yuryprokashev


Apples - The Blog of Apple Evangelist


Previous Entry Share
Apple's Anobit Deal is the Springboard to Educational Market
yuryprokashev
The main reason for Apple to buy Anobit is to reduce the flash costs. That's evident.

But together with special event for iBooks2, Anobit Deal means Apple treats educational market very seriously.

And common sense tells me Apple is going to introduce relatively cheaper iPad models with bigger storages this year.
This would be 64Gb model for $550-600.

Why do I think so?

If Apple want to enter the educational market, it has to give cheap, but high capacity version of iPad.
Apple would never open iPad for external flash drives, since it means very high security threat (there are much more viruses for Android than for iOS due to this fact as well).
So Apple has no other way, but to increase the internal flash capacity of the device.

But NAND flash costs are one of the showstoppers!

How to prove that?
Well, my iPad 2 has 32Gb.
It costs on Amazon about $550.
32Gb NAND Flash comes from Toshiba, says ifixit.com.
I asked myself: "What is the price of those 32Gb?"
I googled it by Toshiba model number, but failed to find any price on the market...
So I decided to estimate it based on the prices of the flash drives with similar capabilities, available on the market.

The price range for 32Gb flash on Amazon varies a lot.
You can find 32Gb for $44. Or you can find 32Gb for almost $200.
Capacity is the same. The difference is in the speed of reads and writes.

I have benchmarked my iPad 2 to check the read/ write speed of the device.
It gave me 184MB/s read speed and 31MB/s write speed.

One that fits more or less in this speed range is Transcend 32Gb Compact Flash Card 600x - 92MB/s read speed and 87MB/s write speed, says Amazon.
Consumer price of it is $152.

So, 32Gb flash price is about 25-27% of the price of my iPad.
For iPad 2 64Gb this is almost 29% ($199/ $690).

Well, real costs percentage could be quite different. :)

But Apple buys flash memory -> the % of margin on it should be lower than for own components.

So I can say, Apple's flash memory could have not less than 25% of overall iPad cost structure.

You can say this is pure speculation, even if it is based on common sense. Nothing more.
Well, you are right.

But there is an article here (iPad 2), and here (iPad 1) from which we get the following figures:
iPad 1 64Gb - about 33% flash ($118 out of $348)
iPad 2 32Gb - about 20% flash ($65 out of $323)
iPad 1 16Gb - about 11% flash ($29 out of $259)

As you see, flash costs portion increases drastically with the memory size.

So in this situation, imagine, you start marketing iPad for students by supporting mass production of gorgeous interactive textbooks.
Do you think students would buy 16Gb model for that?
One textbook about biology - Life on Earth - is 51 pages. 1Gb. Oops.
You can't expect them to buy 16Gb model. Nope.

32Gb is the bare minimum.
64Gb is more or less ok.
128Gb is quite good.

But what a cost would you have, if you just make 128Gb model of iPad?
I would add a hundred bucks on top of 64Gb model costs.
See?
$448 of cost. -> $1000 price.
Work for student among the plenty of Android tablets?
Nope.

By bringing Anobit, 64Gb flash costs could be reduced, say, twice as less as for iPad 1 = $59.
So Apple would have $323 costs to manufacture 64Gb model.
Which lead to quite competitive $550-600 price level.

Bundle "Acer Iconia Tab A500 32Gb + 32Gb microSD" would cost about $520 according to Amazon...

PS: I would also cut the costs of "student's iPad" by using old version of screen ($80 instead of $127), but I think Apple won't do that, since it could affect thickness of the device.



?

Log in