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Background
Apple introduced the first iPad in April 2010, released iPad 2 in March 2011 and the 3rd generation new iPad in March 2012
During 2010, Apple sold 14.8 million, representing 75% of tablet PC sales at the end of 2010 The 4th quarter of 2011 alone, Apple sold 15.4 million iPads, doubled what it sold in the
Background
The iPad is assembled by Foxconn in Shenzhen, China Similar to Southwest Airlines and Vanguard (the mutual fund company), Foxconn follows a cost leadership strategy Foxconn has been profitable and has grown over the years through relentless cost management
Background
Apple follows a product differentiation strategy It generates its profit and growth on the basis of its ability to offer differentiated or unique products or services that appeal to its customers Customers are willing to pay higher prices for its products than that of its competitors
Background
Apples margin has more than doubled the past five year During the same period, the margin of Hon Hai Precision, Foxconns Taipei-listed flagship has become smaller The margin spread between these two companies have widen since the first iPad debut in April, 2010
Power Management
Battery Mechanical/ Electro-Mechanical / Other Box Contents
$182.95 36.66%
$266.15 44.43%
$332.55 47.58%
$270.70 43.04%
$353.90 48.55%
$420.30 50.70%
Power Management
Battery Mechanical/ Electro-Mechanical / Other Box Contents
$182.95 36.66%
$266.15 44.43%
$332.55 47.58%
$270.70 43.04%
$353.90 48.55%
$420.30 50.70%
Touchscreen: Costs an estimated $40, or 10.9 % of the BOM Main suppliers are still TPK, Wintek and Chi Mei Wireless section: Costs $41.50 and accounts for 11.4% of the BOM Qulcomm Inc is the supplier for the MDM9600 baseband processor Application processor: The A5X applications processor costs $23, or 6.3 of the total BOM Samsung serves as foundry partner to Apple Apple is the designer and owner of the intellectual property of A5X
Observations
Samsung with display and application process combined, accounts for 30% total BOM and is the largest for any supplier With the exception of the display, Apples margin will increase as the cost of all other components continue to go down Apple upgrades iPad every year and that will keep competitors from staying in high margin sweet spot for too long
The End