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Apple Inc. Looks for Fat Margins From iPad Pro

Apple Inc. (AAPL) iPad Pro

Apple Inc. launched the giant iPad Pro in order to wrestle back market share for the Surface Pro line of tablets that Microsoft released. Apple’s iPad sales have been declining in the last 12 quarters and the firm hopes that the new iPad Pro with its revamped features will be able to take back lost ground. However, analysts seem to think that the iPad won’t be able recover lost ground from Microsoft’s Surface Pro tablets – but, that might be a good thing.

The Trefis Team suggests that the underperformance of iPads in the tablet wars might help the firm to record bigger margins from iPad sales. Apple is tight-lipped about the margins from its different products but there are rumors that the iPad sits on one of the lowest rungs of Apple products in terms of margins. The fact that Apple is struggling with sales on the consumer end of and it wants to push its iPad Pro to the workplace.

Apple looks at fat margins

It is no longer news that Apple is targeting the workplace with its new iPad Pro. Eddy Cue, VP Internet Software and Services has said that the firm has serious interest in the getting its devices to be used in the workplace. He says that the firm doesn’t know vertical markets but that it is now making a stronger effort to get more of its devices into the workplace. Apple’s business push especially with the iPad Pro starts at $800 might help the firm record bigger margins even with fewer sales.

Apple Inc. makes serious profits from its iPhones but the same cannot be said for the iPads. For instance, teardown analysis of the iPhone 6S reveals that the firm spends $236 to build each unit of the large-screen version while the selling price of the device is $749. In essence, the firm makes about 217.4% on each unit sold, before you add accessories, Apple Care, and Warranty.

In contrast, the best-selling iPad (iPad Air 2) retails for about $499 (it sells for a lower price on the street). Apple spends about $275 to build the iPad Air 2 (16GB); hence, the firm makes about $269 or 81.45% on each device. Now, with the focus on selling the iPad Pro to the workplace, Apple should get bigger margins on the device.

Apple Pencil won’t replace your fingers

One of the great new products that Apple Inc. released is the Apple Pencil, which works with the iPad Pro to provide a natural drawing experience. Jony Ive in an interview with the Telegraph, revealed that the Pencil was designed to for people who are “used to spending a lot of time using paintbrushes, pencils and pens, this will feel like a more natural extension of that experience – that it will feel familiar,”

However, the Apple Pencil won’t necessarily replace your fingers. He says it is easy “to confuse the role of the Pencil with the role of your finger in iOS, and I actually think it’s very clear the Pencil is for making marks, and the finger is a fundamental point of interface for everything within the operating system. And those are two very different activities with two very different goals”.

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Adam Green is an experienced writer and fintech enthusiast. He he worked with LearnBonds.com since 2019 and covers a range of areas including: personal finance, savings, bonds and taxes.

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