Apple’s $600 Mac Mini Costs Nearly $400 to Make, Says iSuppli

iSuppli’s latest teardown was of the Apple Mac Mini desktop computer.
Tearing down and tallying up the components of the tiny cube-which measures just 2 inches high by 6.5 inches long and wide, and has a retail starting price of $599-iSuppli determined it has a bill of materials of $376.20. That number jumps to $387.14 when manufacturing costs are tacked on.
Additionally, not included in the analysis, iSuppli points out in a statement on its findings, are the costs “above and beyond the material manufacturing of the core device itself-i.e., the cost of intellectual property, royalties and licensing fees-as well as those expenses not already included into the per component price, software, software loading and test, shipping, logistics marketing and other channel costs.”
Inside the Mac Mini, iSuppli found a 2GHz Intel Core 2 Duo P7350 microprocessor, which it estimates to cost $118.35. Other higher-priced components include an Nvidia GeForce 9400M graphics card and I/O controller hub, priced at $65.16; a Hitachi 120GB hard drive, for approximately $46; and a Pioneer DVD+R drive, for $32.
“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 of iSuppli, in a statement on the results.
While this enables Apple to achieve compact form factors and reduced energy consumption, Rassweiler continued, “the use of these components, along with other cost adders like software, yields a computer that is more expensive to make.”
Put another way, Ezra Gottheil, an analyst and Apple specialist with Technology Business Research, said that with a device like the Mac Mini, “the consumer gets the most bang for his buck.”
Gottheil said that from computers to cars, when a manufacturer offers a range of product options, from bare bones to decked-out, it makes the least money on its simplest offering.
“If you get a stripped-down model, you really are getting, in terms of the profit model, the best deal,” Gottheil told eWEEK.
“The perception is that Apples are way more expensive, but the components are considerably more expensive [than those in some other PCs]. For a straightforward-pardon the expression here-Apples to Apples comparison, if you go to vendors and order all the same components, you’re going to wind up at about that price.”
Gottheil estimates that in the fourth quarter of 2009, Apple made an approximately 36.4 percent gross profit, but-after research, marketing, advertising and the other costs that indirectly go into a device-that number is slimmed down to 20.4 percent.
“So basically, for a product like the Mini, they’re making $100,” Gottheil said.
The bottom line?
“It’s a very nice PC for the money,” said Gottheil, “but you have to want all the performance you get.”