Posted on 21 January 2006 by Lord Brar
A tech research firm iSuppli took apart one of the new Intel iMacs, retailing for $1,299 a pop, and estimates that the components only cost about $845. Add to it Mac OS X operating system worth $129 and iLife digital-media software suite worth $79 and you still get 20% profit margin.
Good work at commanding a premium, Mr. Jobs. 
This is a viral video from Youtube that is getting a lot of attention.
I will let the author set the scene:
It was back in Oct 2005.
My wedding was about a month to go and I decided to make a memorable event for my future wife. But, I and she were working and due to preparation of wedding, I didn’t have enough budgets for expensive proposal. While I was considering for the event, I remembered what she said in the past. “Wow it would be great if I can get a chance to go in the room with full of yellow post it just like Sang Sang Plus” (Sang Sang Plus is one of the famous talk show (TV program) in Korea and they prepare a room with full of yellow post it – questions from fans to famous celebrity)
I wrote all the happy memories that I had with my wife in 5,940 post it. It took me 4 days & 5 nights to write everything and post it in the bathroom. (I tried main living room first, but, due to surface of wallpaper, I had to change the place) Once we back from honeymoon, we took all the post it off and kept it in the box until now.
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January 21st, 2006 at 12:02 pm
Is 20% considered good for Apple?
January 21st, 2006 at 12:05 pm
Maybe not. ;P But then these PCs are in the same segment as DELL and Think Centers (from Lenovo) are and their margins are pathetic compared to what Apple is biting.
January 21st, 2006 at 12:13 pm
I see. Also, Apple’s stock has dropped about 10 points in the past week. I can’t believe that…
January 21st, 2006 at 12:40 pm
Yeah, but that’s not the whole story. You also have to add in all of the non-physical costs in with the iMac; marketing, pay for the engineers working on the product, testing, designing, all of that stuff. Apple isn’t making that large cut as a straight profit (and it’s a guesstimate of the cost, too, so Apple’s actual milage might vary).
January 21st, 2006 at 8:15 pm
I heard that apple was actually making less of a profit on intel equipped machines but decided to go this route due to intel’s suprior technology for mobile processors. If its true, Apple must’ve made a killing with its motorola based processors.
January 21st, 2006 at 10:29 pm
@Spencer / Business Forum : The decline started on Tuesday. A day after most of the media covered about the privacy concern with the new version of iTunes and Steve Jobs announced that Apple has surpassed Dell in market value (profit booking).
However, that did not affect the stock that much. It was after Wednesday that the main slump started. And that was the day Intel and Yahoo! announced the results, which were not so good.
These three reasons, correct me if you see any more issues that I am missing, contributed to the 10 point decline.
However, I don’t see any long term problems or cause for concern wit AAPL.
Just out of curiosity, are you a short term or a long term investor?
@Zach : I fully agree with you. But you have to agree that that they are doing a wonderful job by having such margins which companies in direct competition can’t even dream of while keeping their users happy and the same marketshare.
@John : That’s what I’ve also heard.
January 22nd, 2006 at 6:51 pm
I dont invest in stocks but if Apple is selling low, I might pick some up. They are a solid company to invest with. I’d also invest in Disney if the Steve Jobs / Pixar / Disney rumors are true.