Category: Technology Author : Steven Hodson Posted: April 13, 2009
Tags : Apple, Apple Tax, ipod shuffle
A lot of talk is being made about a Microsoft sponsored study into the Apple Tax that Mac lovers seem to gladly pay in order to be cool. The interesting thing about the furor that ran rampant across the the tech blogosphere is that much of the talking points were about the numbers being bandied about. This made reading Steve Clayton’s post today about the uproar all the more fun because he seems to have been one of the very few that caught the sarcasm and with that was slid in amongst the fancy number breakdowns.
Whether or not the idea of there being something like an Apple Tax the fact is that Apple has no qualms at all about making a very nice profit on their hardware. A good example of this is the cost of the new iPod Shuffle in contrast to the profit made on each one. To determine this ratio the good folks over at iSuppli have taken apart one of the new Shuffles to see exactly what is in them and how much all those parts might cost.
It turns out that their estimated cost of parts that go into the Shuffle works out to $21.77. Now given that the iPod Shuffle generally retails out at $79 that means the cost of parts plus the minor additional costs of industrial design and programming makes the over all cost only 28% of the retail price. Meaning in the end that Apple is making more than double the cost of the miniscule MP3 player as profit.
[hat tip to SlipperyBrick]
Apr 14, 2009
A 200% profit margin isn't anything unusual. I bet it's higher on some of the other products. Like when they Charge £800 for 4GB of 1066mhz RAM.
Apr 14, 2009
Sigh. You probably shouldn't be posting things like this if you're unclear on the difference between “cost of materials” and “profit margin.”
Apple reports its margins, year after year, and they are consistently in the vicinity of 33%, across their product line. You can be sure the Shuffle is no different, once you add to the cost of materials such things as development costs, manufacturing costs, and packaging.
Apr 14, 2009
From Businessweek.com – There are other costs in addition to components for which a teardown can't account: The time and efforts of software engineers and designers, industrial designers, manufacturing, distribution, royalties paid on patents owned by other companies, and so on. When it last reported earnings on Jan. 21, Apple said its gross margin, a key indicator for profitability that takes into account costs to make all its products, was 34.7%. The company also said it expects a gross margin of 32.5% in the quarter ended Mar. 30, for which it will report results on Apr. 22.