is too expensive, don't buy it.

    You options, if you still want a tablet (I'd like one), are to buy from elsewhere, or to make your own.

    Good luck on the second one.....

  29. Mike Hanna
    Dead Vulture

    Hmmm

    Shoddy reporting... Costs of parts does not eaqual cost of device. Even if Apple were making 100% profit on the device, iTunes doesn't make them any money so how else are they gonna make cash? Xbox and PS3 both make a huge loss on the consoles (initially anyway), cos they recoup the costs on the games they sell at a huge mark-up, whereas Apple don't have this extended income in any real fashion.

    I've never checked the specs of the Archos 9 before. Not exactly Netbook, but not too far off - they're cool! 60Gb HDD, widescreen 1080p (on a 1024x600 pixel screen - how does that work?) All that's missing is an HDMI port and 3G sim slot to really confirm to all the iPad-beatingness of it. That and the same amount of advertising grunt they have in Apple and no-one would buy Steve Job's latest gizzet.

    Saying that... the Archos 9 hasn't got an Apple badge on the back. But then I did get some free ones with my iPod so I could just stick them on there...

  30. John Smith 19 Gold badge
    Thumb Up

    It's *all* about the interface.

    Turn the problem on its head. The parts are <50% of the cost of the product. So what.

    Internal hardware on modern PCs can vary quite a bit. Single, dual, quad, whatever core. 10s of MB, 100s of MB RAM, graphics from squalid to near IMAX level. Printers, digitisers, video capture etc. You can add stuff almost at will.

    But they all run Windows.Why. Because if they don't people have to start making *choices* and some of their choices would not be inter-operable, and they'd have to learn a different UI (doesn't matter if better or worse, its that it's *different*).

    MS insisted suppliers supply windows to the point where now customers *insist* they supply Windows and it's unlikely *any* OS would achieve significant desktop penetration without a fairly detailed (and regulalry updated) "Windows compatability" mode. It's how MS stuffed Word Perfect, AmiPro, 123 etc. MS know this. Mixing up *their* UI every few years to frustrate exactly this sort of thing.

    A note to those non marketing types. "Price" is one of the variables you can use to differentiate a product. Yes some people will not buy some products if it is not expensive *enough* (BTW MS maintain that *any* tablet has to have a *minimum* weight as users will feel it is too flimsy otherwise). the standar definition of the *right* price is the one with give maximum *profit*

    Of *course* Apple could license their OS and UI. But that would put them in *real* competition with MS (IIRC MS own about 17% of them) and have to start worrying about device level compatibility issues.

    Why try to train a cow for show jumping when milking it is a lot easier.

  31. Connor
    Gates Halo

    Netbooks aren't better at anything!

    Yeah right Steve, except say, writing this comment out in a word processor whilst referring to the web page article, yes, at the same time! Oh and of course using the keyboard!

    'Gates reckoned a mix of voice, pen and a real keyboard was the way forward.'

    For once I have to agree with Bill, it's all about the keyboard, if I can't type, it's a phone and I avoid using my phone for browsing and email because I can't type.

    Voice would be handy, but in public, I'd still need the keyboard and I can type faster than I can write, so that makes the pen redundant.

    As for the iPad, if I can't use it for work, and I can't use it for recreation, what is it for?

    1. Anonymous Coward
      Stop

      Who iPad is for...

      From Dan Gruber; "All this argument over whether the iPad is too simple — if anything it’s probably still too complex."

      http://daringfireball.net/linked/2010/02/11/facebook-login

      He's right. Mr and Mrs Joe 'Average' Public can barely use a fucking web browser! Modern computer GUI's are simply too complicated for most of them. Start throwing terms like "security" or "vulnerability" or "runtime" or even "plugin", they panic! This wasn't designed for you, Conor. It was designed with Mr and Mrs Average in mind. This is for people like a 30 year old I know. They haven't the first fucking clue and know as much; they don't even pretend. they use Windows, I currently have them running 7, which whilst an improvement it still confounds them. OSX would be no better, and neither would any of the Linux Desktops. They've played with a number of phones and struggled to get on with any of them , as I type they are debating debating whether or not to get an iPhone; they already have a first generation iPod Touch and *like* how it works. they're not stupid; they're a SEN teacher with no interest in computers whatsoever. They are the iPad's target demographic. Those that want to surf the net, communicate with email and buy music from iTunes (I told them that Amazon is often cheaper and their response was "Yeah, but its another username and password and another system to learn!"). I'd agree with Gruber, the problem with the iPad isn't that it's too simple and not useful, it's that it might still be too complicated.

  32. Adam T

    Profit

    How much profit is in a lettuce? Cucumber?

    Once you've eaten it, it's gone... gone...! Utter madness!

    It's funny the things people will kick up a fuss over. I want to see more articles on the rip-off prices of cabbage and peas.

  33. Anonymous Coward
    Headmaster

    Worth

    Every item is worth what people are willing to pay for it. Therefore, this breakdown - while mildly informative - is not really important (or much relevant).

    Some people will buy it because it's an Apple.

    Some people will not buy it, because they won't want to look look like an Apple fanboi.

    Some people will buy it because of the Experience (much like a Disney ride, tightly scripted and not much freedom, but fun nevertheless).

    Some people won't buy one, because it's not functional enough.

    I'd use it occasionally for some light surfing if somebody were to just give me one. But I would not buy one (limitations aside, I really don't like the bloatware that is itunes). But being a geek, I know I am in the minority.

    I expect this doodah to sell tidily, but nowhere near the iphone/ipod touch.

  34. SleepGuy
    Thumb Down

    iPad will not be a huge success

    It will find niche markets, but that's about it. Why?

    1. The tablet market is a niche market device to begin with.

    2. iPad is "almost" a netbook but certainly not a replacement for any netbook user I know. Most people want a keyboard to type emails or work on documents. Don't come back with "well you can buy a dock with a keyboard for it." No. Fail. When I'm in an airport or in a conference, I need to be able to whip out my netbook and get work done...when I'm in my car on lunch I want to pull out my netbook and do my personal emailing/browsing/shopping...not mess around with a touch-screen keyboard at the same time I'm trying to hold onto the device (can't set iPad on lap to type unless you want to lean over it). For those in the market for a smart device such as iPad that don't use a netbook, most will probably settle on a smartphone...they do everything the iPad does (besides read books) and they have it in one device...see #3

    3. iPad doesn't replace the cell phone. Even if it did, who would want to have to deal with a device of that size to make/receive calls?

    iPad a clunky "3rd" device due to the fact that it can't replace either of the ubitiqous devices in today's market. Sure it has some nice features and I can see some uses for it in some business/healthcare areas (where tablets are currently in use), but don't see it being much of success beyond these markets.

    1. Rolf Howarth

      Niche market?

      I don't know if iPad will be a success or not but I suspect you're getting confused about it's intended market.

      It's not intended as a replacement for a real computer. If you want to do work on a train, or write a novel, or edit your photos, use your laptop.

      It's not intended as a replacement for a phone. If you want to find the nearest tube station or check your email when you're on the go, or, er, phone somebody, use an iPhone (or Google Phone or whatever).

      Where the iPad *is* intended to be used is in the home, or at the airport, or on a plane, or to keep kids happy in the back of the car, or when you're visiting your great aunt Hilda in hospital and want to show her photos of the family.

      It's a replacement for your Kindle and your PSP and your digital photo frame and the computer in your living room that you occasionally use to look things up on Wikipedia or IMDB, not a replacement for your phone or your main computer.

      You're absolutely right that it's a "3rd device" but it remains to be seen whether that means it's "clunky" or not.

  35. Rolf Howarth
    Happy

    DIY

    Hey, you know what? iSuppli should supply a bag of bits just like a Tesco caesar salad kit and then anybody who wants to can make their own iPad and everyone's happy.

  36. bart

    tax not included

    Quick note about tax. Several comments have been made that tax is to be subtracted from the alleged profit on the Ipad . . . Here in the US, there is no such thing as a federal sales tax; states decide individually as to whether or not they add this - some do not. Any state that collects sales tax exempts goods that are purchased for resale. Because of this, Apple does not pay tax on materials purchased to produce their products, because they resell either directly or to vendors. The final sale to the consumer is what triggers the payment of tax, which is then to be remitted to the appropriate state agency.

    So, any tax collected is after production, and Apple does not pay it, the consumer does. The prices quoted for the Ipad by Apple do not include tax, as do any prices listed for products in the US, because a company would need different lists for different states, which would be daunting.

    That said, I too believe that Apple's margin is crushingly high. Let's say for instance that, over the next 2 years, they are able to sell one million "pads." Remember that, in the last quarter alone, they sold 5.2 million Iphones, 2.1 portable macs, and 1.2 desktops, so I'm being fairly conservative here. Now lets say that $100 dollars from each pad goes toward "other costs" not mentioned in the breakdown of pad "profit" in the iSuppli article.

    That would be $100 million toward marketing, assembly, production, advertising, and whatever else for a product that would continue to offset "cost" as volume sales continue. A product which will be linked to further profit gateways such as app and media percentages. Don't forget that much of Apple's smile about Iphone profits comes from software, not hardware sales . . . Even if Apple "had to" use $100 for every unit for "other costs," they would still come out far ahead.

    Realistic, competitive, and fair pricing would see the Ipad prices significantly lower; I would think that an average of up to 30% would not be unreasonable, with less of a ding for the "high end" model (not the 58% quoted in the iSuppli article.) But "whatever the market will bear" is hardly a reasonable beast. If the "bois" want 'em, we all pay more . . .

  37. Anonymous Coward
    Anonymous Coward

    Meanwhile, in an alternate Universe:

    "Yeah, this iPad is amazing, precisely the sort of thing Microsoft should have done. I never should have left that putz Ballmer in charge."

  38. Anonymous Coward
    Anonymous Coward

    Costs lower over time

    If it costs x today, it will cost x - y next year. Computer hardware always drops in price (except memory, which fluctuates). Still, the screens will become cheaper, the OS and software is a fixed cost, the more they sell, the higher the profit per unit.

  39. Anonymous Coward
    Dead Vulture

    Please check your facts

    They did not have an iPad, and they did not do a tear-down. Their figures are pure guesswork. Please update your story.

  40. Tony Paulazzo
    Jobs Horns

    Pointless point

    I hate Apple. I distrust Google. I tolerate MS. I love being in bed with a hot guy on a winters night.

    But if the iPad tanks and they start turning up on Ebay for a ton, I'd get one, cool toy! I'd prefer the Archos 9, Win7 FTW (y'know, with Flash, text recognition and all that groovy computery stuff), but that 10 hour battery life sounds sweet - tho' I do wonder if that time halves on jailbroken versions (y'know, with flash, multitasking and so forth).

    This life's a fiction, and is made up of contradiction. 'W Blake'

  41. Max Miller

    Codswallop

    1. If you don't like it don't buy it

    2. The costs clearly only cover the parts and not the labour, shipping costs, support costs, sales commissions, marketing, OS development work.

    On the support side anyone who has ever had a problem with an apple product (not that often I know) will tell you that it is a price worth paying because their support is untouchable compared to the competition and probably costs them a lot of money to manage.

    Any good marketeer will tell you the product is only half the story and the customer service level and experience is the other. I would happily pay for something that works every time over a cheaper alternative that only may work a la windows.

  42. Grubby
    WTF?

    Pointless Analysis...

    I don't see why they have wasted their time working out how much the components cost, it's like saying well the new Champ Manager game costs £30 but a CD only costs 5p...

    Clearly all companies have to pay people to come up with the ideas etc, and apple are the leaders of innovation at the minute, therefore will pay more for the people they employ. Then the people who work out how it will work, try getting a programmer / systems architect for $450 a year (assuming you have your phone for a year). Then paying people to put them together, there are millions of other charges not included.

    1. The Original Steve
      FAIL

      Huh?

      Um, where's the innovation in taking an iPod touch and making it bigger?

  43. Andrew James

    Apple is not that bad really

    Even if Apple were to make 50% actual profit from every product they sell… they still don’t take anywhere near as much money from you as the government does, and the government doesn’t even provide you with anything that you can hold in your hand. Unless you count local government, in which case you might have a bin that they empty every couple of weeks.

    Gov takes tax on what you get paid.

    What is left you spend. Gov takes tax on what you buy.

    Gov takes tax from supplier of what you buy on the profits they made on what they sold you.

    Got some money left? Leaving it in a savings account? Gov charges you tax on the interest you get paid.

    Want to own a car? Gov charges tax when you buy it. You have to pay tax to put it on the road. You pay huge amounts of tax on the price of the fuel to run it.

    They even make you pay a tax to your local authority for the priveledge of living there.

  44. Bob-Bob-Bobbing_Along

    Saville Row suit £5000, cloth £500, Value?

    What about the costs of the staff who build the bloody thing, advertising costs etc

    I could buy some nice cloth for a Suit for £500, but if I want it made up by Saville Row, I may end up with a bill of £5000.

    Another comparison could be the global costs of a can of Coke, I am sure the Coke liquid itself is worth less than a penny - maybe less, no doubt the can costs more and we pay for all the heavy advertising and constant battle with Pepsi, just like Apple v Microsoft.

    Check this:

    Can of Coke

    Cheapest: 0.2 Euros in , China

    Most expensive: 65 Euros in manchester, Great Britain

    Diff in percent: 32400 %

    http://www.howmuchatyourplace.com/how_much_does/Can%20of%20Coke_cost.php

    1. HFoster
      FAIL

      €65 can of Coke?

      Sure, if it's got actual Colombian in it. I think your source has fallen victim to bullshit, squire. Check the Euro-Pound exchange rate (and the exchange rate of the Euro against your local currency, if it's not Sterling). €65 could buy a week's grocery shopping for a couple in Munich. Even as the most expensive city in Germany, a can of Coke costs maybe €1.50 (I don't know, I drink beer at €0.75/500ml bottle).

    2. Mike Hanna
      FAIL

      65 euros?

      I think it should be 0.65 euros, which still leads to a 224% geographical increase. Some silly Manc tit lost the ability to include a decimal point

  45. Greg D
    Thumb Down

    So Apple are using this to make an obscene amount of money

    Tell us something we dont know. I avoid their products for exactly this reason - I can get a device far more functional, without draconian lock-ins far cheaper than an Apple product.

    It may not look as good, but who honestly gives a fuck unless you're a self-righteous retard who has to spunk their money on what people tell them to wear/buy etc.

  46. Martin Nicholls
    Gates Halo

    On Microsoft...

    "On the other hand, that enthusiasm never translated into wide takeup of Microsoft's attempts at tablet PCs"

    Of course Microsoft have never actually done tablet. They do know what tablets are all about though - Inking, which there's no possibility of doing with the iPad which Gates will clearly recognise.

    I say wait for the courier before doing *comparisons* if it ever sees the real world (apparently there are real versions being played with inside microsoft though), I gotta tell you though to say Microsoft's experience even in the current devices doesn't show would be a giant shambles.

    The question of course is if there's a market. All 7 fanbois asside can Apple carve out a new market like it did with the iPhone? I can't see it - and they'll never get real tablet users because it doesn't do a whole bunch of listable things you'd want a tablet to do.

    Touch interfaces are great but you ALSO need a stylus, there's no working round that.

    1. Neil 6

      Yes they did...

      ... it just didn't take off. http://www.microsoft.com/hk/windowsxp/tabletPC/default.mspx

      I think we need a netbook/slate compromise. A dual core Atom based slate with an optional stand/keyboard/optical drive and no vendor lock in. Then people will quickly lose interest in the ipad.

  47. Anonymous Coward
    Anonymous Coward

    @Max Miller

    Slightly off topic but are you seriously claiming that a can of coke in Manchester costs nearly 57 quid!!!!!!

    1. M Gale
      Badgers

      Blimey

      I know Coca Cola spend more on advertising than, say, refilling water tables in drought areas after they put a fucking great bottling plant there, but this is ridiculous!

      Wonder how much it costs to get a South American worker's union member shot these days?

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