These ‘smart covers’ will benefit Apple as much by helping to sell the iPad as they do from the profit they’ll generate themselves.
However, it strikes me that Apple might make more money selling these than some tablet makers will make selling actual tablets…
- Say 40m iPads in 2011 x 25% cover upsell at $40 and 25%(?) margin = $100m
- Moto Xoom: say 1m units at $100(?) profit = $100m
My numbers are hamfisted (what fun!), but they do illustrate the scale of the ecosystems involved. With more aggressive estimates - 50% margin, 50% sell-through, Apple’s profit could be more like $4-500m.