The premium pricing of Apple's Mac Mini desktop is due to its laptop lineage, according to a teardown analysis by iSuppli.
Apple Mac Mini
(Credit: Apple)Though probably not a surprise to Mac Mini connoisseurs, the diminutive desktop bears higher component costs due to its use of parts designed for mobile PCs, iSuppli said in a report released Friday. In short, inside the Mini is a virtual laptop.
The entry-level version of the new-generation Mac Mini carries a bill of materials (BOM) of $376.20, which increases to $387.14 when manufacturing costs are added, iSuppli said. The low-end model in the Mac Mini lineup is priced at $599, "reflecting the relatively thin BOM/manufacturing margins" of Apple's PCs in relation to its lower-cost consumer items, specifically the iPod line, according to iSuppli.
"Unlike most desktop computers from other brands, the Mac Mini and, indeed, Apple's entire Mac line make extensive use of components designed for notebook computers," said Andrew Rassweiler, director and principal analyst for iSuppli. "Apple knows how to make computers better, smaller, and more attractive," he said. "Such an achievement, however, comes at a premium."
This sentiment is echoed in a CNET Reviews write-up of the Mac Mini. "While we're still impressed with the Mac Mini's ability to pack so much into a tight package, Apple can't get away from its PC competitors that offer more features for less money," CNET Reviews said.
That said, mobile components abound. ... Read More
Apple has cut its 2008 flash memory orders by $200 million, according to iSuppli, setting up a down year for flash vendors.
In February, iSuppli reported that Apple was slashing its orders of flash memory amid a weakening economy, but iSuppli wasn't sure exactly how far the cuts would go. After crunching the numbers, iSuppli now expects Apple to spend $1.4 billion on flash this year for iPods and iPhones, up 12 percent from $1.2 billion last year. But the analyst firm, and the flash memory industry, had been expecting much more purchasing out of Apple, at least $1.6 billion.
The overall flash memory market is in turmoil, as overcapacity and slowing demand come together at the worst possible time. Plunging flash memory prices are expected to dent Intel's first quarter, among other companies likely to be affected. iSuppli projects that the entire market will grow just 9 percent this year to $13.9 billion, down from previous expectations of 27 percent growth to $17.9 billion.
Last month, Digitimes reported that Apple had yet to make a significant flash memory purchase in 2008, as it worked down through their existing inventory.
Correction, February 22: This story misidentified how much iSuppli expects Apple to spend on flash memory this year. The company doesn't yet have a revised estimate for how much Apple expects to spend, and won't until more information becomes available.
Apple is reportedly cutting its flash memory orders for the year, in another sign it's worried about the economy.
iSuppli reported Wednesday that Apple has started informing its flash memory suppliers that it's planning to use less flash memory in 2008. Apple's still planning to purchase 27 percent more flash memory this year than last year, but iSuppli and Apple's suppliers had expected an increase of more like 32 percent. Update February 22: This was an error on my part. The 27 percent increase in flash memory spending in 2008 was iSuppli's previous expectation for the global market, not the revised expectation for Apple's spending. Right now, iSuppli doesn't have an estimate of how much Apple plans to spend on flash memory this year, and won't until more data becomes available.
If people hold off on buying iPods this year, Apple's flash memory purchases will have to slow.
(Credit: Apple)Apple is the third largest buyer of flash memory among companies that manufacture their own products, according to iSuppli. If Apple coughs, the flash memory market gets sick. Several suppliers are expected to record a loss during the first quarter as the slower purchases coincide with a rise in spending on equipment.
Despite posting solid financial results in January, Apple's iPod shipments in the fourth quarter of the calendar year were below expectations. The company said it's shipping more of the higher-priced iPods like the iPod Touch these days, as opposed to the low-end iPod Shuffles, which makes sense since iPod revenue growth for the quarter was actually quite strong.
As that transition takes place, however, the unit growth of the iPod juggernaut might slow. This situation isn't the end of the world--lots of companies would be willing to trade places--but after almost five years of breakaway growth, Apple's rocket ship might be slowing down as consumers start worrying more about the mortgages and jobs as opposed to their digital music collections.
The company is notorious for giving financial analysts guidance below their expectations for an upcoming quarter, but in January it delivered earnings guidance that was 15 percent below analyst estimates, compared to an average guidance of 7 percent lower than expectations over the last seven quarters. Apple's stock went into a tailspin the next day, plunging 10 percent, and it has yet to recover along with the rest of the market.
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