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According to a teardown by IHS, renowned estimator of how much companies actually pay for components, Apple’s iPad Mini carries a USD$188 (£118) cost of materials. You know how Google and Amazon are just barely breaking even on their tiny tablets? This is the opposite of that.
For some perspective, the 16GB Nexus 7 carries a USD$159.25 material cost and a USD$200 price tag. And Amazon has been very candid that it loses money on every Kindle Fire HD it sells. By contrast, there’s a USD$141 gap between the 16GB iPad mini’s asking price and its component value. Ka-ching!
It’s always been clear that Apple’s playing a different game from its tiny tablet competition; Google’s just desperately angling for a hardware foothold, while Amazon relies on content sales after the fact to make its initial losses worth it. Apple, meanwhile, wants to make money on hardware and software. Imagine! There’s nothing wrong with that of course, but reports like this only reinforce the notion that the iPad mini is heftily overpriced given its competitors.
There are also, of course, other factors that go into a device’s cost. Research and development, packaging, etc. But it’s not like Google and Amazon aren’t throwing great gobs of money in those directions either. And whether you love the iPad mini or hate it, at least now it’s clear that there are better bargains to be had elsewhere. [AllThingsD]
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Why does the URL say ‘costs-90-more’?
Because that’s the approximate UK price difference. For some reason they’ve just swapped the $ for a £ in the title.
$141 =£88
Cheers.
I got the £150 figure by subtracting the cost of the mini (£118) from the UK rrp (£269). Hope that helps clear things up…!
And being pedantic, the iPad is ‘priced’ 150 quid more than its components cost.
Brian got this right with the Nexus example in the same article!
Yeah, as much as I like Apple, I hope the Mini bombs just so Apple get the picture that they really need to be competitive in this particular market.
Of course, thats not going to happen and the damn thing will sell like hotcakes…
Apple are competitive in this market. You can charge more money for better products.
Selling tablets at a loss, or simply to break even worries me. Its fantastic for consumers in the short term, but terrible in the long run. Its basically doing to rising technology companies what Tesco has done to the corner shop. Samsung and Amazon can afford to take a hit on the hardware, and in doing so make every non-Apple, tablet, priced above cost, dead on arrival. But equally, smaller companies simply cannot afford to sell their products at cost price. Hence, we risk stagnating the tablet market space and in doing so drain it of all innovation. I just cannot see this being a stable model.
Both Sony and Microsoft sell their consoles at a lost. I fail to see how it’s hurting the gaming industry.
MS and Sony (and reportedly Nintendo, too on Wii U) initially sell their consoles at a loss, partly because they’re fairly well assured five years or more (Xbox 360 is about two weeks shy of its 7th birthday) in which to reduce manufacturing costs. As I understand it, Xbox 360 was being sold at a profit within a year of its release.
Within a year of the release of Nexus 7 or Kindle Fire, there will be another, more technologically advanced version expected, so the companies involved won’t have that benefit.
hang on, don’t we hear this all the time, then a few weeks later we get the, Apple are making more money than we thought on their ipad minis.
i reckon its all just hot air
It all ties in nicely with this recent article on Engadget;
http://www.engadget.com/2012/11/03/editorial-amazon-and-google-are-undermining-mobile-pricing/
I had a play with an iPad mini for the first time yesterday – it’s a terrific looking thing and is almost the right size – finally! The mini and the full-fat were on show side by side – the latter seems even more unwieldy than ever to these eyes and hands.
If I didn’t already own a Nexus 7 I’d be even more tempted to get one and I won’t be surprised if this becomes a top seller for them, even though it doesn’t appear to offer great VFM.
Ugh, come on Apple, sell for less!
I assume that Apple have some great bulk prices on components – does IHS take this into account?