iPad Mini’s Gross Margin Is a Little Lower Than The Rest

The iPad mini’s gross margin is a little lower than the rest of Apple’s products at $329,CFO Peter Oppenheimer From Apple said on the company’s conference call today. He said that’s driving lower guidance for the upcoming quarter despite of Multiple new products Recently launched across its lineup.

“We’re unwilling to cut corners in delivering the best experiences in the world,” said Apple CEO Tim Cook. He stressed that the company is all about setting the bar high, perhaps implying that that’s what’s making gross margins slimmer on the iPad mini.

Oppenheimer added that the company hopes to improve margins with further supply chain and manufacturing process optimization as its production of the iPad mini continues to ramp up and become more efficient and cost-effective.

Launching the iPad mini required being “aggressive” on pricing according to Apple on the call, which is why the company chose to go below its ordinary margins. In past articles, I estimated that the bill-of-materials and construction costs might put the iPad mini within Apple’s existing range in terms of gross margins on hardware products, but it seems like the company’s unique design is keeping the iPad mini costs above the range I’d suggested.

iPad Mini

Cook said this week there are over 700,000 apps in the App Store, including 250,000 mainly designed for the iPad. People with Apple’s iOS mobile devices -  iPhone, iPad and iPod have downloaded Over 35 million apps. Apple said they kept the pixel resolution the same on the iPad mini as on the regular iPad, which means existing apps should run without any modifications on the mini’s 7.9-inch screen. 

“This software strategy enables a distinctive ‘stickiness,’ which should enhance customer loyalty/retention over the long term as apps personalize devices to levels that competitive imitations cannot match,” Reitzes told investors in a note yesterday.

He’s also banking on the iPad mini to win over new buyers, and lift Apple’s sales next year. “The iPad mini is one of the best ways for Apple to expand the [total addressable market] for the iPad,” Retizes said. “Given Apple’s reputation for superior design, software, content delivery and overall brand the iPad seems like a market where its share could arguably be permanently higher than that of the iPhone’s.” 

He’s also banking on the iPad mini to win over new buyers, and lift Apple’s sales next year. “The iPad mini is one of the best ways for Apple to expand the [total addressable market] for the iPad,” Retizes said. “Given Apple’s reputation for superior design, software, content delivery and overall brand the iPad seems like a market where its share could arguably be permanently higher than that of the iPhone’s.”

Gene Munster of Piper Jaffray, who has a $910 price target on the shares, says investors should look beyond today’s report, saying he expects the company to outperform in 2013 on continued demand for the iPhone and iPad mni. “While the September quarter and December guide may be disappointing compared to historical trends, we remain positive on Apple given that we expect a significant ramp in iPhone 5 sales as supply issues resolve,” Munster told investors in report today. “We continue to believe that Apple will launch a TV in mid-to-late 2013, which should be positive for investor psychology around Apple’s ability to innovate.” 

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iPad Mini Release Date Friday, November 2nd

Apple released the iPad Mini (along with other gadgets) today, after we have Waited months and months . The Ipad Mini will hit the markets on Friday, November 2nd colors include black & slate and white & silver models in the U.S.

16GB model is $329.

32GB model is $429.

64GB model is $529. 

The devices are be sold through the Apple Online Store, Apple’s retail stores, and select Apple Authorized Resellers in the following countries: US, Australia, Austria, Belgium, Bulgaria, Canada, Czech Republic, Denmark, Finland, France, Germany, Hong Kong, Hungary, Iceland, Ireland, Italy, Japan, Korea, Liechtenstein, Luxembourg, Netherlands, New Zealand, Norway, Poland, Portugal, Puerto Rico, Romania, Slovakia, Slovenia, Singapore, Spain, Sweden, Switzerland and the UK. The iPad mini with Wi-Fi + Cellular models will start shipping a couple weeks later, beginning in the U.S. on AT&T, Sprint, and Verizon. Pricing for these models are as follows: $459 for the 16GB model, $559 for the 32GB model and $659 (US) for the 64GB model.

                       Pre-orders begin Friday, October 26.

“iPad mini is every inch an iPad. With its gorgeous 7.9-inch display, iPad mini features the same number of pixels as the original iPad and iPad 2, so you can run more than 275,000 apps designed specifically for iPad,” said Philip Schiller, Apple’s senior vice president of Worldwide Marketing. “iPad mini is as thin as a pencil and as light as a pad of paper, yet packs a fast A5 chip, FaceTime HD and 5 megapixel iSight cameras and ultrafast wireless―all while delivering up to 10 hours of battery life.”