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Apple/Mac

Apple May Be Taking Margin Hit on New iPad

Apple May Be Taking Margin Hit on New iPad
March 19, 2012 12:07PM

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"The Retina Display represents the centerpiece of the new iPad and is the most obvious enhancement in features compared to previous-generation models," said Andrew Rassweiler of IHS. "For the third-generation new iPad, Apple has taken a significant step up...at four times the resolution and 53 percent more cost" for the iPad's Retina Display.

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But some analysts aren't so sure the supposed higher costs translates to lower profits for Apple. Michael Gartenberg, an analyst at Gartner Relevant Products/Services, said industry watchers don't know what Apple's profit margins are on the iPad because Apple does not reveal those figures.

"What we have is people making estimates about what things cost. They don't know what Apple is paying, what deals they have with suppliers, how much of these materials Apple has locked into place," Gartenberg said. "Certainly, Apple is not in the business of losing money on devices."

As Gartenberg sees it, Apple has shown that it knows how to carefully balance the cost of materials and the cost of marketing with the price points that consumers expect to pay -- and still manage to earn a profit. And consumers are willing to stand in line to pay in record-breaking numbers.

"AT&T Relevant Products/Services reported a record number of sales and activations for the new iPad over the weekend and it seems that the latest model is resonating with consumers who apparently value the differentiation the new model brings to market. Sales are very brisk," Gartenberg said.

"This is not the sales season for consumer electronics. Typically, consumers buy electronics more at other times of the year. So for the new iPad to be doing very well in what is the off season for consumer electronics is a pretty good sign for how this is going play out the rest of the year."

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 Apple/Mac
1. Apple Tax Case May Spur Reform
2. iPhone Takes a Hit in Satisfaction
3. Mr. Cook, About Those Loopholes . . .
4. What's in Store for Apple's iOS 7?
5. Pentagon Gives iOS 6 Security OK

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