Ever wonder how much profit is in those expensive (or inexpensive) tablets? Prices keep dropping, but how low will they go before they bottom out?
In India, the most popular tablet you can buy has been at a price point around $120. That’s pretty cheap for most of us who are used to shelling out $300-500 or more for a tablet. But in a country where poverty is widespread, $120 still ends up excluding a large percentage of the market. That’s why Suneet Tuli has analyzed the costs and found a way to produce a tablet for just $20!
Here’s what he found. The cheapest place to produce a tablet in the world is China. No surprise there. That popular tablet? It costs about $45 to manufacture. Then come the added costs of shipping:
- $2 for shipping from China to India.
- $9 for customs, duties and taxes
- $12 profit for the importer
- $6 warranty (they get you every time, huh?)
- $15-20 for distributors (In India, there are 3 layers of distribution. And you thought the middle men were outrageous here!)
Just to recap, that’s $45 for manufacturing and an additional $45 for getting the tablet to you. Oh yeah, don’t forget to pay the retailer that sells it to you – make that $90 tablet a $120 and you got a deal!
So what did Tuli do?
Simple – he moved the manufacturing process to India. With $3 shipping anywhere in India, he’s able to produce the tablet and get it to you for $45. Add in to that a nice government subsidy and you (well okay, probably not you!) can have a tablet for just $20.
So how cheap will tablets go for eventually in the Western world?
Put it this way – don’t hold your breath for a $20 tablet anytime soon!
[Image via qz.com]