You’re paying too much to get a little more space on your iPad and iPhone

Re:You’re paying too much to get a little more space on your... by lukifer on Sunday July 15, 2012 @09:42PM (#4248935)

I can't stand the "breakdowns" from iSuppli: as if raw components were the only cost! There are the massive teams of software engineers, not only to write the software, but to maintain it over time. There are shipping costs, labor for manufacturing and quality control, advertising, marketing, R&D for all the unshipped iterations, legal and compliance issues (for every single country), data centers, overhead, infrastructure, and more. Sure, some of these are fixed costs, and some can be absorbed by revenues from other product lines, but it's not like you can just subtract components and arrive at the take-home profit.

All that said, I'm sure that Apple still takes in a good profit on every low-end unit. But I don't see their overpriced storage as a gouge (or at least, an unreasonable one). Rather, it also acts as a subsidy: all the people who can afford a 64GB/3G iPad make up the difference profit-wise for the 16GB/WiFi, allowing them to offer it at a lower margin, both to entice users in and then up-sell, and also to grow the market share. Other industries do this kind of thing all the time, for cars, game consoles, etc.

Is Apple overcharging you on storage? Most certainly. But I don't think it's anything worthy of outrage. If it's not a good value proposition for you, don't buy it. There are plenty of alternate tablets which include micro-SD slots.

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Re:You’re paying too much to get a little more space on your... by reedlaw on Sunday July 15, 2012 @10:44PM (#4249070)

Most of the costs you mention are amortized over the lifetime of a product. Not only that, but their true costs are nearly impossible for outsiders to discern. Manufacturing costs are a good indicator of what margin is possible in a mass-produced product and so useful to other businesses considering competing in that market.

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Re:You’re paying too much to get a little more space on your... by ars on Sunday July 15, 2012 @10:00PM (#4248973)

So because of that your takeaway is that the breakdowns are useless?

Take that data for what it is and don't expect from it what it isn't.

And they do estimate manufacturing costs BTW, plus boxing costs - basically all the costs of making the widget. They don't claim to, and don't, estimate other costs, that's just not what they do.

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Re:You’re paying too much to get a little more space on your... by janardanyri on Sunday July 15, 2012 @10:16PM (#4249013)

It's a healthy dash of guilt by association; these iSuppli reports unfortunately lend themselves to sloppy reporting. This article is a typically wonderful specimen, which crosses lines freely with nonsense sentences like these:

"On the high-end Wi-Fi model, which offers you 64GB of space for $699, Apple’s non-manufacturing profit margin shoots up to 48 percent."

As though you get to handwave away non-manufacturing costs and then call it a "non-manufacturing profit margin."

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Re:You’re paying too much to get a little more space on your... by ars on Sunday July 15, 2012 @10:19PM (#4249020)

Certainly, but that's not iSuppli's fault.

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Re:You’re paying too much to get a little more space on your... by lukifer on Monday July 16, 2012 @05:40AM (#4249969)

Fair enough; I suppose it is the tech press who are dropping the ball here.

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