Mac mini generating low profit margins for Apple
updated 03:25 pm EDT, Fri June 26, 2009
Low Mac mini profits?
The latest Mac mini, at least in its entry-level design, is not an especially profitable product for Apple, says the analysis firm iSuppli. In conducting a new teardown of Apple's cheapest desktop, the firm notes that the bill of materials is estimated be $376.20, a little less than $223 below the retail price. Adding manufacturing brings costs up to $387.14, and the company must also pay for expenses such as licensing, marketing and shipping.
One of the greatest expenses is said to be the 2GHz Core 2 Duo P7350 processor, estimated to be worth $118.35. By contrast, the GeForce 9400M graphics chip costs $65.16, and the 120GB hard drive is worth $46. The included optical drive is worth only $32. All together the system still is more expensive than it might otherwise be, as a result of an Apple insistence on keeping the system small through the use of notebook parts.
iSuppli observes that the computer also consumes more power than one might expect, requiring a 110W external power supply as opposed to the 85W component provided for the original Mini. The new system does use tightly efficient circuitry however, and can consume as little as 13W when idling. The system thus earns its environmental credentials, says iSuppli.
And in other news. . .
06/26, 03:35pm reply
The latest Ford Focus, at least in its entry-level design, is not an especially profitable product for Ford, says the analysis firm iSuppli.
Who pays these guys to state the obvious?
Glenstorm
Fresh-Faced Recruit
Joined: Dec 2000
lol not news
06/26, 04:21pm reply
Seems obvious the Mini is not a massive profit point for Apple.
As time goes on and the component prices come down, Apple will make better money off of each Mini.
DeezNutts
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Joined: Apr 2008
Seems high
06/26, 04:37pm reply
"120GB hard drive is worth $46"
You can get a 160GB drive from New Egg for $40. I'd bet 120GB drives in lots of 1,000 are considerably lest than $46.
dwesnor
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Joined: Feb 2008
Koolaid
06/26, 04:51pm (1 reply) reply
Don't know what the guys at iSuppli were drinking when they wrote this one but a number of the figures including the cost of both optical and hard-drive are hogwash, pure and simple. On the basis of their inflated figures Apple nonetheless has a gross margin of nearly 70% which is twice what Dell have before all that "cost of sale" s***. Don't go shedding any tears for Apple just yet.
Feathers
Forum Regular
Joined: Oct 1999
it's still a profit
06/26, 04:52pm reply
Agreed dwesnor - they are buying in bulk- Instead of dollars how about %? I mean they can't really make it 9,000% markup but anything over 15 or 20% seems ok profit to me.
sharp3d
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Joined: Aug 2008
40% profit margins
06/26, 05:23pm reply
Apple's profit margins are typically estimated to be around 40% and these numbers are in line with that.
resuna
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Joined: Jan 2005
the macmini...
06/26, 10:52pm (1 reply) reply
...is a loss leader to help people to switch platforms with their existing PC peripherals. and an appliance for very specific uses for advanced mac user, for home theater, etc.
and those margins are better than most industry's margins.
as usual, subpar reporting from subpar sources.
rtbarry
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Joined: Aug 2001
Apple must keep MacMini
06/27, 07:43pm reply
Apple had better not remove the Mac Mini from its lineup. It is the last desktop option for users to obtain a Mac with a matte screen (albeit now a non-Apple-made matte screen). The website http://macmatte.wordpress.com indicates 40% of Apple users prefer matte, while 20% absolutely refuse to buy an Mac with a glossy screen. If Apple thinks that, because of razor thin margins, it is not profitable to make the Mac Mini, it will lose more customers.
MacMatte
Fresh-Faced Recruit
Joined: Jun 2009
here, take a taste
06/28, 10:47am reply
Schwinn had a very successful sales strategy: sell the kid their first bike and they will buy Schwinn the rest of their lives.
This is what an entry level machine is about. It's a loss leader, it's that free sample at the food court.
How many first time Mac users are Mini users? How many buy up to the iMac, how many buy iPods or iPhones to go with their Mini's?
Profit margin is not the end all.
alfredo
Forum Regular
Joined: Jul 1999
Re: Seems high
06/28, 11:45am reply
You can get a 160GB drive from New Egg for $40. I'd bet 120GB drives in lots of 1,000 are considerably lest than $46.
Um, no you can't, unless you want to buy a drive that isn't compatible with the mini. The mini uses laptop drives, and the cheapest 120 or 160 drive there right now is $50.
LouZer
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Joined: Nov 2000