While Apple’s (s aapl) Mac mini has never compared favorably to low-end PCs on price, its value being in size, weight and quiet computing, a report from iSuppli shows the $599 retail cost in a more favorable light.
According to the market research firm, an estimate of part costs in the Mac mini comes to $376.20, with another $10.94 for manufacturing, bringing the total build cost to $387.14. At a retail price of $599, that would mean the build cost of the Mac mini is roughly two-thirds of its retail price. In comparison, iSuppli has asserted the build cost of the iPhone 3GS is $179, while the retail, or “no-commitment,” price of an iPhone from AT&T is $599. Further, the iSuppli report on the Mac mini doesn’t include ancillary costs like engineering, marketing and shipping, so Apple is not earning anywhere near $211.86 per Mac mini sold. What this means is that the Mac mini is quite possibly the least profitable product in Apple’s lineup.
As to why the Mac mini costs so much to make, according to iSuppli the answer comes down to size. “Unlike most desktop computers from other brands, the Mac Mini and, indeed, Apple’s entire Mac line make extensive use of components designed for notebook computers,” said Andrew Rassweiler, director and principal analyst for iSuppli.
While it is no doubt true that a smaller computer costs more to make, let’s not forget that Steve Jobs introduced the Mac mini in 2005 as the “most affordable Mac ever,” starting at $499. It wasn’t until the switch to Intel that the price of the Mac mini jumped to $599, admittedly along with a significant performance boost, but does anyone really believe a PowerPC G4 in 2005 costs $100 less than an Intel Core Solo in 2006? It seems unlikely. More likely, Apple was cutting into its profit margins by an even greater amount with the original Mac mini, and that means that those of us still pining for a $500 Mac may be a long time waiting.