Comments on: Apple iPad a Low-Margin Product? Nah.

By: Xavier

Xavier — Mon, 08 Feb 2010 21:31:00 +0000

Nice analysis on the manufacturing cost. The only thing I’d add is that there’s more to cost than components. Apple also needs to account for support, warranty, returns and other costs along with retailer margins for units sold outside of Apple’s own channel. Let’s assume Best Buy wants a 20% cut and net price is then down to a bit over $400 on the low end model. Assume 5% are returned and that’s another $17.50 ($350 cost x 5%). As you can see, the total gross margin is indeed getting quite thin. Not to mention Apple needs to recoup R&D out of profit as well.

By: Nick

Nick — Mon, 01 Feb 2010 21:08:00 +0000

Ah, a fresh blast of cool common sense. Apple, the king of high margins, has no plans to market a loss-leader….they don’t have to! All the fanboys and even some not-so-fan-boys are drooling all over themselves to get their hands on one. While they may not be taking their 100%+ margins on the entry-level introductory ipad, you can bet their newer feature sets will come at a steep cost to make up for lost margins and slowing growth. Like google, there is nothing angelic about Apple – they want your money more than your puppy-dog eyes and praise.