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Low-End iPad mini Carries $188 Bill of Materials, Teardown Analysis Reveals

25 points by brianchu 14y ago

mmanfrin 14y ago
So going on the 3mil figure they put out, that was around $400mil profit in 3 days.
- xenophanes 14y ago
  That was only materials and manufacturing costs. The real margin is lower. Subtract advertising, software development, hardware design, etc
  - awwstn 14y ago
    ntm shipping
    - InclinedPlane 14y ago
      Shipping is inconsequential. How many iPad mini's fit in a shipping container?
      - wmf 14y ago
        This may not matter, but Apple tends to ship each unit by air from the factory to the customer which should cost considerably more than containers. (example: http://www.cultofmac.com/192038/look-at-all-these-iphone-5s-flooding-fedexs-distribution-center-image/ http://www.cultofmac.com/192038/look-at-all-these-iphone-5s-... )
      - curt 14y ago
        A shipping container last time I looked cost $6k. Air freights really won't add that much cost to something the weight of the iPad, less than a dollar.
  - brianchu 14y ago
    True. But those are fixed costs that can be spread out over millions of devices. Some estimate that 2 million iPad Mini's were sold this weekend (http://www.computerworld.com/s/article/9233257/iPad_Mini_iPad_sales_crack_3M_over_three_days http://www.computerworld.com/s/article/9233257/iPad_Mini_iPa...). Given that a couple more millions will be sold in the future, you could accommodate $10mil+ for a few bucks. Note that the 3 million figure is for both the new iPad and the iPad Mini.
- lefthansolo 14y ago
  it wasn't 3. that was for all ipads. 2-2.5 for ipad mini: http://news.cnet.com/8301-13579_3-57545123-37/ipad-mini-eating-into-ipad-sales/ http://news.cnet.com/8301-13579_3-57545123-37/ipad-mini-eati...
- slacka 14y ago
  It's actually much larger. The upgraded have much higher profit margins. >"The incremental cost of the additional NAND flash memory to Apple is only $9.60 for the additional 16GBytes of memory and $19.20 for an additional 32GBytes of memory. This means that compared to the 16GByte model, the 32GByte version of the iPad mini generates about $90 in additional profit for Apple for every unit sold. For the 64GByte model, Apple’s profit is about $171 higher than the 16GByte version."
josephlord 14y ago
A good but not ridiculous markup for the base model when dealer margin and other costs are taken into account. I don't know what the retailer margin is although I suspect it is very low for Apple as there is so little discounting. What makes it even better is Apple's ability to hold the price through the product life while many of their costs will fall so margin in 6 months time will be even better. The markups on bigger memory and 3G/LTE are massive too.
- jsz0 14y ago
  Exactly. When they do a Retina display / A6 next year the margins will be lower yet the retail price will remain the same. They have to factor that in from the start. Apple almost never paints themselves into a corner on pricing.
untog 14y ago
That figure by itself doesn't mean much. But does anyone have a comparison to the iPad.. Maxi? I'd be interested to know which one has higher profit margins.
- badusername 14y ago
  Definitely the maxi. http://goo.gl/d61qY http://goo.gl/d61qY
- gurkendoktor 14y ago
  And the iPad 2 that they're still selling.
  - Shivetya 14y ago
    and for only seventy dollars more for a new one, buying refurbished puts it down to a size issue as the cost difference is not noticable
jsz0 14y ago
A little off topic but having used the iPad Mini for a few days I'm convinced it will dominate iPad sales in the near future. Even today I think the form factor makes up for the lack of a Retina display. I happily switched from the 3rd generation iPad to the iPad Mini. I'll miss the Retina display (temporarily) but I won't miss the bulk of the 9.7" iPad. My iPad Mini has already left my house more times than my iPad 9.7" has. It may not seem like a big difference but being able to pocket the iPad Mini in a jacket actually makes it a lot more like a big iPhone than a small iPad IMO.
- pooriaazimi 14y ago
  Aren't the controls a bit tiny? Don't you mis-tap controls (in Safari, for example)? That's my biggest concern because even on my iPad 2, I sometimes mis-tap buttons and controls (haven't seen an iPad mini in person yet)...
  - erichocean 14y ago
    Aren't the controls a bit tiny? No. The controls are literally identical in size to the iPhone. It's the big iPad's controls that are oversized.
- jarek 14y ago
  We've always been at war with 9.7"

25 points by brianchu 14y ago

mmanfrin 14y ago

So going on the 3mil figure they put out, that was around $400mil profit in 3 days.

xenophanes 14y ago
That was only materials and manufacturing costs. The real margin is lower. Subtract advertising, software development, hardware design, etc
- awwstn 14y ago
  ntm shipping
  - InclinedPlane 14y ago
    Shipping is inconsequential. How many iPad mini's fit in a shipping container?
    - wmf 14y ago
      This may not matter, but Apple tends to ship each unit by air from the factory to the customer which should cost considerably more than containers. (example: http://www.cultofmac.com/192038/look-at-all-these-iphone-5s-flooding-fedexs-distribution-center-image/ http://www.cultofmac.com/192038/look-at-all-these-iphone-5s-... )
    - curt 14y ago
      A shipping container last time I looked cost $6k. Air freights really won't add that much cost to something the weight of the iPad, less than a dollar.
- brianchu 14y ago
  True. But those are fixed costs that can be spread out over millions of devices. Some estimate that 2 million iPad Mini's were sold this weekend (http://www.computerworld.com/s/article/9233257/iPad_Mini_iPad_sales_crack_3M_over_three_days http://www.computerworld.com/s/article/9233257/iPad_Mini_iPa...). Given that a couple more millions will be sold in the future, you could accommodate $10mil+ for a few bucks. Note that the 3 million figure is for both the new iPad and the iPad Mini.
lefthansolo 14y ago
it wasn't 3. that was for all ipads. 2-2.5 for ipad mini: http://news.cnet.com/8301-13579_3-57545123-37/ipad-mini-eating-into-ipad-sales/ http://news.cnet.com/8301-13579_3-57545123-37/ipad-mini-eati...
slacka 14y ago
It's actually much larger. The upgraded have much higher profit margins. >"The incremental cost of the additional NAND flash memory to Apple is only $9.60 for the additional 16GBytes of memory and $19.20 for an additional 32GBytes of memory. This means that compared to the 16GByte model, the 32GByte version of the iPad mini generates about $90 in additional profit for Apple for every unit sold. For the 64GByte model, Apple’s profit is about $171 higher than the 16GByte version."

josephlord 14y ago

A good but not ridiculous markup for the base model when dealer margin and other costs are taken into account. I don't know what the retailer margin is although I suspect it is very low for Apple as there is so little discounting. What makes it even better is Apple's ability to hold the price through the product life while many of their costs will fall so margin in 6 months time will be even better. The markups on bigger memory and 3G/LTE are massive too.

jsz0 14y ago
Exactly. When they do a Retina display / A6 next year the margins will be lower yet the retail price will remain the same. They have to factor that in from the start. Apple almost never paints themselves into a corner on pricing.

untog 14y ago

That figure by itself doesn't mean much. But does anyone have a comparison to the iPad.. Maxi? I'd be interested to know which one has higher profit margins.

badusername 14y ago
Definitely the maxi. http://goo.gl/d61qY http://goo.gl/d61qY
gurkendoktor 14y ago
And the iPad 2 that they're still selling.
- Shivetya 14y ago
  and for only seventy dollars more for a new one, buying refurbished puts it down to a size issue as the cost difference is not noticable

jsz0 14y ago

A little off topic but having used the iPad Mini for a few days I'm convinced it will dominate iPad sales in the near future. Even today I think the form factor makes up for the lack of a Retina display. I happily switched from the 3rd generation iPad to the iPad Mini. I'll miss the Retina display (temporarily) but I won't miss the bulk of the 9.7" iPad. My iPad Mini has already left my house more times than my iPad 9.7" has. It may not seem like a big difference but being able to pocket the iPad Mini in a jacket actually makes it a lot more like a big iPhone than a small iPad IMO.

pooriaazimi 14y ago
Aren't the controls a bit tiny? Don't you mis-tap controls (in Safari, for example)? That's my biggest concern because even on my iPad 2, I sometimes mis-tap buttons and controls (haven't seen an iPad mini in person yet)...
- erichocean 14y ago
  Aren't the controls a bit tiny? No. The controls are literally identical in size to the iPhone. It's the big iPad's controls that are oversized.
jarek 14y ago
We've always been at war with 9.7"