“Apple reportedly will release its new smartphones and tablets in September; however, compared to these new products, Taiwan-based vendors are more concerned about whether Apple has plans to release an entry-level iPad mini or cut its existing iPad mini’s price to boost demand, as both moves would significantly change the current tablet ecosystem, according to sources from tablet players,” Max Wang and Joseph Tsai report for DigiTimes.
“When the iPad mini was launched, some research firms estimated its bill of materials to be at around US$188, compared to its end price of US$329, the device still has plenty of room for price cuts,” Wang and Tsai report. “If Apple decides to keep its new iPad mini priced at around NT$10,500 (US$351) and drop its previous-generation model to around NT$8,500, it could significantly impact all the non-Apple tablet vendors and even change the tablet ecosystem.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]
Don’t these people realize there’s more to the cost of a product than just its raw materials. What about the development costs? Apple didn’t just decide one day to throw some off-the-shelf components together to make a phone. Seems like that’s the idea behind telling Apple how much markup they should do.
It’s just typical CHEAP ASS BASTARD mentality.
They should just stick the crap in Walmart.
Apple devices are available in Wally-mart too – please think different.
Good point, although, after the first few million, the per unit amortization of development costs starts getting pretty low. At a sales volume approaching 20 million iPad minis in the first year, Apple could apply a mere $5 per unit and have a $100M budget for development completely written off. That buys a serious amount of engineering time. Of course, Apple never speaks of such things in public, but I’m guessing they could kill every other competitor, should they choose.
Many products are introduced at a price below that which would produce the desired average margin, on the basis that a successful product will amortize the development costs and produce an overall margin above that which was originally targeted.
I’m sure they’re fully aware of the R&D cost. Retail price reflects many factors, one of which is easily measurable, the bill of materials. Comparing the ratio of retail price vs. bill of materials between Apple’s hardware and other manufacturers, we can understand the possible pricing movement. When a product is new, bill of materials is higher, until sufficient production volume is attained. Since Apple always gives a very generous margin between the two values (price of components and retail price), once the price of components (and cost of manufacturing) goes down, Apple can easily afford to lower the pricing, which is precisely what they’ve been doing with all mobile hardware to date (iPhones, iPads), where prior generation gets discounted (usually by $100) when a new model goes on sale. Since iPad mini is the least expensive mobile device today (if we disregard the iPod line for the moment), it is unlikely that they will discount the first generation iPad mini by a whole $100.
We are still waiting for Apple’s official announcement of the event, but if it happens on the 10th, as reported by some, we’ll know in a few weeks what the price of the old mini will be.
In addition to distribution costs, warranty costs, and a number of other factors beyond simple component costs…
And marketing, advertising, capital costs, overhead, etc…
Mixed feelings on this as well. Obviously somebody at Apple knows something about profit, as their pricing at 329 seems to make Apple lots of money and that is good for Apple, and therefore, as an Apple fan and stockholder, good for me.
OTOH, I would love to see them come in at 249 and watch them suck the oxygen out of the Android tablet market.
Chuck,
You are totally forgetting about that huge mfgr of tablets…. “OTHER”. I saw some of their stuff on tiger direct… 70$ for an Android 4.0 tablet that … well…. did stuff… and 55$ for an app package that some buyers said …. mostly worked… LOL
YEAH OTHER has 30+% of the tablet market and so is a huge threat to Apple… Right??? /s
NO. Apple is quite aware of this segment of the market and it wishes it to live on. This has three effects: 1) It prevents Apple to be accused of monopolistic practices; 2) It forces manufacturers in this market to live on a slim margin; and 3) it makes it hard for suppliers to that market to invest in R&D, which is fine for Apple.
There will definitely be an iPad model at $299, I think.
And then, that low-end iPod touch will go to $199, with the other models starting at $249 (or lower than $299).
iPad mini is a weapon.
At its price Apple may effect the iPod touch market… then again so what.
Apple could simplify its line with five words.
iPad / iPhone
Large / Medium / Small
—-
no need for iPod touch as it is basically a tiny iPad.
add telephone carrier services for real communication to every screen size, 9.7 “, 7.9″ and 4.0” and Apple has the phablet market won in a day.
Add blue tooth ear set and people who require larger displays yet dont wish to carry around both devices will find communications on a tablet just as enjoyable – siri steps in – and the tablet is useful everywhere including automobiles – does Apple believe we want a fixed iPad inside the car – or a mobile device to also take when we leave our cars?
its coming.
“No need for iPod touch”? You are just suggesting that it is renamed, not that there is “no need” for it… 🙂 And I agree… Call it the iPad nano. And I also agree that all iPads (that have cellular) should work as phones.
Whatever you call the iPod touch, it still has to be priced below iPod mini (at least in the low-end and “standard” configs). I think my speculation is reasonable. The iPad mini does not need to go below $299 for it to kill the competition, and the iPod touch could be priced lower across the board, to make it more popular. $199 and $299 are the “magic” price points. The previous low-end price for an iPod touch was $199.
“no need for iPod touch”
Totally wrong. Spectacularly wrong. Couldn’t be more wrong if you tried.
Look at the new iPod touch. It has a relatively small amount of storage and only has a camera on screen side – none on the rear.
The iPod touch is clearly designed to be a remote control for a future Apple TV service and is stripped down so that it can be sold at a reasonable price, while still offering the features needed for a smart remote control with gesture recognition. It will also be handle e-mail, web surfing and Face Time conversations via the home WiFi network.
Many users will use their iPhones and iPads instead, but for some, an iPod touch will be the ideal remote control.
Definitely. I think.
There are a lot of analysts on Wall Street that seem to believe Apple is losing the tablet war to Chinese white-box tablets selling for $60 to $100. It’s true I don’t know what the people in the BRIC nations are buying but I’m almost sure they’re not happy with those el-cheapo tablets. Mostly anyone that uses them for awhile say they’re crap with poor-quality displays and touch panels, jerky UIs and short battery life. Those tablets have to be built with low-quality components. Most likely reject components that are out of tolerance. Wall Street seems to think consumers are stupid and happy with buying short-lived products.
I’ve been tempted to buy one of those dirt-cheap Mach Speed and Linsay Android tablets they sell at Sears since I know I could return it if I didn’t like it, but I wouldn’t waste my time. They’ve already been reviewed and panned as junk.
And who cares. Any other tablets are unnecessary anyways.
iPad mini is Apples secret weapon.
It will destroy the phonelet / phablet market of Android once Apple provides iPad mini with telephone capabilities. Plus be the largest phone available at the same time.
Do it! Do it Apple, drop the prices and change the ecosystem.