Apple's iPad Costs Under $300 To Build, $499 To Buy
We have already discussed our hopes and dreams for the future of the
iPad, and while we don't really feel that it's a homerun of a device in
its current state, there's no doubt that the allure of Apple alone will
help the company sell more than a few of these once then go on sale in
under 2 months. The real question, however, is exactly how profitable
these will be for Apple, given that the $499 price was seen as "low" by
Steve Jobs and "high" from most everyone else that we've spoken to.
According to a bill of materials analysis by Brian Marshall of BroadPoint AmTech, the cost of the goods inside of Apple's 16GB Wi-Fi-only tablet is just $270.15. Apple plans to sell the device for $499. Of course, that gap doesn't take all of the R&D costs that it took to create the iPad into consideration, but it's safe to say that Apple won't be losing money on the hardware as Sony has done with their PlayStation 3 console. The report notes that the cost of building one could be seen as $20 higher if you build in an allowance for under-warranty service costs.
As you would probably expect, the most expensive part of the whole iPad was the 9.7" IPS panel, which was listed at right around $100. The 16GB of flash storage was cited at $25, while the physical case was another $25. Amazingly, the A4 CPU that we're so excited about was listed at just $15, which makes it very viable for a whole slew of upcoming handheld devices. These insanely high profit margins are par for the course for Apple, and in fact, the iPhone 3GS makes even more money per-unit-sold for the company than the iPad. This report also makes clear that Apple has some room to eventually lower the asking price here if sales don't go as well as expected, but we figure the company will wait at least 6-12 months before pulling that lever.
According to a bill of materials analysis by Brian Marshall of BroadPoint AmTech, the cost of the goods inside of Apple's 16GB Wi-Fi-only tablet is just $270.15. Apple plans to sell the device for $499. Of course, that gap doesn't take all of the R&D costs that it took to create the iPad into consideration, but it's safe to say that Apple won't be losing money on the hardware as Sony has done with their PlayStation 3 console. The report notes that the cost of building one could be seen as $20 higher if you build in an allowance for under-warranty service costs.
As you would probably expect, the most expensive part of the whole iPad was the 9.7" IPS panel, which was listed at right around $100. The 16GB of flash storage was cited at $25, while the physical case was another $25. Amazingly, the A4 CPU that we're so excited about was listed at just $15, which makes it very viable for a whole slew of upcoming handheld devices. These insanely high profit margins are par for the course for Apple, and in fact, the iPhone 3GS makes even more money per-unit-sold for the company than the iPad. This report also makes clear that Apple has some room to eventually lower the asking price here if sales don't go as well as expected, but we figure the company will wait at least 6-12 months before pulling that lever.
