It’s not breaking news that companies in the tablet market are looking to make profit, but some of them are charging consumers an arm and a leg for it. Here’s the Apple story of how to make profit off of iPad Mini.
Obviously, the world’s most valuable company knows how to make profit off of basically everything. We knew that, yet we bought all the iPhones, the iPads, the iPods, the iMacs. But when it comes to the iPad Mini and its staggering price starting at $329 + tax, the teardown shows Apple is making a profit margin of 40% off of selling an iPad Mini. In a nutshell, Apple makes $141 profit of a gadget for which Apple pays $188 to have it built.
When iPad mini came out, many were disappointed Apple priced it at $329 plus tax (the 16 GB version). It was obvious the iPad Mini was a sort of “I can do it, too” product, which would have opened the doors into a new market, where Google and Amazon are leaders. However, whereas Google and Amazon are pricing their mini tablets at $199, Apple is going for $329.
“Apple must have had a reason to price iPad Mini so high, right?” argued consumers, experts and fans. “The components must be state-of-the art technology that is pricy” you’d hear people argue. “Well, you see the iPad Mini features a new display and iOS 6” they’d argue some more. But according to a teardown analysis of what’s inside the iPad Mini the combined costs of parts add up to $188 for the 16 GB version, currently sold at $329 + tax.
In a nutshell, Apple is making a $141 profit off of iPad Mini, the standard 16 GB version. In the meanwhile, Google’s Nexus 7, also the 16 GB version, brings the company just $40 in profit, given that the cost of the components adds up to $159.25. Amazon says it is selling its gadgets at a break-even cost, but the company is currently more focused on making profit off of digital content, than gadgets.
But making a 40% percent profit or $141 off of iPad Mini isn’t enough for Apple. In a recent conference, Apple CFO Peter Oppenheimer said that the iPad Mini gross margin is “significantly below the corporate average”. Yet, the price is still staggering for a 7.9 inch iPad mini. You could just save up some more and buy the $399 iPad 2 instead (if it’s not the actual size you’re interested in).