Quote:
Originally Posted by cmdahler
I'm having a problem understanding what you seem to be referring to as "dirty business." Are you seriously trying to argue that Apple should have priced the iPad higher just to be "fair" to Plastic Logic because PL wanted to price the Que at $700? That's just ridiculous. If Apple were using that $50 billion they have in the bank to price the iPad at a loss just to run everyone else out of business, now that would be dirty business. So long as Apple is pricing the iPad at a profit-point (and there have been enough independent cost-to-build estimates since the iPad was announced to indicate that Apple is not just making a profit, but a hefty one, as in around 30%), that can hardly be described as "dirty business."
I have no idea what you mean by creating an "illusion of value;" it seems to me that if Apple is making a 30% profit on the iPad, the iPad is even now priced a little high, but it's going to sell like crazy even at that. Where's the illusion? The "illusion of value" lies more with the large ereaders: you think that because you're paying such a high price, you're getting something of value for your money, but what you're really doing is paying a ton of money for a device that can't do a tenth of what something like the iPad can do. It comes down, in the end, to whether having an e-ink screen is worth all that money to you. I expect that the number of people who are such die-hard e-ink fanatics that they absolutely must have e-ink over everything else will be pretty tiny compared to the number of people who will say that e-ink would be nice, but the entire device is so limited in capabilities compared with the less expensive iPad that the e-ink device just doesn't make any kind of financial sense unless money is just meaningless to you to begin with.
But still, none of that is Apple's fault: you seem to be suggesting that Apple should have said, "Oh, those poor guys over at Plastic Logic, their e-ink screens cost them so much that we really ought to just go ahead and price the iPad at $900 so they have a chance to sell their product."
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...just remember: 30% Gross Margin is not as hefty, as it may seem to outsiders. "Standard" hardware manufacturer's, with an initial Gross Margin of 30%, eventually will end up significantly below the 10% barrier.
I've seen quite a few balance sheets with figures >50% - and still those companies have been close to chapter eleven. Remember general costs >20% and remember tax and remember allocations for different plants/regions/profit centers...