News - Teardown roundup! Microsoft Surface, iPad mini, Kindle Fire HD

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What is the cost of making these new tablets? Who is making the most profit?

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Read more.

Thanks for this, it's a really interesting article. Spot the loss leader, the mature device with next to no RnD cost and the brand spanking new one with software and RnD costs to pay for. Still think it was risky of MS to go in so high, but I'm still getting one! :)

Looks like Microsoft are market skimming with a comfortable margin for spring sale discounts. Not that I'm interested :)

Yeah definitely room to budge on the Surface price. IF it proves to be successful and the price drops perhaps i would consider it... dont know what i would use it for though.

There is always the assembly costs (labour) to consider in the price.

The other issue is the price of the surface is going to be more complex.

I've already suggested in other threads that for plenty of SMEs a surface is all thats needed really, as it has 'enough' of MS office to get by, those that don't use macros have all they need. That is a large chunk of the business market.

So they don't want to effect desktop hardware license sales, which they could if they are not careful. I'd rather have 20 Windows RT devices for the HR/Admin staff than something more able to go wrong.

They also have their hardware partners, some of whom are already pissed off with MS.

So they have to walk a fine line, they want to grow market share which means low price, but don't have the market share that Google do, which means they can piss off their OEMs.

Also when compared to an iPad Mini, you have to remember that iWorks is $30 and is utter crap. So the margin of bundling included in price really should be taken more in to account. As would tooling / assembly.

As such I'd be very suprised if we ever saw MS drop $100 in price on this model. Thou who knows what will happen if they don't get the share they want of the market.

Interesting to see. While BOM isn't representative of the total cost to bring a product to market, Microsoft clearly have room to manoeuvre on price should market conditions change. At the moment, Surface is priced to allow OEMs to compete. Should Amazon and Google succeed in changing the dynamics of the market, making it impossible for OEMs to compete, the Surface's price can certainly drop a long way.

Sale Price - BOM != Profit

Firstly the wholesale price the companies are paying for the components is also probably only estimated and more numerous devices creating larger orders might well reduce per component cost. The BOM doesn't cover packaging, assembly, transport, marketing, warranty cover etc etc

The Surface is a new product, all R&D costs concentrated into one item and that price as stated doesn't include the software etc. I still think $499 is a good price for the tablet part considering how much more actually useful it is than iTat, the price/benefit ratio about right if you do use Office etc but cheap Android tablets have the price/benefit spot on if you just want to watch things or finger Facebook a bit.

MS are definitely price gouging on the keyboards though, touch should be $30 max, maybe $40-45 for the type cover at most. Probably the biggest reason I doubt I'll buy the Surface is that I would want the type cover but the price is a joke. If MS had included at least the touch cover in the standard price and small fee to upgrade to type then they would have had a real winner on their hands IMHO.

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Originally Posted by kingpotnoodle

MS are definitely price gouging on the keyboards though, touch should be $30 max, maybe $40-45 for the type cover at most. Probably the biggest reason I doubt I'll buy the Surface is that I would want the type cover but the price is a joke. If MS had included at least the touch cover in the standard price and small fee to upgrade to type then they would have had a real winner on their hands IMHO.

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Given that apple charge £40 in the UK for a synthetic cover with a couple of magnets in, I think charging £80 when you buy the device is resonable compared to the competition.

Plus the cover is a bloody impressive bit of kit, nifty and it took barely 2 minuites before I was typing rather fast on it. It puts all of the keyboard ipad solutions to shame.

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Originally Posted by TheAnimus

Given that apple charge £40 in the UK for a synthetic cover with a couple of magnets in, I think charging £80 when you buy the device is resonable compared to the competition.

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Given that I got a transformer tablet with detachable proper keyboard for £379 all in i'll have to disagree with you i'm afraid - I think its a bit of a rip off.

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There’s less Samsung in the iPad than there used to be IHS and AllThingsD point out. The screen is made by either LG Display or AU Optronics. Samsung is only supplying the processor now, it used to supply a lot more bits and bobs before the AppSung feud.

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According to iFixit's teardown of the Mini, Samsung display panels are still being included in the mix.

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Originally Posted by kingpotnoodle

Sale Price - BOM != Profit

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Nobody is suggesting it is. It simply gets you in the ballpark.

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Originally Posted by cheesemp

Given that I got a transformer tablet with detachable proper keyboard for £379 all in i'll have to disagree with you i'm afraid - I think its a bit of a rip off.

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I think the £120 they charge for a detachable propper keyboard is a complete and utter rip off.

But I think a lot more R&D went in to the touch keyboard.

The build quality and performance of the surface is also much better than the transformer prime I found too.

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Originally Posted by TheAnimus

I think the £120 they charge for a detachable propper keyboard is a complete and utter rip off.

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The cost of the Asus keyboard IS expensive, but then again you're perhaps comparing apples and oranges, since the Surface's cover/keyboard is just that whereas the Asus keyboard also has ports and that large battery. I've got a teardown somewhere around that estimates the battery alone at £50-60 retail, in which case the Asus price isn't that excessive at all.

In addition I was talking to a staff person in a PC World and they told me that they sold precious few keyboard-less Transformers because most consumers (rightly so) wanted the flexibility of having that battery and ports. Which would explain why keyboard-less Transformers turned up at a local tech "bucket shop".

Similarly it's interesting to see that Microsoft's site seems to have no stock of the plain Surface, but will happily sell you one with the cover/keyboard - probably quite sensible given the comments from various folks (including your esteemed self).

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Originally Posted by TheAnimus

But I think a lot more R&D went in to the touch keyboard.

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Than the Transformer's dock? How? Surely it's "just" a membrane keyboard - in which case it's not exactly novel.

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Originally Posted by TheAnimus

The build quality and performance of the surface is also much better than the transformer prime I found too.

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Don't agree with the use of "much" there - the Surface I looked at was nothing special quality wise.

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Originally Posted by crossy

The cost of the Asus keyboard IS expensive, but then again you're perhaps comparing apples and oranges, since the Surface's cover/keyboard is just that whereas the Asus keyboard also has ports and that large battery. I've got a teardown somewhere around that estimates the battery alone at £50-60 retail, in which case the Asus price isn't that excessive at all.

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You miss understand me, that was the surface pricing. The laptop esc standard keyboard is damned expensive.

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Originally Posted by crossy

Similarly it's interesting to see that Microsoft's site seems to have no stock of the plain Surface, but will happily sell you one with the cover/keyboard - probably quite sensible given the comments from various folks (including your esteemed self).

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Its only the 64gb which is instock apparently, that is bundled with the touch cover.

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Originally Posted by crossy

Than the Transformer's dock? How? Surely it's "just" a membrane keyboard - in which case it's not exactly novel.

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It is a lot, lot more than that, its a dynamic pressure sensor array, which relies on many factors such as angle, where your other fingers are etc. It's not membrain keyboard at all, very different tech. It's been packaged in some very curious fabric, I can't think of a more technical term than that.

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Originally Posted by crossy

Don't agree with the use of "much" there - the Surface I looked at was nothing special quality wise.

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Where was it you saw it? I'm amazed they didn't have the touch cover on it, which is why I'm surprised you didn't notice my above comments on it.

Yes £80 is a lot, so is £100 if you don't buy it together. But compared to the £40 for a 'dumb' apple cover, its not bad value.

The type cover is however, incredibly bad value.

Compared to the Transformer Prime I've used the surface is a lot faster, much better web browser, drum roll - office. Something like copy memory card to HDD is possible, couldn't on the prime. (Probably could with internet access to get a howto/download an appp)

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Originally Posted by aidanjt

Nobody is suggesting it is. It simply gets you in the ballpark.

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I disagree I think its incredibly misleading and disregards many significant intangible costs. Plenty of companies selling their gear above BOM cost but losing money...

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Originally Posted by TheAnimus

Yes £80 is a lot, so is £100 if you don't buy it together. But compared to the £40 for a 'dumb' apple cover, its not bad value.

The type cover is however, incredibly bad value.

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Oh the type cover is the worst value of the two definitely, it's nothing new at all. It's the one I'd want though (with 64GB unit) and it's made the overall package just to expensive for me to consider it worth it, I'd rather top up and go Ultrabook, for that money I want a bit more oomph than a Tegra and 2GB.

A type cover of some sort is really needed to make the most of the features of the Surface (Office etc) so I think one should have been included or sold much cheaper. The stupidest thing of all is that I don't seem to be able to buy the 64GB WITHOUT touch cover, or upgrade to the type one at checkout for extra £... you have to buy the unit and both covers... for grand total of £668.99!!

The dumb Apple cover is a joke as well especially as the quality is poor, the Mrs had one (definitely genuine as bought from an Apple Store) which started to show dark marks on it where the magnets or something were. That should be bloomin included with any iPad as well as its such a big part of the marketing and features and necessary to protect the screen.