Saw this article on Slashdot this morning about China's profit margin on i-Devices

Jstas

Not trying to stir the pot or anything. I just found it very interesting.

http://www.forbes.com/sites/timworstall/2011/12/24/china-makes-almost-nothing-out-of-apples-ipads-and-i/

With a profit margin so thin, and China is still making millions on them a year, they must be building insane amounts of iPods, iPads and other Mac "i" products.

But a 2% take on the COST of the device is pretty dismal. I don't know what the actual cost is but an iPhone costs about $500 without the incentives. 2% of $500 is $10. If that is the "cost" Forbes is referring to then $10 per device to support the entire manufacturing plant in China, that means those workers are making pennies (as in 2 or 3) per device they make. If the "cost" they are referring to is less than $500 then that number per worker is even smaller.

But at $10 a pop to the manufacturer, the Chinese plant that makes the iPhone needs Apple to sell 10 million iPhones a year to make a reasonable operating revenue of $100M for the manufacturing plant just to justify the tooling. If the workers really are making 5 cents per phone or less then they have to make at least 100 phones each a day just to make the typical ~$4 a day wage that seems to be the commonly stated figure for Chinese workers.

Seems pretty exploitative to me.

SDA1C

Seems pretty exploitative to me.


So has the F'er become the F'ee?

obieone

That's why I won't buy their products. It's just the hypocrisy of the you-know-who.

tonyb

Yep, the do as I say, not as I do crowd.

Toolfan66

I just typed this with my iPad and my iPhone is ringing I think it's my wife..

Strong Bad

Reading this thread on my iMac...as my iPhone syncs with iTunes...and charging my iPad. Of course all my web traffic passes through my Apple Extreme router!

Just curious...anyone know where those fancy Android products are made?

cnh

Those figures sound fairly accurate to me. They may "not" be representative of other plants and Chinese labor though. It's well known the Apple knows how to manipulate such things in their "favor". That said, full disclosure requires me to say that my wife went with an ipad II for her gift and she studies Chinese Migrant workers? A contradiction? I'd say yes.

cnh

dorokusai

And?

Jstas

Strong Bad wrote: »

Reading this thread on my iMac...as my iPhone syncs with iTunes...and charging my iPad. Of course all my web traffic passes through my Apple Extreme router!

Just curious...anyone know where those fancy Android products are made?

China, Japan and Taiwan. Depends on brand. That wasn't the point I was making though. I was hoping there wouldn't be any butthurt Mac fans for at least a day. I wasn't even trying to rip on Macs. I just found it interesting that a $500 product like an iPhone has all this cost associated with it and the place where it's made gets about 2% of all that cost. It's rather skewed and while not indicative of the industry entirely, the margins on other products aren't that much better for the Chinese. If their economy is about $5 trillion a year and they are sneaking single digit revenues then that shows how much is actually made in China.

Jstas

dorokusai wrote: »

And?

So??

Glowrdr

Jstas wrote: »

But at $10 a pop to the manufacturer, the Chinese plant that makes the iPhone needs Apple to sell 10 million iPhones a year to make a reasonable operating revenue of $100M for the manufacturing plant just to justify the tooling.

Just found an article from 07/11, and they were talking about the second quarter for Apple. It looks like they are selling 15+ Million each quarter! This is just the phone, not including any of the other products. So even at $10 apiece, there is some serious money changing hands here.

http://tech.fortune.cnn.com/2011/07/13/how-many-iphones-did-apple-sell-last-quarter-2/

kevhed72

Sounds very similar to Nike's business model

tonyb

Sales is a numbers game, we all know that. Still, how much apple makes on a product is really not relevant to anything. If your going to go down the road of hypocracy, slave wages, China, blah blah, your not really saying anything new most of us don't already know. If your surprised at why people still buy their products, just come out and ask.

Rather than care about China's profits, maybe a story on America's profits is more fitting, given our economy and all. Shouldn't the conversation be about getting America's profits up and running again ? Eh, regardless, my interest in Apple rates up there with dog dodo. Not knocking anyone who uses their products either, we all have choices that fit what we use a product for anyway.

BlueFox

I doubt the phones only cost $10 to make (labor and parts). Anyway, the point is we need to know the per person productivity in making iPhones, etc. How much of the process is automated? Does it take 1 person to make 1 phone per day, or can one person make 10,000 phones per day.

I bet there is a high level of automation in the process, and Apple could pay $25/hour, and still make a profit. The whole point of using China is not to make a profit, but to extract every single penny of profit. If anyone does not know the Chinese worker, by and large, is not exploited then they have been living in a bubble. Of course, as an American worker I also am exploited, just not as bad as the Chinese worker.

inspiredsports

It's easy to make numbers mean whatever you want them to mean.

First, don't confuse profit with wages. "Profit" is what is left over, over and above wages and other costs.

You are correct that 2% (the stated Chinese wage percentage) of your assumed $500 value of an iPod is $10. However, you don't know exactly what the Chinese worker is doing for that $10 per iPod. Hand labor for all of the work would be tough, but if a lot of it is mechanized it may not be so bad.

The premise of the article you linked is that these jobs are not worthwhile to bring back to the US, but that's flawed also.

The actual cost of the factory is covered too, and factories pay property taxes and fees to thousands of outside vendors who build those factories and work to keep them functional. Also, if produced here, the wage percentage per unit would be higher, transportation costs lower, and Apple's profit margin lower. Unemployment payouts would also theroretically be lower as folks would be working for a wage rather than collecting a percentage of someone else's.

It a complicated argument, but I would rather have the production base here.



P.S.: Just read BlueFox's post as he was posting at the same time and agree with his similar points

Shizelbs

I wish I regularly made $10 when selling a $500 product.

Dennis Gardner

I decided to replace the broken front glass/lcd digitizer on my iPhone 4 myself to save some $$$. 5 hours later, I finished fumbling around with the 25 or so microscopic screws, ribbon connectors etc. I nearly had to call it a day from frustration alone. No amount of money could get me to do that type of assembly line work!!

I am a "big picture" kind of guy and am thankful each and every day that someone, somewhere busts their **** every day just so that I can have my goodies.......

Toolfan66

It cost me $80 to have my glass replaced at AT&T sounds like money well spent..

Dennis Gardner

Current chart of costs Of most recent iPhone:

From the article:http://news.cnet.com/8301-13506_3-20123112-17/iphone-4s-parts-cost-$188-study-finds/

Dennis Gardner

Toolfan66 wrote: »

It cost me $80 to have my glass replaced at AT&T sounds like money well spent..

I consider myself more tenacious than talented and I wasn't going to let a little thing like a tiny phone get the best of me, but I will pay someone else do it from now on.
It was one of those "How hard can it be?" moments.