The iPad mini’s gross margin is “significantly below” the rest of Apple’s product line at $329, Apple CFO Peter Oppenheimer said on the company’s conference call today. He said that’s driving lower guidance for the upcoming quarter despite a number of new products just-launched across its lineup of offerings.
“We’re unwilling to cut corners in delivering the best experiences in the world,” said Apple CEO Tim Cook. He stressed that the company is all about setting the bar high, perhaps implying that that’s what’s making gross margins slimmer on the iPad mini.
Oppenheimer added that the company hopes to improve margins with further supply chain and manufacturing process optimization as its production of the iPad mini continues to ramp up and become more efficient and cost-effective.
Launching the iPad mini required being “aggressive” on pricing according to Apple on the call, which is why the company chose to go below its ordinary margins. In past articles, I estimated that the bill-of-materials and construction costs might put the iPad mini within Apple’s existing range in terms of gross margins on hardware products, but it seems like the company’s unique design is keeping the iPad mini costs above the range I’d suggested.