> Apple’s ([AAPL](http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=AAPL)) iPad tablet computer, introduced Jan. 27, may have component costs of as little as $219.35, according to a preliminary estimate by market research firm iSuppli. > > Materials for the iPad, due to go on sale in March and April, include a multitouch-screen display that may cost about $80 and a $17 processor designed by Apple and manufactured by Samsung, according to El Segundo (Calif.)-based iSuppli. > > Even the lowest-priced iPad, with 16 gigabytes of memory and a retail price of $499, may be beyond the reach of some budget-conscious consumers, analysts have said. The relatively low price of the iPad’s materials gives Apple scope to reduce the retail price over time, iSuppli analyst Francis Sideco says. > > “There’s certainly a decent amount of headroom in there,” Sideco says. “If they had to reduce the retail price, they certainly could.” So the article starts off suggesting that the component costs for the iPad MAY be as little as $219. And that leads iSuppli to conclude that Apple CERTAINLY COULD reduce the price.

For starters, it’s important to note here that this is iSuppli’s “preliminary estimate” of component costs. In other words, they’re pulling numbers directly out of their asses, because they don’t have an iPad to analyze. For all they know, the iPad’s inside is made of pure gold. But that’s not going to stop them from putting a hard number on the cost of the product to Apple.

They’re literally playing a guessing game, and Business Week is publishing it as if it were real evidence.

Take the A4 processor, as just one example. iSuppli puts a price of $17 on that. Why? Because $17 sounds reasonable. The processor in the iPhone 3Gs is $14.46, which we know, because we can buy one from Samsung. So the A4 is probably just a little more expensive, right? Who knows?

Here’s an experiment. I’m going to give you $17, and you’re going to make a processor with it. You’re not going to buy one from someone, you’re going to design one of your own, as Apple did with the A4.

Done yet? No? Here’s a hint to get you started:

First, you’ll need the $278 million dollars Apple spent to buy PA Semi conductor. Then, you’re going to need to pay the six-figure salary of everyone you keep on that team for two years while they develop you a new processor. Pay them medical benefits, vacation time, etc. Pay the software developers who are going to work closely with the hardware team to make sure the thing is nice an optimized, and so on.

There’s a bit of overhead involved, you know?

At the end of the day, you may be able to make your SECOND chip for $17, but the first one is going to cost you hundreds of millions.

Even after iSuppli gets a real iPad and examines its components, and even if that raw estimate of component costs were relatively accurate (the preliminary one is pure speculation), there are a ton of other costs that go into any kind of business. You can’t continue to operate if you can’t turn a profit of some kind. Which means you have to charge significantly more for a product than what it costs you to make one.

The design, the testing, the software developers, the box, the labor for assembly, shipping, advertising, the receptionist at the front desk—these things cost real money, and they have to be factored into the purchase price.

What iSuppli is suggesting here is that Apple is being greedy, overcharging once again for their products. That’s an easy story to sell, because it fits in nicely with people’s pre-conceived notions about Apple as a brand. But that doesn’t make it true.

Business Week should know better, and it should have more respect for the intelligence of its readers.

> Actually, multitasking is essential to one of the major features that Apple has been touting on the iPad: [iWork](http://www.macworld.com/article/146274/2010/02/ipad_multitasking.html?lsrc=rss_main/article/145941/2010/01/iwork_ipad.html). Imagine trying to make a Keynote presentation without being able to access other files or being able to check on the Internet for data, citations or other information. Sure, there is reported to be a shared folder on the iPad, which all applications will be able to access. So you can stick your text files, graphics, videos and music files there if you already know you want to use them for a presentation, Pages document, or Numbers spreadsheet. But if you’re like most people, you don’t plan out every step of your documents ahead of time; you build them up as you go along. If you have to quit, say, Keynote every time you need to check something on the web or copy some data from a Numbers spreadsheet, you’ll be spending a lot of time switching apps and not much time producing. Here’s another article that misses the boat on multitasking and the iPad.

I think what’s got all these tech writers in a tizzy is that they keep thinking that the iPad is a variation of a laptop, rather than a new approach to computing. Their premise is that the way we currently do things on laptops and desktops is great, and if the iPad doesn’t do them the same way, it fails.

I think Apple rejects that premise.

The example above that Kirk McElhearn gives in this Macuser article wasn’t very well thought out. He makes the assumption that quitting Keynote on the iPad and then having to restart it is similar to doing the same on a Mac—it isn’t. Starting a Mac app takes anywhere from five seconds to a minute (if you’re running something like Photoshop). On the iPad, it takes a second or two, tops. Mac programs often start with a blank screen or blank document when quit and reopened. iPad apps remember where they were when they were quit, and relaunch in exactly the same place in the last opened document.

So, really, quitting Keynote by hitting the home key, researching something in Safari, copying some text or images, then hitting home, then relaunching Keynote to paste in that information is a lot more like hitting Command+Tab to switch to Safari, researching, copying, and then Command+Tab to switch back to Keynote for the paste.

Don’t think of it as quitting and restarting. Think of it as app switching.

Kirk even paraphrases Rob Griffiths, who has suggested that iPad needs some sort of Exposé-style app switcher. How would some convoluted, system-wide finger gesture be easier or better than hitting home and then hitting the app you want? iPad already has an app switcher; it’s the home key.

Right now, I’m typing this article in Safari on my Mac. Photoshop is running in the background, just sitting there. From a desktop perspective, this doesn’t hurt me, because later I will need Photoshop to edit some photos. But from a resource efficiency standpoint, it’s tremendously wasteful.

If Photoshop would relaunch instantly and open the same image I have open now the next time I launched it, I’d gladly quit it. But I don’t want to lose that minute waiting for the relaunch, so I leave it running for no reason all day long. This isn’t a problem on the iPad.

No matter how many windows I open up on my desktop, I’m only focusing on one at a time. The idea that humans are capable of doing two things at once with any efficiency is a myth. In fact, studies are demonstrating that not only can we not focus on more than one thing at a time, but trying to do so actually has adverse effects on our ability to concentrate.

http://news.stanford.edu/news/2009/august24/multitask-research-study-082409.html

Tech writers like McElhearn are making the assumption that everyone knows and likes the desktop OS experience as it is. They don’t. Having multiple apps and multiple windows open actually confuses the average user. Many have no idea that several apps are still running after they close out their documents. And many of us who do understand that we’re wasting precious processor power and battery life are tired of having to police our resources manually.

If you want to have a discussion about Background processes, that’s an entirely different subject. There’s a real debate to be had about whether or not App Store apps should be able to run some processes in the background. And Push Notifications need a rethink, as well.

I’m also not suggesting that some other approach to app switching won’t eventually prove a better way than the current system Apple employs in the the iPhone OS.

But iPad doesn’t really have a multitasking problem.

> Apple intends to stay “nimble” on pricing of the iPad, possibly lowering prices if the newly unveiled tablet device fails to gain traction among consumers. Here’s another one of those articles that only serves to set people up for disappointment.

Before iPad was introduced, the most common price point people floated around the rumor mill was $1,000. That’s what people expected from Apple, considering its long history of pricing a bit on the high side for better products.

So when Steve Jobs dropped the bomb of $499 as a starting price, the world should have been sufficiently shocked and awed. Here was Apple, undercutting everyone’s price expectation on a new gadget by a rather significant margin. Cue the earthquakes, the locusts, etc. The world was coming to an end.

Instead, we get the Wall Street Journal, using a recent quote from an unnamed Apple exec at an analyst meeting to suggest that Apple will reduce the price on iPad before long.

Just like the “iPad will grow a camera before launch”, this rumor feeds into the Apple crowd very easily. After all, we all remember the iPhone started at $600, and that price was dropped significantly a few months later. Surely, Apple will do exactly the same thing again with iPad?

Well, probably not. At least not for the $499 version. Most experts agree that $499 is pretty aggressive for what iPad is. If Apple is overcharging for anything, it’s the $130 for the 3G option, which I’m guessing is Apple’s way of gauging interest in 3G for this kind of device.

Remember, this is a totally new market that no one knows much about. What features get included or not, or how important individual features will be to potential buyers is anyone’s guess. Apple needs to keep some flexibility as it gathers sales data in the first few quarters.

If the majority of people end up willing to spend that much more just to get 3G (I’m guessing they won’t), then Apple can reconsider how much to charge for the 3G chip. They would probably consider just consolidating the line and giving all iPads 3G by default, if it proved overwhelmingly popular. This is how WiFi slowly made its way to becoming a default feature in Apple’s laptops. Or they could drop 3G on all but the highest-priced model, if it proved to be not very popular.

This is what Apple execs most likely meant by “being nimble” on pricing.

The situation with the iPhone was very different. Apple was basically charging full price in a market that was used to getting phones for next to nothing, thanks to subsidies. Apple eventually had to cave and go with the standard subsidized pricing model, which left us all slaves to AT&T, which is now the only complaint people have about the iPhone. I seriously doubt that Apple wants to put iPad in the same boat.

So $499 as a base price will probably stay pretty steady for a while. The top of the line iPad could end up being cheaper in the long run. Instead of $829, it could be maybe $700. But don’t expect the entry-level to drop below the cost of an iPod Touch. That wouldn’t make much sense.

> The survey results suggest consumers may not see how the iPad would fit into their lives. While 5 percent said they “definitely” need one, 61 percent said they do not think they need an iPad. Oddly enough, AppleInsider, a full-blown fanboy site for all things Apple, completely missed the boat on this misleading survey by Retrevo. Ars Technica, a site that could be characterized as more neutral on Apple (even somewhat negative at times), published an article later the same day that revealed just how misleading these numbers are.

Take a read of the Ars article to get a clearer picture of what these survey results actually suggest.

http://arstechnica.com/apple/news/2010/02/survey-tries-quantifying-ipad-hype-…

Retrevo has a track record of producing nonsense stats like this to steer the public in the wrong direction. AppleInsider should have known better than to regurgitate these results without a proper analysis.

If the web wants to replace old-school paper news sources, it needs to get its act together.

> Microsoft’s huge profits — $6.7 billion for the past quarter — come almost entirely from Windows and Office programs first developed decades ago. Like G.M. with its trucks and S.U.V.’s, Microsoft can’t count on these venerable products to sustain it forever. Perhaps worst of all, Microsoft is no longer considered the cool or cutting-edge place to work. There has been a steady exit of its best and brightest. Still don’t believe me when I say that Microsoft is no longer relevant as anything other than a provider of boring office software solutions? Read this NY Times piece from a former VP at Microsoft.

While it’s eye-opening to read about leaders of different departments purposely sabotaging each other’s projects for personal reasons, I can’t say I’m all that surprised. Ballmer doesn’t strike me as the kind of CEO who puts the hammer down on these sorts of things.

At Apple, on the other hand, it’s impossible to even picture a head of one department refusing to support the efforts of a major new initiative like iPad. Steve would have him or her escorted off campus before lunch.