Michal Ždanský Company IHS iSuppli has traditionally taken apart Apple's latest device, the iPad Air, to reveal the secrets of its hardware as well as the price of individual components. According to their findings, the production of the basic model will cost $274, the most expensive model with 128 GB and LTE connection Apple will produce for $361 and thus has a 61% margin on it.
Apple managed to significantly reduce the production price compared to the 3rd generation iPad, which for the first time used a Retina display with four times the number of pixels. Its production cost 316 dollars, while the cheapest second generation tablet came out at 245 dollars. It is no surprise that the most expensive part of the entire device is the display. It is significantly thinner than the third generation, the thickness has decreased from 2,23 mm to 1,8 mm. It was possible to reduce the thickness thanks to a smaller number of layers. For example, the touch layer uses only one layer of glass instead of two. The price per panel is $133 ($90 display, $43 touch layer).
Very interesting is the fact that Apple reduced the number of LEDs illuminating the display, from 84 to only 36. Thanks to this, both weight and consumption were reduced. AllThingsD attributes the reduction in the number of diodes to better efficiency and higher luminance, acc Cult of Mac it is a consequence of the use of the IGZO display, the use of which in Apple products has been speculated for a long time. However, this information has not yet been confirmed.
Another prominent component here is the 64-bit Apple A7 processor, designed by Apple itself and manufactured by South Korean Samsung. The chip is actually not expensive, the company comes in at $18. Even cheaper is flash storage, which costs between $9 and $60 depending on capacity (16-128GB). The more expensive component is the chipset for connecting to mobile networks, which costs $32. Apple equipped the iPad with such a chipset that can cover all used LTE frequencies, thanks to which it can offer one iPad for all operators, thereby further reducing production costs.
Despite the expensive display, which costs more than all previous generations, Apple managed to reduce the production price by 42 dollars and thus increase the margin from 36,7% to 41%, with more expensive models the difference is even more pronounced. Of course, the entire margin will not reach Apple's coffers, because they have to invest in marketing, logistics and, for example, development, but the apple company's profit is still large.
It is difficult to calculate the margin if we do not include other costs such as marketing, logistics, assembling, etc. Of course, it gives at least an overview of how the prices of components move in individual generations.
You are confusing margin with profit
flash headline just to attract as many readers as possible. Only the last sentence of the whole article is really relevant..
sorry, what is this nonsense? The article contains only statements and numbers.
Anyone who complains about a 41% difference between the selling price and the production price of parts has obviously never made anything in their life and then tried to sell it.
I understand the nostalgia of users. who imagine their iPad could cost half as much, but the economic reality is relentless. If you can't sell an item for twice the production price (or more), it's almost not worth making. Of course, it varies from industry to industry, but the idea that you add up the cost of the components, add 10% to it and charge the customer is completely odd.
Apple makes huge amounts of money mainly because it sells huge amounts of devices, not because it has outrageous margins.
For reference: The Samsung Galaxy S4 sells for $579 in the US, with an estimated manufacturing cost of $237. (data from May, I'm too lazy to find out today's price)
The author of the article clearly has no idea what margin is. In the costs, I see some tangible, but no intangible costs such as iPhone development, iOS, marketing and a bunch of other costs (including, for example, salaries of lawyers to cleaners). There is not even the mood for the transport and assembly of those parts. Therefore, these costs are not even at the level of fixed costs. Please think about what you write next time. This is Lightning quality.
You obviously have no idea what margin is and are confusing concepts with impressions. This is the difference between the selling price and the production price. On the other hand, the profit from the product is the margin reduced by costs associated with sales, etc. Therefore, please think about what you write next time. This is the quality of comments like from iDnes.
Mr. Žďánský, don't be ridiculous. After all, you don't state the production price, but the price of the components. Do you perhaps buy parts as a customer? Manufacturing costs are generally divided into fixed (some you mentioned, some omitted) and variable (you completely forgot about them). What you stated applies to traders who resell goods – i.e. they buy a product for x and sell the same product for x + perhaps 20% + VAT. Then the margin is 20%. But in this case, Apple does not buy components for resale, it "buys" a lot of other "components" internally - development, software and everything related to it. All this belongs to production costs. So I would certainly not please you in the exam.
Mr. Robert, nowhere did I state that this is a complete list of all parts. IHS iSuppli calculated that the manufacturing cost, i.e. cost of parts + assembly, is $274 for the base model. Software development, marketing, etc. are completely different costs and are not included in the margin calculation. If you were to calculate the profit, that is, what Apple actually receives per piece, then it would be different. But as stated at the end of the article, Apple will not get the entire margin. Don't confuse margin with profit.