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.

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Originally Posted by TheAnimus

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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For the record this isn't true (on the tf300 anyway). The built in file browser lets you copy files from an SD card/USB device straight on to the device. I know this as I copied photos from my cameras SD card onto the transformer on the first day I got it.

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Originally Posted by cheesemp

For the record this isn't true (on the tf300 anyway). The built in file browser lets you copy files from an SD card/USB device straight on to the device. I know this as I copied photos from my cameras SD card onto the transformer on the first day I got it.

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On a friends transformer prime, I couldn't copy from SD to USB.

I'm a programmer fluent in many languages, I've dabbled in BSD and Linux admin for a decade. This probably means the cable wasn't plugged in :D

But seriously, couldn't make the transofmer prime copy my photos.

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Originally Posted by kingpotnoodle

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.

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I'd suggest that you don't want the type cover. I think anyone who is looking to buy the type cover should consider instead the ultrabooks which are < £500.

The touch cover will let most touch typists get fairly good WPM, for anything else, a USB keyboard will be a much better solution. You can on this tablet use office all day, and addins/vba excluded, you wont need a PC, for anything, hell the printer will probably just work too. That is a very good feature!

I'd also question if you needed the 64gb unit, rather than just buy the 32GB with a microSD card for more space.

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Originally Posted by kingpotnoodle

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.

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The touch cover is simply brilliant compared to the Apple competitions cover, enough said, I've said it enough times.

The other things this BOM addition doesn't take in to account is not just the R&D but the cost of the case, no one knows how much the VaporMG technology has cost MS. In all honesty, if its a lot of money I'm not sure its worth it, but the fact Stefonsky used one as a skateboard shows how strong the device is. I'd have thought that just like regular magalloy, its much more expensive than allumium which is more expensive than most plastics. That will also add to the cost.

All this really tells you is that the guts of the device are cheap. Which is kinda to be expected for a tablet.

Animus, when you put an SD card into the SD slot on the surface, does it go all the way in or is it left 'hanging out' like in many laptops i have used recently?

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Originally Posted by TheAnimus

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

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Guess who didn't order enough stock ... shame on you Microsoft UK. When I checked earlier there was stock of the "lesser" model. And I saw the Surface in a Microsoft store when I was travelling - there was a second unit (with the keyboard) but you couldn't get near it without tear gas and riot sticks.

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Originally Posted by TheAnimus

(Don't agree with the use of "much" there - the Surface I looked at was nothing special quality wise) 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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I'll never, ever, ever believe that any version of IE will be better than the equivalent version of Chrome. And copy is dead easy - just use the standard file manager (although I'm guessing here that the Prime is kitted out the same as my elderly "original" Transformer).

Don't get me wrong, I'm fascinated by the Surface (and obviously grateful for the in-depth "review" your exaulted self did elsewhere on Hexus) and it's one of the two devices (the other being the Note 10) that could persuade me that the replacement to my Transformer won't be another Transformer. (I priced up an iPad equivalent to the Transformer and it worked out to be comparable to a discounted Ultrabook - not viable).

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Originally Posted by crossy

Guess who didn't order enough stock ... shame on you Microsoft UK. When I checked earlier there was stock of the "lesser" model. And I saw the Surface in a Microsoft store when I was travelling - there was a second unit (with the keyboard) but you couldn't get near it without tear gas and riot sticks.

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Yeah I don't know why they didn't, was it an attempt to not piss of OEMs or just a lack of confidence. Either way, it sucks.

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Originally Posted by crossy

I'll never, ever, ever believe that any version of IE will be better than the equivalent version of Chrome. And copy is dead easy - just use the standard file manager (although I'm guessing here that the Prime is kitted out the same as my elderly "original" Transformer).

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http://www.infoworld.com/t/microsoft...ro-ie10-196832
So since the summer basically, IE has been faster in a non-MS sponsered test. My 'subjective real world' tests show this.

However I just hate the UI on the desktop compared to chrome, oh that and flashblock+, how the hell one surfs the web with flash on by default I don't know.

As for the copy, the issue is I just couldn't find the mount for my camera. I don't think it was mounting properly at all. Sadly my friends device wasn't rooted, and I didn't have time to learn what I could see without the tools I know at my disposal! But there is no way my mum could have used it.

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Originally Posted by crossy

Don't get me wrong, I'm fascinated by the Surface (and obviously grateful for the in-depth "review" your exaulted self did elsewhere on Hexus) and it's one of the two devices (the other being the Note 10) that could persuade me that the replacement to my Transformer won't be another Transformer. (I priced up an iPad equivalent to the Transformer and it worked out to be comparable to a discounted Ultrabook - not viable).

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I think the issue is why not buy an ultrabook, the fact there are some already under £500, really does make it a harder sell, you have to want the fondlejab functionality, and accept the lack of x86 apps.

However the device is just damned nippy, I think if you tried IE10 in Metro you'd be suprised.

It's not without its bugs, but slow its certainly not.

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Originally Posted by TheAnimus

I think the issue is why not buy an ultrabook, the fact there are some already under £500, really does make it a harder sell, you have to want the fondlejab functionality, and accept the lack of x86 apps.

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It's an interesting point - but then I paid close to that for an iPad which doesn't have office, x86 or a decent keyboard (the software one is crap too). I'm either fascinated by Apple logos (nope) or I did want that fondlejab functionality..

It is odd, but there is something about the whole fondle jab thing which is great. I'll be honest, I found the transformer prime didn't please me in UI, web browsing or games. The nexus 7 only really pleased me on the form factor, almost all the Apps I tried felt like 0.8 betas.

An example is Reddit Hub on windows 8 is already better than anything I found on Andriod for simplicity and dare i say it enjoyment. It also shows how crap the reddit website is, but we know that already.

the succsess of the iPad was due to 3rd party apps. The design guidelines for WinRT are good for Jabscreen interface.

I can really see the appeal of the JabbityTap as I think the surface should now be called. I'm probably going to take it, and not my considerably more expensive ultrabook to an important meeting I have tomorrow. As shockingly all I'll need is Powerpoint, Excel and Word (in that order!) and hell, it might even be one note rather than word. But sadly they haven't shown any sign of the digitiser (http://www.slashgear.com/microsoft-s...port-18234493/) yet.

70% of the time, it will be sans cover, just using it as a pure tablet. Then any changes we make I can take down fast enough on the touch cover keyboard.

I think the design of a full slate is just easier for sharing and collaborating, the viewing angles on the surface lend it to this far better than the viewing angles on my 9 series ultrabook. The downside is the glossy screen (yuck. only the devil and high end apple laptops see fit to use such things).

Microsoft went with quality components and priced high as a reference platform,
leaving OEMs to produce a cheaper surface and fight to the bottom price-wise.

ARM tablets start at £50, and iOS/Android/WinRt are all "just" software
- what's to stop someone (Dell / HP / Nokia best suspects?) slapping WinRT on a cheap £200 ARM tablet ?

Though I see Asus and Lenovo have surfacRT tablets priced higher than microsoft ...bizarre.

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Originally Posted by mikerr

- what's to stop someone (Dell / HP / Nokia best suspects?) slapping WinRT on a cheap £200 ARM tablet ?

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The license fee.

MS don't want WinRT loosing them money that would otherwise have been earnt via sales of Office.

Myself I think microsoft should offer WinRT without Office, for a very low fee. Then sell Office, heck maybe peacemeal via the Store.

That would allow < £200 tablets quite happily, which people could then license office seperately. £200 machines that when put with a £80 tft + keyboard + mouse become everything most office drones need, whilst using less electricity. Yup I'd see the appeal for that. imagine kitting out an office with £200 all in ones. You could have 5 spares easily.

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Originally Posted by mikerr

- what's to stop someone (Dell / HP / Nokia best suspects?) slapping WinRT on a cheap £200 ARM tablet ?

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Nokia have already said they're not interested (at the moment?) in doing tablets - given their relatively precarious state I can understand their position.

Dell also have been quoted as saying that they've got the XPS 10 and that's it for WinRT (although $499 list surely makes it more expensive than the Surface)

HP have already been widely quoted as saying that RT doesn't interest them - they much prefer full fat Windows (as do quite a lot of Hexus readers apparently). The Envy x2, while being a cracking box, is just too pricey for my meager pocket. :'( But even if HP did do an 'RT box you'd surely be talking about the same kind of costs as the XPS 10. And the further problem with that is that once you've added the keyboard in, the resulting cost isn't a mile away from a "proper" Windows 8 system which is obviously going to be a heck of a lot more flexible in the long run.

I think WinRT is a hard sell because of the lack of apps - that will change (probably rapidly) though. I put myself down for just the pro some time back but the more I read about the Surface the more I wonder if it might actually be a better bet than my iPad (after all the iPad is even less compatible). There's still going to be a sizeable gap between RT devices and Pro ones price wise and not everyone will pay 700quid for a tablet. To me the Surface RT is the same sort of prices as an iPad but with office, a keyboard (I hate my ipad's kb) and lots of device support.