Slashdot Mirror

iSupply continues to only give CRTs another 3 years until complete extinction, just as they predicted in 2006. No doubt it will be true someday. But the CRTs are built like battleships, and remanufactured for markets that have lots of heat (bad for OLED and Plasma, I'm told). http://www.isuppli.com/Display-Materials-and-Systems/MarketWatch/Pages/Global-Television-Shipments-to-Shrink-in-2012.aspx Samsung and LG are the remaining players in the Plasma (PDP) manufacturing market. Will they outlive Videocon/Thompson (CRT maker in India)?

I do believe I picked up a brand new digital projector not too many years ago, and the charge from the online retailer was about 30 quid.

So why do they say tens of thousands?

First of all, there's the significant issue of the massive amount of power and performance that's required from a theatre-class professional projector, rather than the comparatively tiny distance-throw, dimness, and short lifespan of a home or office HD projector. Quality, as a few have pointed out here, is a big factor. Also, to be that bright, these don't use LEDs of course: they use very hot bulbs that need to be cooled down with very loud and large fans and cooling systems.

Secondly, we're not just talking about the projectors themselves. Most of the major film distributors will not longer be providing films on actual 35mm film, which is what the drive-ins have been using. The major distributors have been reducing the number of "films" that are actually released on film; for some, the move to digital cinema is arguably more about the distribution methods than the viewer's experience. DCP (Digital Cinema Package) [wikipedia] —boiled down to MPEG-4 on an encrypted harddrive — is how the films are being sent to theatres. What do you need in order in the industry to run the required DCP drives? You need a server that will decrypt, store, queue, and run everything: trailers, all the films for the week, your preshow, etc.

The end result is having to buy a very expensive, closet-sized projector and computer server that your projectionists need to be trained on how to use and you can't fix yourself.

As someone who works for a non-profit film cinématheque, this is a very big deal and worry for independent cinema, who, without access to DCP projectors, are increasingly relying on having to present theatre-class events from a Blu-ray burned in the distributor's office.

See here for more info about the market changes from 35mm to DCP in this reposted press release [isuppli.com].

The raw part cost of a smartphone SoC is a tiny portion of the bill of materials (BOM), maybe 10-15%. CPU is maybe $30 at the very high end? So for a box like the OUYA where the CPU is probably the biggest cost and they don't have to worry about a display, camera, battery, cellular radios, or massive amounts of storage, they probably could have sprung for a Snapdragon 600 or Tegra 4. Only thing is it would have delayed the product by 6 months since those chips are in high demand from smartphone OEMs.

Take a look at this cost breakdown analysis of the GS4: http://www.isuppli.com/Teardowns/News/Pages/Samsung-Galaxy-S4-Carries-236-Bill-of-Materials-IHS-iSuppli-Virtual-Teardown-Reveals.aspx $236 worth of parts selling for $699 just shows you how things are roughly priced (granted, MSRP - BOM != profit, but Samsung is in a pretty good position). Also you'll learn the biggest conspiracy of smartphones ever: it does NOT cost $100 to go from 16GB NAND to 32GB, or 32->64, or 64->128.

Yes, but what you're forgetting about is the opportunity cost. If you can make a $100 device that competes equally with a $300 device simply by lowering your profit margin, that's not the whole picture. To design and start producing that device, you need funding. That capital typically comes from people who want a return on their investment, and lower risk. The smaller your profit margin, the closer you are to not being profitable at all if you miscalculated, incorrectly estimated, or failed to account for something. And even if you hit exactly your intended margin, you still end up providing a lower return on investment than if you had charged more...or, in this case, if you lower the hardware costs. Also, keep in mind that a $5 hardware cost difference matters less, profit-wise, on a $300 device than it does on a $100 device.

Hardware isn't designed and built in a vacuum; these things happen in the context of a business, as well as in the context of an entire industry.

The raw part cost of a smartphone SoC is a tiny portion of the bill of materials (BOM), maybe 10-15%. CPU is maybe $30 at the very high end? So for a box like the OUYA where the CPU is probably the biggest cost and they don't have to worry about a display, camera, battery, cellular radios, or massive amounts of storage, they probably could have sprung for a Snapdragon 600 or Tegra 4. Only thing is it would have delayed the product by 6 months since those chips are in high demand from smartphone OEMs. Take a look at this cost breakdown analysis of the GS4: http://www.isuppli.com/Teardowns/News/Pages/Samsung-Galaxy-S4-Carries-236-Bill-of-Materials-IHS-iSuppli-Virtual-Teardown-Reveals.aspx $236 worth of parts selling for $699 just shows you how things are roughly priced (granted, MSRP - BOM != profit, but Samsung is in a pretty good position). Also you'll learn the biggest conspiracy of smartphones ever: it does NOT cost $100 to go from 16GB NAND to 32GB, or 32->64, or 64->128.

I'm surprised I don't see anyone here questioning this 5 zettabyte number. The biggest drives currently manufactured are 4 terabyte 3.5" drives. 5 zetabytes would require 1.25 billion of those drives. A great price on a 4TB drive right now is $190. I doubt there's enough margin in them to make this possible, but let's just say that based on the insane quantity they get them for $150 each. That's $187 billion for the drives alone, nothing for the computers and racks and air conditioning and all. The NSA's budget is estimated at 8 billion a year. $187 billion is 23 times their yearly budget. It would be about 3% of total federal spending for a year... just for the drives. Total facility costs would certainly run many times that... it would probably cost more than an entire year's military spending to build a 5 zettabyte data center.

Also, you can fit about 500 terabytes in a server cabinet. That means 10 million server cabinets. A server cabinet is about 15 cubic feet of volume. So just the cabinets alone would run 150 million cubic feet. And that's just storage, not even including computers. And it's not like you can pack them in solid, of course. If you can make a datacenter with one third of its total volume being server racks, that would be amazing. The largest building in the world is only 472 million cubic feet, this would have to equal or surpass it.

Also, the entire world wide market for hard drives is only a little over 30 billion a year... this one project would consume over 6 times as much value in hard drives as every other use in the world combined for the year.

Unless the NSA has developed their own mass storage technology that no one else knows about and is radically superior to anything commercially available, I'm guessing someone's exaggerating or got their numbers wrong.

Nope. It doesn't have a cellular modem. http://www.isuppli.com/Teardowns/News/pages/Low-End-Google-Nexus-7-Carries-$157-BOM-Teardown-Reveals.aspx

It's more like $1.5 billion to $2 billion from my estimation. The processor in the iPhone 5 has a value of around $17.50.
Multiply that by around the 500 million in sales and you get $8.75 billion. A 20% increase puts that up to $10.5 billion.
Of course, this is all estimation.

I think Samsung is just reading the tea leaves. With the iPhone 4, Apple used to source components such as SDRAM, NAND flash, and CPU from Samsung. With the iPhone 5, they've dropped Samsung as suppliers of commodity chips, and now they're only sourcing the A6 processor from Samsung.

One might reasonably project that with the iPhone 6 or 5s or whatever it will be, Apple will drop Samsung altogether. Samsung might as well milk Apple while they can.

I think Samsung is just reading the tea leaves. With the iPhone 4, Apple used to source components such as SDRAM, NAND flash, and CPU from Samsung. With the iPhone 5, they've dropped Samsung as suppliers of commodity chips, and now they're only sourcing the A6 processor from Samsung.

One might reasonably project that with the iPhone 6 or 5s or whatever it will be, Apple will drop Samsung altogether. Samsung might as well milk Apple while they can.

That's the iPhone 4. The iPhone 5's A6 chip (two generations newer) costs an estimated $17.50. So a 20% increase is $3.50.

http://www.isuppli.com/Teardowns/News/Pages/Many-iPhone-5-Components-Change-But-Most-Suppliers-Remain-the-Same-Teardown-Reveals.aspx

The A6 processor is estimated to be $17.50 [iSuppli]. Whatever chip that the article refers to is likely to cost less than that. So we are talking at $2-$3 per iPhone? Apple can easily swallow that. Samsung is really asking to be shown the door, it's only a matter of when Apple moves to another supplier.

Product....Kindle...iPadMin... Surface
Cost.......174.00...198.00.....284.00
Price......199.00...329.00.....599.00
Profit.....14.37%...66.16%.....110.9%
So Microsoft is hoping that by embracing Apple's strategy (huge profit margins on hardware) and extending it (almost double Apple's margin, which is already four times Amazon's), it can extinguish the Kindle Fire? I know MS doesn't do business the way it used to, but leopards don't change their spots.

According to this teardown:
http://www.isuppli.com/Teardowns/News/Pages/iPhone-4S-Carries-BOM-of-$188,-IHS-iSuppli-Teardown-Analysis-Reveals.aspx

Only about $15 of a $200 device is the processor. And that's the iPhone. So is there really any purpose to taking shortcuts on performance when it seems that's not what is driving costs?

Also, nobody know what specific deals Amazon is getting with their suppliers. I don't know about IHS iSuppli (got a link?), but most of the time when I see these breakdowns of how much things cost, they are going based on prices for single units, or small runs. When you're selling millions of units, the price gets severely reduced. Assuming This is the article you refer to, I have serious doubts about their prices. For one thing, they rate the WLAN at $4.50, but you can easily get USB WLAN dongles from Alibaba for $4.50 a piece. I'm sure that Amazon could get a much better deal on such a similar product. Not only that, they price the touchscreen at $87, but you can easily buy a complete tablet with a similar screen for about the same price.

First, the summary above says that Seagate will produce a 60 Tb drive by 2016. That is not true. Seagate has said they will produce a drive with "up to" 60 Tb of capacity (30-60 TB) by the end of the decade. This is based on the theoretical limits of HAMR technology, which are projected to be in the 5-10 Tbits/sq. inch. range. Current 4TB drives are made with platters that have a density of around 650 Gbits/sq. in., so the math works (10Tb/.65Tb is approximately 15x).

The other part of the article is talking about what the maximum density is likely to be over the timeframe from now to 2016 using PMR technology and transitioning to something new like HAMR. PMR technology will top out at about 1Tbit/sq. inch, so anything over that will require something new like HAMR. that underlying article quotes 1.8 Tbit/sq. in in 2016, which may not be out of line with 5-10 Tbit/sq. in. by 2020 as a new technology like HAMR comes online.

The two articles that I am basing the above on are:
Seagate/HAMR article
IHS/ISuppli article

If anything, they should make the DVD version the standard, and let savvy folks downgrade and save the cost if they want.

Why? Research is showing that DVD/Bluray playback is decreasing, and the most popular ways to watch media are Youtube, Netflix, Hulu, etc. According to some projections, digital playback is poised to surpass physical this year. So why should the default be to pay? Besides, most computers these days are sold with dvd playback software on top of what Microsoft provides. For the vast majority of consumers, there will be no difference.

First off, it doesn't cost the big manufacturers $200 to license Windows. It's more like $50 or possibly even less.

Bundled software with budget laptops, outside of the OS, is shovelware, and is often used to reduce the price.

For the hardware, the display is the most expensive component, and it's no wonder that cheap tablets tried to save money on the display. I'll grant you that tables save some money with lower RAM and small flash drives, but it's not hundreds of dollars. Chipsets for standard ports like ethernet are cheap, and only cost a few dollars. I don't know how much they saved on stuff like GPU, but again, it's not hundreds of dollars, especially when you're talking budget laptops in the price range of $400.

On the Apple Website, a contract-free (although not carrier- unlocked) 8GB iPhone 3GS is priced at $375.

A 8GB iPod Touch 4G is priced at $199.

The entire iPhone 3GS carries a Bill of Materials and manufacturing costestimated at $178.96.

The iPod touch 4g has a better screen (960x640 px at 326 PPI vs 480x320 at 163 ppi) and and a faster processor (1GHz A8 vs 600MHz A8) than the iPhone 3GS. There is research online indicating that Apple generally prices its iDevices at double the cost of the BOM and manufacturing cost. That seems fair to me. They have an ungodly amount of R&D costs for that great iOS software, hundred of millions in marketing, the cost of the iStores with the 50 blue-shirted employees -- it's expensive. But...is it realistic to suggest that the iPod Touch 4G that has a better screen, faster processor, and more RAM than the 3GS has a BOM and assembly cost of $78.96 less?

I find it hard to believe that the cost of a cellular modem, ear piece, microphone, and larger battery accounts for that $78.96? I don't think so...

Apple is an amoral, profit-driven company. who's surprised? it's what western (especially American, MBA-infested) business culture is all about.

what's surprising is that confronting this fact creates a surprising amount of cognitive dissonance among those who hold a romanticised image of Apple (free-thinking, genius designer/artistes who are the underdog of the computer and CE worlds. wrong in so many ways...)

what makes all this coverage more piquant is the fact that the harsh labor practices constitute a remarkably small portion of the BOM for Apple products. for instance, ~10% of the cost of an iPad2 is the enclosure (ie, foxcon aluminum polishing):
http://www.isuppli.com/PublishingImages/Press%20Releases/2011-03-12_iPad2_BOM.png

these numbers show apple's markup is about 120% over cost; if they doubled what they pay for the enclosure, their markup would drop to a mere 100%.

Look at the cost breakdown of HP's fire-sold tablet, according to them the display assembly was the biggest portion. Note we're talking about tablets here, so the price of the screens goes up *considerably* over phone-size displays. Large high quality displays (and large high quality touch interfaces) cost money.

http://www.isuppli.com/Teardowns/News/Pages/HP-TouchPad-Carries-$318-Bill-of-Materials.aspx

Here the claim is that the 9.7" display in the Touchpad is $70 alone (not including the touch interface, which is $63.50). So, if you put one of those in one of these theoretically cheap tablets that you want to buy for $230, then right off the bat you're down to $160 for everything else combined (including your profit margin), or down to $96.50 if you include the touch interface too.

According to HP's breakdown the touch driver chip is $11.75.

I know everyone automatically jumps on the "whatever Apple's price is, that's obviously with a gigantic markup" bandwagon, but in the case of tablets, they really are quite expensive to make at this time if you want a good one (be it Android or iOS). The best pricing I've seen is (ironically enough given the subject of the article) a Transformer which you could get for $100 less than the equivalent iPad. That still puts it in the $400 region.

I imagine a new generation Apple TV with next gen A5 CPU (A6?) and iOS. Already capable of running all the games in the App Store.

I think you're bob on there. Updating the Apple TV Bill of Materials. With the iPhone 4s estimates

• Apple A5 - $26
• Memory 32GB NAND / 512MB SDRAM - $38

Would make a total BoM today of $97.40 (presuming they can't cost reduce the rest) - with a launch in 2012 some time, they ought to pull this off for their more typical margins.

If the iPad hardware could be produced for less than $500 then everybody would be making iPad competitors for sub-$500, probably for sub-$400.

Well, according to isuppli the iPad 2's hardware costs $326.60.

To be fair, you still have to factor in Apple's own costs (hardware design, software, licensing costs and so on). There's no word on whether that would then exceed the $500. Some costs are shared across other devices, particularly the iPhone.

They're propping up one business arm with another, and that stinks of a monopoly.

It stinks of common business practice. Lots of businesses will use a stronger part to assist a weaker part - usually because the stronger part would suffer without other one.

Abusing a monopoly position to enable aggressive pricing in another segment would certainly be considered anticompetitive, and presumably illegal. What monopoly is it that you think Apple is abusing to prop up the iPad?

Steve

I'm in complete agreement that no one external to Amazon can do an accurate BOM cost because of confidential pricing agreements. However, this "teardown" is even more nebulous. The funny thing is that the analysts don't even know what parts Amazon is using. They call this a "virtual" teardown. What a joke.

Skip the middleman

http://www.isuppli.com/Teardowns/News/Pages/Amazon-Sells-Kindle-Fire-at-Low-Profit-Margin-to-Promote-Online-Merchandize-Sales.aspx

According to Google, HP Touchpad costs $306 to make while the iPad costs $260. Of course it's all approximate, but at $499 it's clear they're being sold with about a $150 - $200 margin, which is pretty hefty in the consumer electronics market.

Now it's speculated that Amazon is taking a $50 loss on each Kindle Fire. And you know what, they're going to sell a ton. A quote from my friend just now: "dunno why i want the kindle fire so much." I'll tell you why, because it's in impulse buy range. And if Amazon can make that $50 back in content sales then they're going to do well with these.

Just the screen and touch assembly in the HP Touchpad came to $132 and that's purely the raw cost of the parts (no assembly or profit margin or any other components at all).

http://www.isuppli.com/Teardowns/News/Pages/HP-TouchPad-Carries-$318-Bill-of-Materials.aspx

It's not as cheap as all the armchair quarterbacks seem to think it is, otherwise we'd already have cheaper-than-iPad tablets out there that cost much less.

You are entirely wrong: http://www.isuppli.com/Teardowns/News/Pages/HP-TouchPad-Carries-$318-Bill-of-Materials.aspx The touch screen is approaching a quarter of the costs of the entire device, and along with the display itself is almost half.

http://www.isuppli.com/Teardowns/News/Pages/HP-TouchPad-Carries-$318-Bill-of-Materials.aspx

The biggest priced item on ANY tablet is the display+touchscreen. The other parts cost a fraction of what the display costs.

First, look at the iSuppli BOM...

http://www.isuppli.com/Teardowns/News/Pages/HP-TouchPad-Carries-$318-Bill-of-Materials.aspx

The display is $69. The Touch Screen is $63. $45 for 32GB NAND. $26 for DRAM. $20 for the dual-core processor. $12 for power management. $8 for sensors. $5.50 for WiFi. $30 for the case, connectors, PCB, etc.. $20 for the battery. $5 for box and contents. $10 for manufacturing.

You're right in that there's not one single component that would kill those numbers... IT"S ALL OF THEM ADDED UP TOGETHER.

Your wonderful set of suggestions dropped the BOM down to $273. How many more corners and features are you going to have to cut to hit your numbers? And once you do, is the POS even worth buying? A plastic 5" tablet with an anemic processor, half the RAM needed to do anything, and no storage? Right. Ask Dell how well the Streak 5 sold...

(Oh yeah, add SD slot hardware and a controller chip to your BOM.)

And THAT'S only the BOM. Then it has to be shipped. Distributed. There's R&D, engineering, and development costs. Admin. Marketing. Patents, licensing, and legal. Recouping $1.2 billion in acquisition costs. Costs. Costs, and more costs. And that's before it's even in a store and the retailer marks it up yet again by another 10%. Then there are returns, damaged goods, shrinkage, and demo units.

30% profit? In your dreams. People look at the BOM and COGS and think, "Damn. They're making out like bandits."

Get a clue. To make ANY money selling a tablet at $149, your BOM would have to be less than $50. Good luck hitting that price point.

No it was priced right according to iSuppli who did the teardown. If HP sold it at $150 there would have been a loss on each device sold.

http://www.isuppli.com/Teardowns/News/Pages/HP-TouchPad-Carries-$318-Bill-of-Materials.aspx

They probably COULD have saved money somewhere, but they already chintzed on the plastic in the back.

The real problem is there were no apps. There was no real push by Palm OR HP on gaining developers. At least not one like there should have been. Plus the SDK was REALLY late. By that time, Palm was already dead in the water, HP picked them up and did NOTHING with them.

True. Unfortunately, they're selling these at Around a $100-$200 loss on each model sold.

This is a "feature," not a "bug." Sales or no sales, they still have the same bills to pay. The artificial demand caused by this past weeked's blowout sale would have been absent without a sale:

Because selling those X million units at a $100-$200 loss generates more gross cash than selling zero of those same units at a $200+ gain :-)

The Bill of Materials for the Touchpad is $296 (Source: http://www.isuppli.com/Teardowns/News/Pages/HP-TouchPad-Carries-$318-Bill-of-Materials.aspx) and that doesn't include manufacturing costs. How on earth are you going to knock more than 2/3 of that price off? Volume will only get you so far.

True. Unfortunately, they're selling these at Around a $100-$200 loss on each model sold.

Perhaps in 5 years the Touchpad could be profitable at $100-150. But not today.

According to iSuppli(whose accuracy is debateable; but should at least provide ballpark numbers), somebody is eating a major per unit loss to provide the $99/$150 price point. Frankly, unless those numbers are pretty pessimistic, I'm a little bit surprised that the units were retailed at all a little surprising. It'd almost be worth tearing the 16GB units down for the screen and battery in bulk...

SSD industry is also not very far from monopoly and moving in that direction. Check who is manufacturing and supplying the flash memory to most SSD producers. Hint: http://www.isuppli.com/Abstract/P13699_20110621100254.pdf Note that economies of scale are possible only for very large volumes, so anything below 5% is probably losing money.

You have to understand that TSMC has a different business model than Samsung. TSMC is the largest Chip Fab in the world - bar none. It is ONLY a chip fab. The article is actually in error when it implies that the relationship between ARM and TSMC is a big deal. The relationship between Samsung and ARM is likely exactly the same! They BOTH have a license to ARMs IP. The BIG difference between the two is that TSMC doesn't have System Architecture experience. They take designs from others - and create masks, then fab them for you. Most of the "fabless" semiconductor companies in the world use either TSMC or UMC (the number 2 player..)

Samsung is different in that they do both Architecture/Implementation of the design along with fabrication. TSMC doesn't really have that ability.

What Apple would have to do is take on the Architecture/Implementation roll by themselves and send the design to TSMC for fabrication. That would put Apple more in the "fabless" semiconductor business. What they do now is they buy most of the design from Samsung, i.e. they use Samsung's IP on their chip, then Samsung implements the device, and fabs it. They ship the completed device to Apple.

Hope this straightens out some of the differences between the two approaches.

My understanding is this: both the Apple A4 and A5 are SoC's (System on a Chip) with ARM cores (A4 - single, A5 - dual) but are designed by Apple. Samsung only provided manufacturing capability. Design of the end product (iPhone and iPad) was done by Apple. Integration of the chip into the finished product and mass manufacturing (iPhone 4, iPad 1 and 2) was done by Foxconn and Pegatron (iPhone 4 CDMA only). I don't recall ever reading that Samsung was involved in any part of the iPhone 4 or iPads beyond the manufacturing of the chips (and flash memory). Please provide a link if you know differently. Here's one that lists parts and suppliers for the iPhone 4: LINK

Thus, at least to my understanding, replacing Samsung is simply a matter of finding someone else who can manufacture chips (and maybe even memory if they just want to be rid of Samsung). At the very least, it benefits Apple to find more than one potential supplier both for getting more supply and lower prices.

Apple is the largest OEM Semiconductor buyer in the world.

http://www.isuppli.com/semiconductor-value-chain/news/pages/apple-becomes-worlds-largest-oem-semiconductor-buyer-in-2010.aspx

They are not a customer that is easily replaced.

Lets see some data for such a claim.
If they really were such a big buyer they would be stuck with buying from samsung since they produce most of the flash.

Spurred by booming demand for the iPhone and iPad, Apple Inc. in 2010 became the largest buyer of semiconductors among original equipment manufacturers (OEMs) for the rst time ever, new IHS iSuppli research indicates. http://www.isuppli.com/Semiconductor-Value-Chain/MarketWatch/Pages/Apple-Becomes-Worlds-Largest-OEM-Semiconductor-Buyer-in-2010.aspx

FTA: Apple’s surge to leadership in semiconductor spending in 2010 was driven by the overwhelming success of its wireless products, namely the iPhone and the iPad. These products consume enormous quantities of NAND flash memory, which is also found in the Apple iPod. Because of this, Apple in 2010 was the world’s No. 1 purchaser of NAND flash.

Without belabouring the point... I think that it is common knowledge in the semiconductor industry that Apple is buying up all the semiconductor factory capacity they can get their hands on - more than even HP, Dell, Samsung, Nokia, Sony, etc. Apple has created a global shortage of certain components (not always because Apple has bought up the supply for that component, but often because Apple has bought up the chip fab capacity for its own custom components) leaving smaller oems without the off-the-shelf components that they need for their products.

The chatter that I am getting in the industry is that Samsung will (not may) loose more by pissing Apple off than they could ever hope to gain because they don't own the Android market and can never hope to replace the revenue generated from Apple with Android phone/tablet sales. Toshiba and Sony are lobbying Apple to get more of their chip business as we speak.

it is surprising that a few slashdot posters still don't know how to code links: Click Here!

Outsourcing iPad manufacturing to low wage workers in China is hardly the problem. According to iSuppli, each iPad 2 costs $9 to assemble. This is only 3% of the overall manufacturing cost -- the rest is in parts that are made all over the world.

The US benefits at least as much as anyone else from the availability of cheap electronics -- both for consumers and for industry. Unless we are prepared to make all electronics dramatically more expensive, we have to let the market decide who makes the parts that go into our devices. If we're designing the device, and writing software for it, and building new companies and industries around it, that seems like a pretty good contribution to the US economy.

iSuppli
http://www.isuppli.com/MEMS-and-Sensors/News/Pages/Japans-Digital-Compass-Makers-Work-to-Maintain-Supply-Amid-Earthquake-Aftermath.aspx

MGC
http://www.mgc.co.jp/eng/news/2011/pdf/110318-2_e.pdf

Shin-Etsu
http://www.shinetsu.co.jp/e/news/s20110322.shtml

Renesas
http://am.renesas.com/press/notices/notice20110322.html

MEMC
http://www.prnewswire.com/news-releases/memc-update-following-japan-earthquake-118003244.html

Hitachi
http://www.hitachi.com/New/cnews/f_110317h.pdf

Fujitsu
http://www.fujitsu.com/global/news/pr/archives/month/2011/20110314-01.html

iTunes controls 64.5% of the online movie market.

I'll just quote the first sentence from that article:

"Despite intensified competition from fierce rivals including Microsoft Corp. and Wal-Mart Stores Inc., Apple Inc.’s iTunes store in 2010 managed to hold onto its dominance in the U.S. market for movie electronic sell through (EST) and Internet video on demand (iVOD), new IHS Screen Digest research shows."

Wait, one more quote from the 3rd paragraph:

“The iTunes online store showed remarkable competitive resilience last year in the U.S. EST/iVOD movie business, staving off a growing field of tough challengers while keeping pace with an dramatic expansion for the overall market,” said Arash Amel, research director, digital media, for IHS. “Apple faced serious competition from Microsoft's Zune Video and Sony Corp.'s PlayStation Store, as well as from Amazon and—most significantly—Wal-Mart."

Remember, when you're talking about a monopoly, you're talking about competition in the market. If iTunes has managed to attract a majority of consumers in a market rife with competition, then one can only cry monopoly after digging up anti-competitive practices that specifically play a larger factor than normal consumer choice.

iTunes isn't a monopoly.

As always, that depends.

iTunes controls 64.5% of the online movie market. iTunes controls 70% of online music sales.

Remember, when you're talking about a monopoly, it's the market that matters.

Yeah this is really interesting. Especially because Apple are known for overpricing things. Does anyone else sort of get the feeling that they are losing money on the sales and making it back in app store? If they were doing that - it's a completely different to their usual strategy.

Actually, Apple apparently has a healthy profit margin in the iPads. iSuppli's teardown of the original iPads estimates the costs of materials + Manufacturing at $230 to $346, depending on the model. Of course that does not include R&D, marketing and support costs, and it may be a little "optimistic", but still it suggests that Apple could actually charge less for the same products and still make a profit.

You don't understand product costs. R+D, marketing, salaries, overhead, facilities costs have nothing to do with a product's bill-of-materials cost. NOTHING. So imagine that iSuppli is correct with their $230 BOM cost (they're not). The R+D, etc all comes out of the difference between the BOM cost and the wholesale price. So if a product lists for $500, wholesale might generally be 60% of list ($300), leaving only $70 to pay for everything Apple needs to run its business? Absurd. So the BOM cost is substantially lower, more like $100 to $150. Of course Apple does have their direct sales channels, which cut out the middleman (like Dell) so there is added profit there, but there still is a cost associated with a retail operation.

Yeah this is really interesting. Especially because Apple are known for overpricing things. Does anyone else sort of get the feeling that they are losing money on the sales and making it back in app store? If they were doing that - it's a completely different to their usual strategy.

Actually, Apple apparently has a healthy profit margin in the iPads. iSuppli's teardown of the original iPads estimates the costs of materials + Manufacturing at $230 to $346, depending on the model. Of course that does not include R&D, marketing and support costs, and it may be a little "optimistic", but still it suggests that Apple could actually charge less for the same products and still make a profit.

According to isuppli even the cheapest version is making money...not a huge margin but respectable.
http://www.isuppli.com/Teardowns/News/Pages/Mid-RangeiPadtoGenerateMaximumProfitsforApple,iSuppliEstimates.aspx

1) The Galaxy Tab's camera cost a whopping $8. Development costs should be minimal, as the iPhone has a camera.
2) Have you seen how much wasted space there is in an iPad? You could put a HUGE camera on there with no effect on battery life.
3) Ahhh.... that sounds much better.

Leaving out a camera was not done for any technical or cost reason, but to give them something significant to add in the next version. And since their competition was nil, it made sense. No tablet could ever be released anymore without a camera, except maybe ultra-low budget tablets.

Cameras and USB ports aren't absolutely essential to a tablet, but their presence will still be missed by buyers and reviewers.

Great information in your post. I suspect the reason Microsoft doesn't go with an ODM is because it might be significantly more expensive, which would result in a more expensive phone that won't compete as well in the marketplace (see: Dell Streak @ $299).

The iPhone is an ODM product - it's made by Foxconn. An 8GB iPhone 3GS is $99 if you get it from AT&T. Of course it's not really $99, AT&T pay a kickback to Apple to cover the cost of the hardware. I've read "$20 per month" or $325. That's $325 or $480 over the cost of a 24 month contract.

Now it's hard to get an unlocked iPhone, but let's say

http://www.engadget.com/2009/03/18/atandt-to-offer-unsubsidized-iphone-3g-with-no-commitment-required/

$599 for 8GB

That makes me think the value of $480 is about right and they charge you $20 extra for unlocking. Now I could be wrong of course - other figures I've seen have been lower - the contract breaking fee is max $325, which would put the hardware cost at $424. But I've never seen an unlocked iPhone sell for as low as this.

Here's the Dell Streak

http://www.engadget.com/2010/07/27/dell-streak-retailing-for-299-with-contract-549-without-dell/

I.e. and 8GB iPhone 3GS costs $424 to $599 without a subsidy and $99 with. A Dell streak costs $549 with no subsidy and $299 with. Dell have cheaper hardware but they failed to negotiate a good subsidy. They get $250 and Apple get $325 to $480!

Incidentally the BOM cost for an iPhone 3GS is $179.

http://www.isuppli.com/teardowns-manufacturing-and-pricing/news/pages/iphone-3g-s-carries-178-96-bom-and-manufacturing-cost-isuppli-teardown-reveals.aspx

So Apple are making a fortune regardless of the subsidy.

Now my argument is that one of the things that AT&T and the like tend to like is locked down devices. For example on my Windows Mobile device which is unlocked I get tethering for free.

On an iPhone I'd need to pay $20 per month. Given the sort of people who buy smartphones, I think they can argue that that added average revenue per month justifies more subsidy.

http://gizmodo.com/5553135/att-iphone-tethering-an-extra-20month

So my argument is that the Apple model is an ODM'd product which is locked down where things like tethering cost extra.

Actually if I got a subsidized Windows Mobile device, they'd probably disable tethering unless I paid them too.

I.e. unlocked devices have features that sell to customers. Locked devices have those features disabled to sell to operators if they want to get a high subsidy.

It's also possible that MS is privy to more accurate sales figures (and profit margins) from the iPad than the rest of us, and they decided it wasn't worth their time. And that could be because hardware margins are razor thin and the potential profit was not worth the investment,

You can accuse Apple of a lot of things, but selling products with a "razor thin profit margin" is not one of them.

You do have to take iSuppli's analysis with a grain of salt, but it's the best we have....

http://www.isuppli.com/News/Pages/Mid-RangeiPadtoGenerateMaximumProfitsforApple,iSuppliEstimates.aspx

The 16GB iPad was estimated to cost $229 and sells for $499.

The 64GB GSM iPad sells for $829 and has an estimated cost of around $350

as TFA states, this is a SoC and it is the first commercialy available that incoporates one eink-certified display controller (like 8T125100A), with a CPU (ARM-cortex-A8 core) and varius peripherals specifically for e-readers. So if this is correct, it will make a difference.