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iPad Mini Costs $24 More To Make Than Kindle Fire HD
sweetpea86 writes "... but retails for $130 more. Teardowns of the Apple iPad Mini and the Amazon Kindle Fire HD have revealed that the two devices cost almost the same amount to manufacture, despite the retail prices being significantly different. Andrew Rassweiler, senior principal analyst of teardown services for IHS iSuppli, explains that Apple is sticking to the premium brand strategy it has always used for its media tablet and smartphone products, whereas Amazon is banking on content."
First of all, Apple makes its own OS and applications while Amazon just uses Android. On top of that Amazon has always tried to keep their price down so they can sell more ebooks. Apple tries to make profit by selling their devices. These two things combined, I don't think the $100 price difference is that much. It's almost surprisingly low.
The $35 in extra cost turns into $130 at the consumer level. That's actually pretty much right for a manufactured good. You see, when someone makes a product they typically want to charge MORE for it than it costs to produce. This difference is called Profit. The more it costs, the more you must charge. Plus, it's apple. Even if it cost less, they are selling you the device plus the brand. Or did you think Phil Shiller worked for free?
Interesting, but until you compare the design costs of each device, you can't make a statement about whether or not the price is a fair one. These things don't just spontaneously arise.
I am not interested in articles about life extension advancements.
The $35 in extra cost turns into $130 at the consumer level. That's actually pretty much right for a manufactured good
Oh, you were so close to being correct, and then missed.
The reason its so close is middlemen. If it costs a farmer 10 cents more to grow an apple, that doesn't mean YOU pay the food store 10 cents more, it means the wholesaler gets 2*10 cents = 20 cents more, the distributor/franchise operator gets 2*20 cents = 40 cents more, the store needs to charge twice invoice on average to keep the lights on, etc, so you pay 2*40 cents = 80 cents more at the store.
Its not quite so bad with market leading electronics, but its bad. I can totally see if a battery costs $4 more, the retail price after layers and layers of middlemen could very well increase $13.
The price at a direct mfgr store goes up because the resellers demand it contractually in order to stock it, Walmart would never carry the kindle if amazon could undercut it every time, so the price, even online, reflects the maximum amount of middleman profiteering via any channel. Mandatory minimum pricing and all that. Yes apple.com probably COULD sell it for only $35 more, but walmart etc would freak out and sue them, so they have to sell it for $130 more.
"Science flies us to the moon. Religion flies us into buildings." - Victor Stenger
If I was Apple I would have set the price at $250 and lived with little or no profit and counted on iTunes sales. The point is Apple has always taken the stance that they are a hardware maker not an OS or even a software and music retailer. Those are considered sidelines. It's one of the reasons their hardware has always cost more but they sell their OS dirt cheap. I don't know the profit margin on a Fire but say Apple is pulling 30% or 35%. It's high but not out of line with some products and no one ever wants to factor in development costs. Yes it's a downsized iPad but there's still tooling and design costs. Overall they are making probably 25% without advertising. Oops there's that cost and Apple loves to advertise. I have no idea the final cost once you add in distribution and advertising and all the other expenses. I'm sure they are easily making 15% or 20% pure profit. It's a health profit but that's what a company in their position should make, a healthy profit. The companies have to make money somewhere but everyone says they don't want to pay much for music, movies, games and software so where exactly do you build in profit? Everyone else is playing catch up so they have to sell near or at a loss but so long as Apple products are selling well they have no incentive to cut out the profit margin. Sure they are making a profit on every step but that's what companies do, make money. At least they are making a solid product. One of the reasons Microsoft got into so much trouble is they became dependent on a couple of products then started turning out crappy products and said so what? We have a monopoly in PC OSs and office software so what are you gonna do about it? Well over the last five or so years a lot of people switched to Apple. Apple's evil? Here's a revelation, corporations are evil! They exist to make money not to make you happy. They want to make their investors happy. As much as I would like to see Apple products cheaper I don't want to see them cut quality to do it. Little things like the metal instead of plastic cases on the pad devices. The iOS is elegant and fun to use once you get used to shoehorning your personal content onto them. I'd love to see them more open but it would come at a sacrifice of stability so I'm happy the way things are. In the end if you want a device with zero profit margin then buy Android. If you want iTunes then you're talking an Apple device and deal with them making a profit.
Perhaps if people didnt kiss Apples ass and buy everything that has an Apple logo, regardless of price, their prices wouldnt be outrageously high to begin with..
The Anti-Apple routine here at Slashdot is getting very, very old. Well of course Apple charges more. They make the majority of their cash on hardware (although the App and iTunes stores are pretty lucrative too). Amazon is *all* about the content. So their goal is to get you to buy a Kindle by any means possible so they can make money on content sales. Apple's goal is to entice you to buy their hardware - if you don't buy anything in the store, no big deal they've made their money. Anything extra is gravy. The Kindle and iPad have different use cases & marketing models and are priced accordingly.
Now you wanna complain? Why does Microsoft make more than $250 on every Surface Tablet ? (Guess: because they actually don't expect to sell many)
Apple is more of a media company than Amazon is. By a long shot. And "anything else" is not gravy for Apple. Its the sole reason for the devices existing, and the sole reason they have to justify their stock price to investors.
If people wouldn't pay $500 for an iPad, Apple would be selling them at cost, just like Amazon. Amazon doesn't have the brand clout Apple does. The Amazon name doesn't automatically add $200 in value to the product. You better believe, if Amazon could get away with $500, they would. And if Apple couldn't, they'd still be selling the iPads.
Apple wrote the vast majority of iOS.
Wrote, past tense. It's not like it costs them any more for each tablet sold.
systemd is Roko's Basilisk.
Because Chrysler, GM and Ford all create same luxury level. Compare a Lexus to a Camry and while the production cost of a lexus may only be a little more, the MSRP is significantly more. Yes those are from the same manufacturer, but people still buy the Lexus even though it does the same thing as the Camry, just looks better doing it.
It might help you realize how silly it would be to expect (for example) that a vehicle should should have the same markup as a toaster. That's dumb.
It might help you to realize that we're not comparing a vehicle to a toaster, but different models of vehicles from different manufacturers. I'd expect a Chrysler, GM and Ford vehicles to all have similar markups.
I wouldn't expect vehicles to have similar markups. I would expect a Chevy and a Dodge sedan to be quite similar, but if you look at all sedans (Toyota, Mazda, Chevy, Dodge, Lexus, Mercedes-Benz, BMW, Audi, Volkswagen, Kia, Hyundai, Fiat and who knows how many more) you'd find several ranges of prices and margins. Some focus on low end, high volume, low margin (let's say.... Kia). Others focus on low volume, high end, high margin (let's say..... Mercedes). Some even hit multiple targets. A Camry isn't the cheapest car, but it's affordable and well built (iPad Mini). Their Lexus stuff is more expensive, and still well built, with some higher end features (iPad 4 with better graphics, higher resolution).
The only thing that really makes me mad... is that somehow I got pulled into a car analogy.
Apple wrote the vast majority of iOS.
Wrote, past tense. It's not like it costs them any more for each tablet sold.
iOS 2? 3? 4? 5? 6? The one you know they are working on now? I remember an iPhone running an OS that couldn't handle Retina graphics, tablet sized displays, Bluetooth stereo, cut and paste, Exchange support, voice control, AirPlay, third-party apps, wireless sync, background operations, persistent notifications, didn't have driving directions or their own map content, folders, Game Center, MMS, high definition video, HDR, panorama photo shooting, video calling, 4G/LTE, and a few other things.
Each generation of iOS has a real, measurable (but not released to the public) development cost. Which needs to be recouped, and of course is a part of the cost of offering iOS devices.
To be even more fair, it is the first iOS device with stereo SPEAKERS... They all have stereo SOUND
There Can Be Only One...
This seems to come up a lot. Apple is overprice, apple is overpriced. Perhaps they are just the "luxury" devices of the computer world. I feel this applies to cars as well, but I don't see people posting that Lexus' or BMW's are overpriced. A Ford Focus gets me from point A to point B just as well as a Benz, but the perceived quality and status symbol of the Benz helps keep prices high. Hell, I had a Nissan that has gone 235,000 miles at a much lower price than "luxury" cars. So Apple charges more than other device retailers/manufacturers? Why is this surprising? So does BMW and Lexus compared to Fords and Chevy's.