Why the iPad might not be a rip-off

Media beat-ups around the Apple iPad continue. This headline “Virtual teardown reveals great iPad rip-off” (see here) would be funny if it wasn’t so misguided.

The story claims the following:

– Apple is perhaps costing US$229.35 to produce (a ridiculously specific number for what is simply an estimate – here’s a breakdown of the component estimates)

– It is definitely selling for $US499

Ergo (in the reporter’s mind) Apple is ripping off Joe Consumer to the tune of $259.65 (that isn’t stated explicitly, but it is implied by the headline).

Of course, missing from the above maths are four pretty crucial elements:

– shipping and logistics costs

– the retail mark-up

– marketing costs

– development costs at Apple HQ

All of sudden, Apple doesn’t look quite so evil do they?

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