What's so special about the storage on the iPad?

[vini-vidi-vici]

Apple rarely if ever uses that approach. They will make money no matter what model you buy.

Correct. I can't see any company doing that. It'd be totally reckless & about the stupidest business move ever to sell potentially millions of a product at negative margin.

As for the memory... others already have it - because they can, because people will pay for it, and because Apple is a business.

 

[admanimal]

I can't see any company doing that. It'd be totally reckless & about the stupidest business move ever to sell potentially millions of a product at negative margin.

With the recent exception of the Wii, this is exactly how most video game consoles are sold. Microsoft lost $125 per original Xbox sold for a total of $4 billion in losses, and the 360 costs them somewhere around the same amount (not including all of the RROD repairs). I'm sure the PS2 and PS3 are in the same ballpark.

The general idea is to sell a ton of consoles at a loss, but then sell even more software at a decent profit. Apple has always been known to sell their products with high profit margins.

 

[drjsway]

All products are priced not according to how much it costs to produce but how much people are willing to pay.

Picasso's paintings probably cost a few dollars in paint and materials but they sell for millions. No one complains about the Picasso tax.

 

[vini-vidi-vici]

With the recent exception of the Wii, this is exactly how most video game consoles are sold. Microsoft lost $125 per original Xbox sold for a total of $4 billion in losses, and the 360 costs them somewhere around the same amount (not including all of the RROD repairs). I'm sure the PS2 and PS3 are in the same ballpark.

The general idea is to sell a ton of consoles at a loss, but then sell even more software at a decent profit. Apple has always been known to sell their products with high profit margins.

True... good point. Though, I don't think it was a very smart business move. You could say that their business is software, not the console. I wonder how much Microsoft made in Xbox software given $4 Billion in losses (especially when you consider that others were making games for it... not sure if MS got a cut). But, I think they ought to have designed something that met a price point... even if it didn't quite do all the things they wished it could.

It'd be interesting to see a detailed case study of those products, but that's drifting quite a bit from the iPad forum...

 

[admanimal]

I figured I'd bump this thread given the new info from iSuppli that says that the NAND flash used in the iPad is actually the 2nd most expensive component, starting at $29.50 for the 16GB up to $118.00 for 64GB. I still don't know exactly why this flash is more expensive than the NAND flash usually used in USB thumb drives, but obviously there is something special about it.

 

[mkrishnan]

Apple rarely if ever uses that approach. They will make money no matter what model you buy.

It's being reported that the component cost of the lowest iPad (16GB/No 3G) is about $230... 100% markup from component cost is pretty typical for Apple products, at least outside of the computers... so it's probably reasonably profitable. The margins after assembly are probably on the order of 30-40%. The article points out that the margin is slimmest on the 16GB unit, but they're still pretty favorable. More favorable than almost any product Dell, say, makes, most likely.

 

[applemike]

Will an iPad, even connect to an external flashdrive?

Nope, not unless this flash drive is plugged into your computer, and the media is copied to itunes first, and the iPad is plugged in.

Mike