Yes, but these costs are (1) an *estimate*, and (2) don't factor in the cost of R&D, overhead, etc. etc. I am not arguing they are too high or low, just that all the factors are not included.
I have been on both ends of this: having contracted iSupply to tell us the cost of a product, and having them estimate the costs of the products we were selling.
On technology that is mainstream, they are withing 10% of the actual cost. I consider iPad2 mainstream. It does not rely on components that have never been available before and are at prototype stage. In this sense, then the cost of iPad2 is from $300 to $360 -- not enough to make the numbers that different.
Where they miss and miss big is a) when it is in prototype such as blue-laser costs when PS3 came out or b) when the company has significant leverage in buying components such as Apple has. There is no question in my mind that Apple is getting some parts at or below manufacturing costs of the supplier. Reason is simple: you can leverage the halo effect of "we supply parts of iPad" to sell a ton of parts to other companies. If God (err, Apple) saw fit to use your parts, then surely it has great merit. As an example, there is no way anyone can match the buying power of Apple in Flash memory. I have talked to companies that make flash memory and their internal cost for flash is far above Apple's! So on this front, iSupply numbers are too high.
As for R&D, I have experience with that too
. There are companies who you hire and they will get you the headcount of any project at any company. Don't ask me how they do it. OK, I confess
. There are always stupid people who give out the goods if you know how to ask them and these guys know how! Anyway, we got the headcount for various Apple projects and they are exceptionally low. They run a lean ship.
My estimate is that they have about 200 people all up working on all of these products. Using a round number of $250K per head, that is $50M/year. Salaries tend to 70% of the total R&D expense so adding the rest to it, we are at $65M/year. Let's add $20M for capital equipment and major tooling and such ad we are at $85M. Sounds like a lot but amortized over all the "i" products, it is a drop in the bucket. Apple sold 7 million iPads in 2010 so even if that product alone had to fund all of this R&D, you would have a per device cost of $12 -- drop in the bucket. Damn big bucket!
Net, net, this is a cash machine the likes of which has never existed.
PS I own no Microsoft shares. My banker has invested in Apple stock for the last two years although without asking me
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