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'Mean Apple' Rakes In More Than 135% Margin From iPad Air

By Wire Service | Thursday | 07/11/2013

Apple who has been described by some Australian retailers as one of the "meanest" Companies to do business with because of what has been described as "wafer thin" margins is making more than 135% margin on their new Apple iPad Air according to analytics group IHS.

The research reveals that the iPad Air which is described as being twice as fast as previous models and 20 per cent thinner is cheaper to make than prior models. 

 IHS took the tablet to pieces and worked out how much each individual component would cost to manufacture.

It discovered the cheapest 16GB Wi-Fi-only iPad Air costs $274 to make, based on preliminary results, yet sells for $598.

This is despite the fact the iPad Air is $42 cheaper to make than the third-generation model.

The 16GB iPad Air with 3G connectivity costs $304 to make, according to preliminary results, and this represents a 6 per cent drop in production price of the iPad 3.
 
'While the iPad Air slims down in size, the profit margins are getting fatter,' said Andrew Rassweiler, senior director, cost benchmarking services for IHS.

'Although the Air's new, ultra-thin display and touch screen are more expensive than for the third-generation iPad, Apple has held the line on cost by taking advantage of price erosion in other areas.

The profitability of the iPad Air rises dramatically as the built-in storage capacity increases.

For example, the 32GB model costs Apple only $8.40 more to produce - but has a retail price that's $100 more in Australia.

As is normal Apple is refusing to comment on their price gouging.

This cost breakdown shows that Apple is sticking to its traditional pricing strategy. This may also be, in part, due to the fact the firm's earnings recently fell 9 per cent.

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