Seeking Alpha

Apple roundup: 12.9" iPad, Air margins, Deutsche's checks, sapphire

  • Chinese site PadNews has joined a growing list of sources (previous) reporting a bigger iPad (AAPL -0.3%) is on the way. The site reports (translation) Foxconn is testing a 12.9" iPad, and that the tablet will launch in March '14.
  • The fact Apple chose to name its 5th-gen 9.7" iPad the iPad Air has already fueled speculation a larger "iPad Pro" is on tap.
  • After tearing down the 4G and Wi-Fi-only iPad Air units, IHS thinks the tablets carry higher margins than older iPads did at launch time. IHS estimates the cheapest Air model (16GB Wi-Fi-only, sells for $499) costs $274 to make, and thus has a 45% gross margin. The most costly model (128GB 4G, sells for $929) is believed to cost $361 to make, giving it a 61% gross margin. For reference, Apple is guiding for a total Dec. quarter gross margin of 36.5%-37.5%.
  • Deutsche's checks indicate channel supplies for the Air are healthy, save for the 128GB model; stronger demand for high-capacity models boosts margins/ASPs. The firm also reports iPhone 5S demand is outpacing supply in all of its carrier, online, and retail checks. Lead times remain high for gold 5S units.
  • Speculation is swirling about what Apple plans to do with the sapphire GT Advanced will be producing for the company at a Mesa, AZ plant to be built by Apple. Those who think the material will be used to cover iPhone/iPad displays point to the fact Apple has mulled using sapphire for this purpose before, but held off because the material couldn't be produced in sufficient volumes. Others think sapphire will only be used in an iWatch for now, given its high costs and the huge volumes needed to handle iPhone/iPad production needs.
  • Previous: iPad Air activation/usage data; 5S/5C production changes
Comments (13)
  • First the hiring Of jewelry designer Yves st Laurent then the high end retail lady Ahrendts from Burberry , and with Jony in the lead and now them sinking 542 million into a manufacturing plant in Arizona for Garnet glass..something is def cooking....and it.surely Is not going to be a cheap piece of plastic ....
    5 Nov 2013, 01:00 PM Reply Like
  • I reiterate my suggestion that they make a limited-edition iPhoneG with a REAL gold casing, same guts, to retail for several thousand dollars.

     

    "The last iPhone that you will ever have to show to your friends"
    5 Nov 2013, 02:11 PM Reply Like
  • Scott trader
    I agree. Angela Ahrendts is leaving a job paying $27M a year, the highest paid executive in the UK. They are not wooing her, to simple oversee, what are already the most successful retail spaces. Apple are an experience company. Check out the Burberry flagship store in London video on their website. The blending of design and technology is extraordinary. If I was in London, I would want to visit the store. It also only took her 3 months as CEO to open their online store which has become a cash cow.

     

    http://bit.ly/1egPkGh

     

    The names you mention, are all involved in design and customer experience. Lots of companies make chairs, for example, but not all chairs making sitting a special experience. The quality of the materials is important but not nearly as important as the design. Design draws you in and makes you want to be part of the experience of use. Apple more than anyone know this. Large numbers of their patents reflect it. It is their moat, they are the best experience design company in their niche.

     

    Their stores should become icons to possibility for retail. They can showcase pinpoint in-store navigation and iBeacon interaction. Rich interactive technology for customers to learn about products. In essence a store you want to visit, because of the experience that flows from design.
    5 Nov 2013, 02:31 PM Reply Like
  • Just looked at the website it is very good.
    5 Nov 2013, 03:32 PM Reply Like
  • Technology and fashion and great display all integrated...Thanx for link upscale or what...
    6 Nov 2013, 09:37 PM Reply Like
  • whao. That is truely impressive. I do go to London, and will visit it next time. thanks.
    7 Nov 2013, 03:52 AM Reply Like
  • Can they really get it built in time to produce sapphire in quantity for the watch in Q4?
    5 Nov 2013, 02:36 PM Reply Like
  • Will someone explain why she is not coming to Apple for about six months!
    5 Nov 2013, 02:39 PM Reply Like
  • She's under contract..
    5 Nov 2013, 05:30 PM Reply Like
  • Power efficiency pays dividend for Apple on iPads, they can decrease size of battery that brings costs down and keep same usage time
    5 Nov 2013, 04:33 PM Reply Like
  • In my dreams, Apple does SoS (silicon on sapphire) at 7nm. heh-heh!
    5 Nov 2013, 10:15 PM Reply Like
  • Why does Apple stocks continue downward? All positive reports in earnings and product lines. I am incredulous!!!!!
    6 Nov 2013, 01:30 PM Reply Like
  • @jen the market punishes AAPL, as it is not a momentum darling of the market trade i.e. not NFLX, AMZN, etc. It makes real products, and real money day in and day out, with high margins, and keeps it's religiously faithful customers and fan base happy.

     

    The great fear the market has is that this is not sustainable, and each new release is treated with scepticism. It is hard for the general trader to believe that SNE or Samsung, or Goog or Lenovo or whoever will not simply take their market share from them.

     

    However, as is detailed in some of the comments above, with Apple it's about innovation, design, and experience. This is fueled by the people at Apple, like J Ives and his teams for example. Now, they are adding to this team with the very best proven world class people who have delivered at places like Burberry and YSL. Don't forget Burberry in the UK had been adopted by our urban 'chavs' and was in danger of going under as a premium brand, so the job done there has been stellar.
    Therefore, I and many others, have faith that this world beating team at Apple will continue to deliver, and will continue to surprise to the upside.

     

    Lastly, AAPL is being punished for having raced to $700 to early and too quick, before falling, or, as I would see it, re tracing. The next run to $700 will be slower and more measured...but it will surely come.
    'The market is a voting machine in the short term, but in the long term it is a weighing machine'
    7 Nov 2013, 04:01 AM Reply Like
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