

As Tablet Race Heats Up, Apple May Try Smaller Device - vellum
http://www.nytimes.com/2012/07/16/technology/apple-may-meet-tablet-competition-with-smaller-ipad.html?pagewanted=all

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jfb
The most important thing to remember when trying to accurately predict what
Apple will do is to remember that they make their (not inconsiderable) money
from their unbelievable margins on hardware. They may well make a 7" iPad, but
only when the cost of so doing falls below their expected profit margin.
They're not looking to own 100% of any particular market -- rather, they're
just trying to capture the maximal profit possible.

A 7" iPad is probable, but it's not intended to kill the Android-based 7"
computers, but rather, because Apple's supply chain mastery and logistics has
made it possible for them to _make money_ at a $200 price point.

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r00fus
Is this true? doesn't the iPad, or hell, the iPod touch have lower margins
compared to the iPhone?

Apple isn't a slave to margins. They can and will (as Cook publicly stated)
sacrifice margins to release a new product or to solidify their brand image.

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jfb
I think that's bafflegab and hand waving. I claim no particular expertise from
working there, but I haven't seen Apple move into any hardware market that
they can't make ridiculous profits from.

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beagle3
They probably don't make ridiculous profits on the AppleTV: At MSRP $100 and
available $80 every other weekend at respectable retailers if you look for it
(I used to see it at $80 e.g. through dealnews.com when I was looking), I
assume that the retailers pay $60-$70 for it.

BOM and build is probably of the order of $50/unit (think Raspberry Pi + Flash
storage + Box + Wifi + Power Adapter + Remove; then subtract Apple economoy of
scale). They're probably making $10-$15 on each unit, about $1-$3 would
actually go to pay for the software and support.

That's good solid profits. But it's not ridiculous profits.

