Microsoft and Apple are garnering the highest profit margins for their tablets, followed by Google and then Amazon, according to research firm IHS. Microsoft Corp’s first self-made tablet, the Surface, went on sale Oct 26 priced resonably, for a profit margin of around 46 percent. Surface comes with a 10.6-inch screen measured diagonally, and can access the Internet only through Wi-Fi. The price for its base model with 32 gigabytes of memory is more.
With a similar configuration, the Surface bakes in slightly more profit for Microsoft than Apple Inc. did when it released its third-generation iPad in March. Apple’s third-generation Wi-Fi-only iPad with 32GB of memory and a 9.7-inch screen cost more. A preliminary analysis of the fourth-generation iPad, which comes with a faster processor and went on sale Friday, costs more in parts and labor for the 32GB Wi-Fi-only model, for a 49 percent margin, estimates IHS analyst Andrew Rassweiler.
IHS’ analysis excludes costs for marketing, sales or operating system-software, which Microsoft has been touting with its device. The research firm obtains the devices independently and breaks them apart to estimate the cost of the components. The analysis suggests Microsoft is imputing a cost for its latest operating system, the slimmed-down Windows RT, which debuted last month. It also needs to price its flagship tablet high enough so that manufacturing partners like Dell and Lenovo can compete even after paying Microsoft for the operating system.
Apple is maintaining premium pricing as the market leader. Among smaller-sized tablets, the iPad Mini that went on sale on Friday boasts a 7.9-inch screen measured diagonally and costs $198 for parts and labor. This 16GB model has a retail price tag, for a profit margin of 40 percent. The 7-inch offering from Google Inc., the Nexus 7, for its 8GB model and sells for much cheaper, according to IHS. That’s a profit margin of 20 percent. Google makes a little more on its 16GB model.
Amazon.com Inc. spends about less make its 7-inch Kindle Fire HD with 16GB of memory and sells it around the same as Nexus, for a profit margin of 13 percent. That’s better than the original Kindle Fire, a money -loser that, on launch, cost Amazon around the same price in its range. Google is aiming to both make a profit and broaden the reach of its Android operating system, while Amazon is looking to make up the profit gap when customers buy movies, books and magazines from its store. “Amazon and Google want to put tablets in consumers’ hands – even if it means doing so at a minimal hardware profit,” Rassweiler said in a statement.
Meanwhile, a federal judge on Monday tossed out an Apple lawsuit accusing Google-owned Motorola Mobility of trying to charge the iPhone maker too much for licenses to essential technology for mobile devices. US District Court Judge Barbara Crabb dismissed the case after a week of pre-trial legal wrangling that evidently convinced her that the matter was headed for prolonged litigation instead of earnest resolution.
Apple filed suit against Motorola Mobility early last year after Motorola claimed it was due 2.25 percent royalty on sales of devices powered by iOS software, using patented Wi-Fi and video technology. Apple argued that the price was too high because the technology was in a category considered industry-essential and therefore had to be licensed under terms that are “fair, reasonable, and nondiscriminatory” (FRAND).
Crabb sided with Apple regarding the FRAND status of the Motorola technology but dismissed the case on Monday, when the trial was to begin, after Apple placed conditions on whether it would accept license terms set by the judge. “The case cannot proceed to trial on the remaining issue; case dismissed,” Crabb wrote in her ruling. Apple can appeal the judge’s decision. Motorola Mobility said in a statement, “”We’re pleased that the court has dismissed Apple’s lawsuit with prejudice. Motorola has long offered licensing to our extensive standards-essential patent portfolio at a reasonable and non-discriminatory rate in line with industry standards. We remain interested in reaching an agreement with Apple.” Apple did not respond to an AFP request for comment. – Agencies
