The Smart Cover…..Gadget of The Year and Profit King

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    Posted: 13 March 2011 02:37 PM

    Horace sets the tone….look at these numbers for the ‘gadget’ of the year

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    I was only half-joking when, on first sight, I tweeted that I will buy a new iPad 2 to go with my new Smart Cover. The new iPad cover is enchanting.

    It also seems to be enchanting to many.

    I?m estimating that at least 60% of iPad buyers will get one. Based on an estimate of 36 million iPads sold in 2011 and an average price of $48 (70% polyurethane and 30% leather mix), the total revenue for Smart Covers will top $1 billion this year.

    I further estimate that with a very modest gross margin of 75% (average cost to produce of $12), the Smart Cover could contribute $777 million to Apple?s gross margins.

    The iPad by itself should generate $23 billion in revenue and a contribution of $7.7 billion. That means that the Smart Cover will add 4% to sales and 9% to gross profits. If taken as a bundle, the iPad+SC will increase gross margin over the iPad alone by nearly 200 basis points (taking it from 33% to 35%).

    It will be interesting to compare the Smart Cover business with competitor tablet businesses.

    http://Www.asymco.com

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  • Posted: 13 March 2011 05:46 PM #1

    Red shirted ensign - 13 March 2011 05:37 PM

    The iPad by itself should generate $23 billion in revenue and a contribution of $7.7 billion. That means that the Smart Cover will add 4% to sales and 9% to gross profits. If taken as a bundle, the iPad+SC will increase gross margin over the iPad alone by nearly 200 basis points (taking it from 33% to 35%).

    I don’t doubt that the smart cover will juice the iPads GM, when taken together.  However, I think your margin on the iPad on its own is pretty strong at 33%.  We’re all guessing at it though, as Apple does not publish gross margin by product category.

         
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    Posted: 13 March 2011 06:07 PM #2

    I bought the leather one for mine.  I only see myself using it when I am transporting it or just letting it sit.  If I have it on it makes the iPad heavy.

    Many will buy but not sure how many will use regulary.  Apple will sell a ton of these and we shareholders will make some nice profits.

         
  • Posted: 13 March 2011 06:19 PM #3

    I went through 5 covers/ cases on my first iPad and was never entirely happy with any of them. I LOVE the SmartCover I bought with iPad 2. I think they’re going to sell almost as many as they do iPads. I have the leather also. Don’t find it heavy at all. Provides a bit of protection without taking away from the beautiful design. The two positions it props the iPad to are perfect for typing and reading in a restaurant. This is an absolute home run as far as I’m concerned. Every person I saw buying iPad 2 also bought the Smart Cover.

         
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    Posted: 17 March 2011 12:26 PM #4

    The Smart Cover as a refrigerator magnet.

    Now you can watch videos, surf the web while you grab a beer…...

    http://www.9to5mac.com/56539/smartcover-doubles-as-a-ipad-frige-magnet/ LOL

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  • Posted: 17 March 2011 11:39 PM #5

    omacvi - 13 March 2011 09:07 PM

    I bought the leather one for mine.  I only see myself using it when I am transporting it or just letting it sit.  If I have it on it makes the iPad heavy.

    Many will buy but not sure how many will use regulary.  Apple will sell a ton of these and we shareholders will make some nice profits.

    Heavy?  Sponge Man, you need to swing the club less and lift weights more.  LOL

    I use the leather cover all the time—the cover folds on the back securely and is comfortable to hold this way.  Leather is warm; aluminum is cold.