I'd guess that the hardware is subsidized by the increase in turn over from iTunes and the App Store - probably selling the iPad at close to cost price knowing that they'll make the money back through use.
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.
Using hardware as a funding mechanism to iOS isn't going to last when the chinese OEMs come with Android dogs.
Maybe they'll just follow their phone/computer model and not even try to compete in low-end?
No doubt about that. Competing in the low-end market is a loser's game. None of the low-end vendors last very long, and playing in that market only tarnishes the brand.
> aren't going to tell their huge customer to pound sand
A manufacturer such as Samsung won't allow one customer to take more than around 15% of production. Otherwise they become beholden to that customer.
So at a certain point they will indeed tell Apple to "pound sand".
Nonsense. If Apple, or any other OEM, comes to a vendor with the cash to buy the whole production capacity, guaranteed, the vendor will say "thank you, Mr Customer," because a guaranteed sale always beats hoping someone else will come along to buy your parts.
And yes, there are tons of examples of smaller parts manufacturers selling a device to a large OEM who is their only customer for it, and then that big OEM changes to another device (for all sorts of reasons), leaving that small guy with nothing. But that's not the big guy's problem; the small vendor should have diversified to other products and other customers. (And these small guys are fabless, anyway, so it's not like they have excess capacity going unused.)
>> No one who knows anything about electronics manufacturing thinks this. The $499 16GB iPad, by all estimations, costs under $250 to manufacture.
If it indeed costs about $250 to make, then after R&D and marketing costs... they might be breaking even.
No! You don't get it. The difference between the bill-of-materials and the wholesale cost -- the profit on each unit -- is what pays for salaries, R+D, benefits, facilities, marketing, everything else a company needs to operate. This is why the BOM cost is likely much less than the quoted $250.
No one who knows anything about electronics manufacturing thinks this. The $499 16GB iPad, by all estimations, costs under $250 to manufacture.
Correction: The hardware components and materials that make up the 16GB iPad cost under $250. There's a big difference. (That big difference includes assembly, testing, packaging, shipping, and amortization of design and software development costs.)
Correction: it costs much less than $250 to build a $500 iPad and put it in the retail box. The difference between the BOM cost and the wholesale price is what pays for the engineering (both hardware AND software) as well as everything else necessary for Apple to be in business: facilities costs, salaries for non-engineering staff, marketing, benefits, etc.
I believe he was talking about the cost to actually manufacture/assemble the components. The base components cost something, but so does the labor to put them all together. Over volume, $50-100 doesn't sound unreasonable to add to the cost of $250 for just the parts, for the completed device./assumption of grandparent post meaning
I would guess that it costs about about two bucks to assemble an iPad. Really. It costs Apple $100 to build a $500 iPad and put it in the retail box.
So you're basing your whole assumption that every $499 electronics product only costs at most $100 to make on your company and their products? Did it every occur to you that other products may not have the same cost/profit structure. The variation of component costs alone makes each product different. The iSuppli has estimated an iPad costs $250; however, they are only looking at estimated wholesale costs and some allowance for manufacturing. If a part was more expensive or harder to work with, they don't know. It's a reasonable estimate of the lowest manufacturing cost a product.
iSuppli has no idea what sort of deals Apple has worked with its suppliers. Apple has enough cash to buy parts for production runs in the tens of millions, so variations in components costs are irrelevant. The vendors want Apple's business, so they work hard to get and keep it. Apple (and every other manufacturer) knows to the hundredth of a penny what everything costs.
Obviously, you've not involved in the consumer-products business, otherwise you'd know that bill-of-materials cost that is 20% of retail list is pretty standard.
Actually a $499 electronics product most likely costs less than $100 if not less then $50 to manufacture.
If that was true Sony, Dell, Samsung, and every electronics company should each make hundreds of billions in profit each year based on your estimation of 80-90% margin.
You seem to forget that the product's profit -- the difference between the wholesale price and the bill of materials -- is what pays for EVERYTHING the company needs to run their business: salaries, benefits, facilities, electricity, garbage disposal, local/state/federal taxes, marketing, etc. EVERYTHING.
This is what cracks me up about Internet nitwits who decry profit margins, which said nitwits clearly don't understand. You can't build a $500 product for $450 and expect to stay in business.
No one who knows anything about electronics manufacturing thinks this. The $499 16GB iPad, by all estimations, costs under $250 to manufacture.
No one who knows anything about products thinks this. The tear-down component price estimations are deliberately lowballed, and it costs a lot more than just the sum of the components to take those components and combine them into boxed and shelved iPad, ready for purchase.
Speaking as an EE who's brought products to market: Those teardown price estimates are pointless. In the case of a large OEM like Apple, the teardown guesstimate price is obviously high. Apple's sitting on tens of billions of dollars in cash. They don't buy parts through distribution -- they can deal with vendors directly, and those vendors WANT Apple's business. With all of that cash, Apple can get what it needs at the price points it wants to meet. I'm with the others who say that the $500 iPad costs less than $150 to build and put in the shrinkwrapped box.
One piece of advice for people getting "into" microcontrollers, is its a narrow field and rapidly shrinking. Rather than trying to do "big PC" stuff with a herd of 8 bit pics in raw assembly, you should be using embedded industrial single board computer PCs. PC/104, kinda like the soekris boards but tougher.
That's not really good advice. Microcontrollers have their place -- in embedded systems, where you need just the right amount of processing power to do that which needs to be done, and no more. Many products don't need, and their budgets certainly can't support, a full-up 32- or 64-bit microprocessor system with a multitasking operating system and multiple cores and SDRAM and disk subsystem and the usual things associated with a PC. In those cases, an 8-bit micro with 64 kB flash, a few k of on-chip RAM, a handful of I/O ports, perhaps ADCs and DACs, and you're good to go.
And, yes, the number of 8-bit microcontrollers sold per year overwhelmingly dwarfs the sales of PC-class microprocessors.
If you're not familiar w/the Arduinos, you'll have to return your geek license.;)
And if you're an engineer, you are familiar with the Arduino, and you've gone back to an SiLabs or other proper dev kit, or more likely, to the product you're designing...
I bought a dozen of the LaunchPad dev kits and gave them out to other engineers at work in exchange for various engineering favors. Bribery always works like a charm, and I never told them they cost me under $5 each.
You can be sure that the other engineers know exactly how much you paid for the kits.
This just goes to prove that most users aren't sophisticated enough to do computing outside of a "walled garden". Sorry to say, but that's just the way it is. Sure many of us geeks on slashdot can handle it, but most users generally cannot. Which is why the general public love their video game consoles, iPhones, iPads, and other walled garden computing devices. Because it lets them use computers without having to think, and without having to worry about what applications might do hard to their computer.
You're making a huge mistake in calling video game consoles and iOS devices and smartphones, "computers." THEY ARE NOT. These things are content-consumption appliances, not general-purpose personal computers.
These things may have processors and memory and displays and Internet connections, but then again, so do some high-end refrigerators.
If you want a general-purpose computer, buy one. If you want a cheap, portable, battery-powered device to surf the web and play games, don't buy a general-purpose computer.
Yes, I know everyone here on slashdot is a superstar programmer earning $10m + a year just in stock options, just think of us little guys as you're snorting cocaine off hookers' tits on one of your yachts.
The sad part of that statement is that a programmer who earns $10M (I assumed you didn't mean milli) a year still has to get a hooker in order to meet women.
Witness for the prosecution: Charlie Sheen, rich guy who uses hookers. Prosecution rests.
BTW: in financial parlance, M indicates thousand, since it's an abbreviation of the Latin mille, which means "thousand." So the superstar programmer earning $10,000/yr? Yep!
Battlestar Galactica ruined Caprica for me. Galactica went off the rails in the middle and each episode started leaving me more and more frustrated. I stuck with it, though, but the ending just killed it for me. I don't care to re-watch any part of it, and I'm not slightly interested in any spinoff.
The thing is, when all of the geeks started complaining that Season 3 of BSG turned into a soap opera, my wife and I thought it was a lot more interesting than boring space battles between Cylon raiders and Vipers. What's wrong with spending an episode learning about how the people on the fuel-supply live? After all, each episode was telling us how many humans were still alive.
While I agree with most of this, how is Friday night the death slot? Stargate SG-1 ran for 10 years in the same Friday night slot didn't it? I am however still unhappy that they killed off Atlantis and Universe.
Besides, one might presume that the target demographic was the first to embrace the DVR.
We don't watch anything when it's actually broadcast. We just set up the ol' EyeTV and watch it after the kid goes to sleep. Or we just wait a couple of days and watch it on Hulu. So the date of original broadcast is irrelevant for us.
The first place to start would be to remove the Federal Government's ability to collect and levy income taxes by abolishing both the IRS and the 16th Amendment to the Constitution.
So, if the Federal Government has no ability to collect and levy income taxes, should I assume that. among other things, the Armed Forces would be dissolved?
Thats because the America Revolution wasn't "domestic terrorism".
From 1770 to 1776 the colonies had public conventions, meetings and publicly complained about their problems with the United Kingdom's rule. The colonies in today's Canada, Barbados, Bahamas and Florida (Florida wasn't part of the US until 1819, and not a state till 1845) were told and invited to send delegates.
While the colonies were complaining the United Kingdom kept turning up the heat by passing more laws and taxes designed to piss off the colonies.
It wasn't a bunch of men sitting around in a basement deciding what building to blow up, it turned into a civil war in North America and spawned European wars between the powers there.
I think the parent poster's point had nothing to do with British rule, and everything to do with how the native people were treated.
OK, so it's probably not entirely correct to call them "domestic terrorists." I suppose "foreign invaders" is a better description.
For that $100, I could have made more than ten boards with my processor of choice, with the peripherals I really need, and a proper debug interface. So what's the point?
Don't know where you heard this, but it's not true. The Utah state legislature is in session now, grappling with ways to close the budget deficit, including an across-the-board 7% cut in agency funding, and early release for large numbers of convicts in state prisons.
Raise the tithe to 20% problem solved, with a surplus!
Slashdot Mirror
I'd guess that the hardware is subsidized by the increase in turn over from iTunes and the App Store - probably selling the iPad at close to cost price knowing that they'll make the money back through use.
Your guess is wrong.
Apple is probably selling them at a lower profit margin because they generate revenue through app sales.
Utterly wrong.
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.
Using hardware as a funding mechanism to iOS isn't going to last when the chinese OEMs come with Android dogs.
Maybe they'll just follow their phone/computer model and not even try to compete in low-end?
No doubt about that. Competing in the low-end market is a loser's game. None of the low-end vendors last very long, and playing in that market only tarnishes the brand.
> aren't going to tell their huge customer to pound sand
A manufacturer such as Samsung won't allow one customer to take more than around 15% of production. Otherwise they become beholden to that customer.
So at a certain point they will indeed tell Apple to "pound sand".
Nonsense. If Apple, or any other OEM, comes to a vendor with the cash to buy the whole production capacity, guaranteed, the vendor will say "thank you, Mr Customer," because a guaranteed sale always beats hoping someone else will come along to buy your parts.
And yes, there are tons of examples of smaller parts manufacturers selling a device to a large OEM who is their only customer for it, and then that big OEM changes to another device (for all sorts of reasons), leaving that small guy with nothing. But that's not the big guy's problem; the small vendor should have diversified to other products and other customers. (And these small guys are fabless, anyway, so it's not like they have excess capacity going unused.)
>> No one who knows anything about electronics manufacturing thinks this. The $499 16GB iPad, by all estimations, costs under $250 to manufacture.
If it indeed costs about $250 to make, then after R&D and marketing costs... they might be breaking even.
No! You don't get it. The difference between the bill-of-materials and the wholesale cost -- the profit on each unit -- is what pays for salaries, R+D, benefits, facilities, marketing, everything else a company needs to operate. This is why the BOM cost is likely much less than the quoted $250.
No one who knows anything about electronics manufacturing thinks this. The $499 16GB iPad, by all estimations, costs under $250 to manufacture.
Correction: The hardware components and materials that make up the 16GB iPad cost under $250. There's a big difference. (That big difference includes assembly, testing, packaging, shipping, and amortization of design and software development costs.)
Correction: it costs much less than $250 to build a $500 iPad and put it in the retail box. The difference between the BOM cost and the wholesale price is what pays for the engineering (both hardware AND software) as well as everything else necessary for Apple to be in business: facilities costs, salaries for non-engineering staff, marketing, benefits, etc.
I believe he was talking about the cost to actually manufacture/assemble the components. The base components cost something, but so does the labor to put them all together. Over volume, $50-100 doesn't sound unreasonable to add to the cost of $250 for just the parts, for the completed device. /assumption of grandparent post meaning
I would guess that it costs about about two bucks to assemble an iPad. Really. It costs Apple $100 to build a $500 iPad and put it in the retail box.
So you're basing your whole assumption that every $499 electronics product only costs at most $100 to make on your company and their products? Did it every occur to you that other products may not have the same cost/profit structure. The variation of component costs alone makes each product different. The iSuppli has estimated an iPad costs $250; however, they are only looking at estimated wholesale costs and some allowance for manufacturing. If a part was more expensive or harder to work with, they don't know. It's a reasonable estimate of the lowest manufacturing cost a product.
iSuppli has no idea what sort of deals Apple has worked with its suppliers. Apple has enough cash to buy parts for production runs in the tens of millions, so variations in components costs are irrelevant. The vendors want Apple's business, so they work hard to get and keep it. Apple (and every other manufacturer) knows to the hundredth of a penny what everything costs.
Obviously, you've not involved in the consumer-products business, otherwise you'd know that bill-of-materials cost that is 20% of retail list is pretty standard.
Actually a $499 electronics product most likely costs less than $100 if not less then $50 to manufacture.
If that was true Sony, Dell, Samsung, and every electronics company should each make hundreds of billions in profit each year based on your estimation of 80-90% margin.
You seem to forget that the product's profit -- the difference between the wholesale price and the bill of materials -- is what pays for EVERYTHING the company needs to run their business: salaries, benefits, facilities, electricity, garbage disposal, local/state/federal taxes, marketing, etc. EVERYTHING.
This is what cracks me up about Internet nitwits who decry profit margins, which said nitwits clearly don't understand. You can't build a $500 product for $450 and expect to stay in business.
No one who knows anything about electronics manufacturing thinks this. The $499 16GB iPad, by all estimations, costs under $250 to manufacture.
No one who knows anything about products thinks this. The tear-down component price estimations are deliberately lowballed, and it costs a lot more than just the sum of the components to take those components and combine them into boxed and shelved iPad, ready for purchase.
Speaking as an EE who's brought products to market: Those teardown price estimates are pointless. In the case of a large OEM like Apple, the teardown guesstimate price is obviously high. Apple's sitting on tens of billions of dollars in cash. They don't buy parts through distribution -- they can deal with vendors directly, and those vendors WANT Apple's business. With all of that cash, Apple can get what it needs at the price points it wants to meet. I'm with the others who say that the $500 iPad costs less than $150 to build and put in the shrinkwrapped box.
IPv6 DNS is borked in Snow Leopard, unfortunately.
And it's not difficult to supply a patch for an operating-system install, as opposes to a firmware upgrade for a router.
One piece of advice for people getting "into" microcontrollers, is its a narrow field and rapidly shrinking. Rather than trying to do "big PC" stuff with a herd of 8 bit pics in raw assembly, you should be using embedded industrial single board computer PCs. PC/104, kinda like the soekris boards but tougher.
That's not really good advice. Microcontrollers have their place -- in embedded systems, where you need just the right amount of processing power to do that which needs to be done, and no more. Many products don't need, and their budgets certainly can't support, a full-up 32- or 64-bit microprocessor system with a multitasking operating system and multiple cores and SDRAM and disk subsystem and the usual things associated with a PC. In those cases, an 8-bit micro with 64 kB flash, a few k of on-chip RAM, a handful of I/O ports, perhaps ADCs and DACs, and you're good to go.
And, yes, the number of 8-bit microcontrollers sold per year overwhelmingly dwarfs the sales of PC-class microprocessors.
If you're not familiar w/the Arduinos, you'll have to return your geek license. ;)
And if you're an engineer, you are familiar with the Arduino, and you've gone back to an SiLabs or other proper dev kit, or more likely, to the product you're designing ...
Is cmdrtaco having an affair with the bint from adafruit or something?
Seriously, I want to know. Arduino is the Microsoft Bob of EE.
EXACTLY.
I bought a dozen of the LaunchPad dev kits and gave them out to other engineers at work in exchange for various engineering favors. Bribery always works like a charm, and I never told them they cost me under $5 each.
You can be sure that the other engineers know exactly how much you paid for the kits.
This just goes to prove that most users aren't sophisticated enough to do computing outside of a "walled garden". Sorry to say, but that's just the way it is. Sure many of us geeks on slashdot can handle it, but most users generally cannot. Which is why the general public love their video game consoles, iPhones, iPads, and other walled garden computing devices. Because it lets them use computers without having to think, and without having to worry about what applications might do hard to their computer.
You're making a huge mistake in calling video game consoles and iOS devices and smartphones, "computers." THEY ARE NOT. These things are content-consumption appliances, not general-purpose personal computers.
These things may have processors and memory and displays and Internet connections, but then again, so do some high-end refrigerators.
If you want a general-purpose computer, buy one. If you want a cheap, portable, battery-powered device to surf the web and play games, don't buy a general-purpose computer.
It's really that simple.
Yes, I know everyone here on slashdot is a superstar programmer earning $10m + a year just in stock options, just think of us little guys as you're snorting cocaine off hookers' tits on one of your yachts.
The sad part of that statement is that a programmer who earns $10M (I assumed you didn't mean milli) a year still has to get a hooker in order to meet women.
Witness for the prosecution: Charlie Sheen, rich guy who uses hookers. Prosecution rests.
BTW: in financial parlance, M indicates thousand, since it's an abbreviation of the Latin mille, which means "thousand." So the superstar programmer earning $10,000/yr? Yep!
I do recall an infected version of Snow Leopard people were downloading and using. And here's a link about it http://gigaom.com/apple/apple-users-targeted-with-snow-leopard-malware/
Stupid fucking idiots who are too cheap to spend $29 on a copy of Snow Leopard pretty much get what they deserve.
Battlestar Galactica ruined Caprica for me. Galactica went off the rails in the middle and each episode started leaving me more and more frustrated. I stuck with it, though, but the ending just killed it for me. I don't care to re-watch any part of it, and I'm not slightly interested in any spinoff.
The thing is, when all of the geeks started complaining that Season 3 of BSG turned into a soap opera, my wife and I thought it was a lot more interesting than boring space battles between Cylon raiders and Vipers. What's wrong with spending an episode learning about how the people on the fuel-supply live? After all, each episode was telling us how many humans were still alive.
While I agree with most of this, how is Friday night the death slot? Stargate SG-1 ran for 10 years in the same Friday night slot didn't it? I am however still unhappy that they killed off Atlantis and Universe.
Besides, one might presume that the target demographic was the first to embrace the DVR.
We don't watch anything when it's actually broadcast. We just set up the ol' EyeTV and watch it after the kid goes to sleep. Or we just wait a couple of days and watch it on Hulu. So the date of original broadcast is irrelevant for us.
The first place to start would be to remove the Federal Government's ability to collect and levy income taxes by abolishing both the IRS and the 16th Amendment to the Constitution.
So, if the Federal Government has no ability to collect and levy income taxes, should I assume that. among other things, the Armed Forces would be dissolved?
Thats because the America Revolution wasn't "domestic terrorism".
From 1770 to 1776 the colonies had public conventions, meetings and publicly complained about their problems with the United Kingdom's rule. The colonies in today's Canada, Barbados, Bahamas and Florida (Florida wasn't part of the US until 1819, and not a state till 1845) were told and invited to send delegates.
While the colonies were complaining the United Kingdom kept turning up the heat by passing more laws and taxes designed to piss off the colonies.
It wasn't a bunch of men sitting around in a basement deciding what building to blow up, it turned into a civil war in North America and spawned European wars between the powers there.
I think the parent poster's point had nothing to do with British rule, and everything to do with how the native people were treated.
OK, so it's probably not entirely correct to call them "domestic terrorists." I suppose "foreign invaders" is a better description.
For that $100, I could have made more than ten boards with my processor of choice, with the peripherals I really need, and a proper debug interface. So what's the point?
Don't know where you heard this, but it's not true. The Utah state legislature is in session now, grappling with ways to close the budget deficit, including an across-the-board 7% cut in agency funding, and early release for large numbers of convicts in state prisons.
Raise the tithe to 20% problem solved, with a surplus!