I don’t know if there’s a better representation of the health of a consumer business than this kind of chart found in the Asymco blog:

In the chart above, it shows that Apple derives more profit per unit than any other vendor (by far), and that RIM (another integrated platform) still derives the second-most profit per unit.  It also shows the profit per vendor by looking at the area of each rectangle.  Again, Apple and RIM look to be #1 and #2.

Similar charts for the PC business would also be interesting.  And the Auto business.  Conventional wisdom says you have to have volume (scale) to be successful – and therefore a high-margin product in a low-margin industry won’t succeed (because it won’t achieve scale).  But there are examples that show it is possible.  And in some markets (cell phones), even a single digit market share is a very large user base (platform).

Horace Dediu’s Asymco blog yet again strikes a chord with me, as he fairly well trashes the classic “iPad is DOA” quotes from last year.  Of course, even more amusing are the follow on wave of death watch quotes from this year.  As new iPad user, I have to say the experience is better than I expected and I now understand why you would have this device that isn’t quite your phone and isn’t quite your laptop.  But at a macro level, the iPad is a huge business already, so it just seems odd to see how many people still think it is a fad:

I thought that would be that. As the success of the product would become self-evident, predictions of imminent demise would trail off. The pain of share loss would prompt a wave of challenger copycats. Imitation would be the the best form of flattery.

But no.

Critics were not silenced. One year, 15 million units, and $9.2 billion later I went back to the source of the quotes and found the following.

Great summary.

The easiest way to launch a $1B product – in year 1 – is to first have a $9B product trending toward $23B, and then sell a must-have accessory alongside it:

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.

Until other innovative covers come to market (and they will), Apple is going to sell these to more than 60% of iPad buyers.  My anecdotal evidence at the pop-up store in Austin during SXSW was that everyone buying one for themselves bought a cover.  Only people buying them for others skipped it (and they were obviously not buying the iPads for friends or they would have splurged for the snappy cover).