4 ms·

Would have been interesting if they'd discounted it to this level before canning the ecosystem. Might have given it the shot in the arm it needed?

martythemaniak 15y ago
Come on, the BOM alone on these things is more than $200 and there is no console-like way to make your money after.
- kloncks 15y ago
  $318 http://www.isuppli.com/Teardowns/News/Pages/HP-TouchPad-Carries-$318-Bill-of-Materials.aspx http://www.isuppli.com/Teardowns/News/Pages/HP-TouchPad-Carr...
- ja27 15y ago
  I've started to wonder when Apple is going to offer hardware subscriptions. I guess that's not much different than leases, but I don't think consumers ever lease hardware. It's surprising that they don't because the phone market is so driven by just the monthly payment amount.
- ig1 15y ago
  You mean like the billions of dollars Apple makes from their App Store ?
  - Sayter 15y ago
    Apple CFO Peter Oppenheimer stated that "We run the App Store just a little over breakeven" during a shareholder meeting earlier this year. An analyst from Citibank estimated that the App Store would account for $2B in yearly revenue for 2011. Compare that to the $24.67B revenue that Apple had in Q2 of 2011 alone, and that puts the App Store at approximately 2% of Apple's yearly gross revenue. Also, a Trefis analysis of $AAPL puts iTunes and iOS Apps at a combined 4.3% share of the stock's perceived value. While the App Store does provide the ecosystem that allows the iPhone and iPad to thrive, it does not act as a significant revenue source for Apple.
    - orijing 15y ago
      How is 2 billion 2% of 24 billion? It sounds pretty significant to me.
      - ianferrel 15y ago
        24 billion is quarterly revenue. 2 billion is annual.
    - ig1 15y ago
      I don't see how that invalidates my point in anyway, yes Apple doesn't make a significant proportion of their revenues from their app store, but that doesn't mean that $2 billion dollars of revenue is insignificant in absolute terms.
      - 2muchcoffeeman 15y ago
        It is when you are trying to recoup losses form selling hardware below cost. I think App Store revenue last quarter was 1.4 billion. Take out content providers share and you are left with 420 million. This is for the entire store mind you. HP's fire sale will cost them something like 100 million and it is not as popular as the iPad. Not even Apple could pull something like this off.
mechanical_fish 15y ago
This is a classic example of the problem of selling things below cost. It always "works". People always love you for it - it's basic manners: "don't look a gift horse in the mouth." But not only does it teach you nothing about the actual market, it actively misleads you. Even if you try to consciously remember that your popularity is illusory, that you bought that popularity - even if, like the triumphant Roman generals of old, you employ a servant to stand behind you at all times whispering: "Remember your company is mortal and these happy people are all paid shills" - psychology is psychology, and smiles are contagious, and you are going to fool yourself, and you are going to make bad decisions under the influence. And then the paid-for popularity will warp your product, as you begin to build features based on feedback from the existing users, the ones who did not pay a fair price. These people aren't your market. But that doesn't mean you can just ignore them either, because they are in contact with your actual market, so you have to keep them happy...
- revorad 15y ago
  That explains Groupons quite well.
  - tptacek 15y ago
    That's the point of Groupons: to buy first customer visits with below-cost products, instead of throwing money away in newspaper ads. He's not saying selling below cost is a discredited tactic. He's saying it's a discredited strategy. He's not saying selling below cost means there's no market. He's saying it doesn't tell you what the market is. If you're selling cupcakes, you need to go to Groupon knowing your cupcakes are good enough, and that there's sufficient demand, to clear in the market. Then it makes sense to spend resources to promote your business so that people are aware of your cupcakes. Groupon might be a pretty good illustration of the perils of confusing awareness marketing with demand generation.

martythemaniak 15y ago

Come on, the BOM alone on these things is more than $200 and there is no console-like way to make your money after.

kloncks 15y ago
$318 http://www.isuppli.com/Teardowns/News/Pages/HP-TouchPad-Carries-$318-Bill-of-Materials.aspx http://www.isuppli.com/Teardowns/News/Pages/HP-TouchPad-Carr...
ja27 15y ago
I've started to wonder when Apple is going to offer hardware subscriptions. I guess that's not much different than leases, but I don't think consumers ever lease hardware. It's surprising that they don't because the phone market is so driven by just the monthly payment amount.
ig1 15y ago
You mean like the billions of dollars Apple makes from their App Store ?
- Sayter 15y ago
  Apple CFO Peter Oppenheimer stated that "We run the App Store just a little over breakeven" during a shareholder meeting earlier this year. An analyst from Citibank estimated that the App Store would account for $2B in yearly revenue for 2011. Compare that to the $24.67B revenue that Apple had in Q2 of 2011 alone, and that puts the App Store at approximately 2% of Apple's yearly gross revenue. Also, a Trefis analysis of $AAPL puts iTunes and iOS Apps at a combined 4.3% share of the stock's perceived value. While the App Store does provide the ecosystem that allows the iPhone and iPad to thrive, it does not act as a significant revenue source for Apple.
  - orijing 15y ago
    How is 2 billion 2% of 24 billion? It sounds pretty significant to me.
    - ianferrel 15y ago
      24 billion is quarterly revenue. 2 billion is annual.
  - ig1 15y ago
    I don't see how that invalidates my point in anyway, yes Apple doesn't make a significant proportion of their revenues from their app store, but that doesn't mean that $2 billion dollars of revenue is insignificant in absolute terms.
    - 2muchcoffeeman 15y ago
      It is when you are trying to recoup losses form selling hardware below cost. I think App Store revenue last quarter was 1.4 billion. Take out content providers share and you are left with 420 million. This is for the entire store mind you. HP's fire sale will cost them something like 100 million and it is not as popular as the iPad. Not even Apple could pull something like this off.

mechanical_fish 15y ago

This is a classic example of the problem of selling things below cost. It always "works". People always love you for it - it's basic manners: "don't look a gift horse in the mouth." But not only does it teach you nothing about the actual market, it actively misleads you. Even if you try to consciously remember that your popularity is illusory, that you bought that popularity - even if, like the triumphant Roman generals of old, you employ a servant to stand behind you at all times whispering: "Remember your company is mortal and these happy people are all paid shills" - psychology is psychology, and smiles are contagious, and you are going to fool yourself, and you are going to make bad decisions under the influence. And then the paid-for popularity will warp your product, as you begin to build features based on feedback from the existing users, the ones who did not pay a fair price. These people aren't your market. But that doesn't mean you can just ignore them either, because they are in contact with your actual market, so you have to keep them happy...

revorad 15y ago
That explains Groupons quite well.
- tptacek 15y ago
  That's the point of Groupons: to buy first customer visits with below-cost products, instead of throwing money away in newspaper ads. He's not saying selling below cost is a discredited tactic. He's saying it's a discredited strategy. He's not saying selling below cost means there's no market. He's saying it doesn't tell you what the market is. If you're selling cupcakes, you need to go to Groupon knowing your cupcakes are good enough, and that there's sufficient demand, to clear in the market. Then it makes sense to spend resources to promote your business so that people are aware of your cupcakes. Groupon might be a pretty good illustration of the perils of confusing awareness marketing with demand generation.