New iPad BOM Reveals Slimmer Profit Margin for Apple
There's never been a more expensive iPad model than the one Apple will start selling on Friday, March 16. It's not any more expensive to buy than previous iPad models at launch, but the cost to produce these third generation tablets has gone up significantly.
Citing figures from UBM TechInsights, EE Times reports the bill of materials (BOM) is $310 for a 16GB Wi-Fi + 4G iPad, which sells to consumers for $629. That's just for the cost of parts. The original iPad carried a BOM of $270.86 and the iPad 2's parts added up to $276.27
Obviously there's still plenty of wiggle room to flip a profit even after factoring in marketing costs and everything else that's associated with selling an iPad. Still, the company's profit margin decreases across the board, both from the higher BOM for the new model iPad, and in selling older models at a reduced price.
"The bottom line is the new iPad’s margin should take a little hit because of some expensive adders like LTE, the high-res display and camera, a bigger battery and faster processor," said Jeff Brown, a senior UBM TechInsights analyst.
The new Retina Display is by far the most expensive single component, which runs $70 according to UBM TechInsights. After that, the battery sits in a distant second place at $30, followed by the A5X processor ($28).
Citing figures from UBM TechInsights, EE Times reports the bill of materials (BOM) is $310 for a 16GB Wi-Fi + 4G iPad, which sells to consumers for $629. That's just for the cost of parts. The original iPad carried a BOM of $270.86 and the iPad 2's parts added up to $276.27
Obviously there's still plenty of wiggle room to flip a profit even after factoring in marketing costs and everything else that's associated with selling an iPad. Still, the company's profit margin decreases across the board, both from the higher BOM for the new model iPad, and in selling older models at a reduced price.
"The bottom line is the new iPad’s margin should take a little hit because of some expensive adders like LTE, the high-res display and camera, a bigger battery and faster processor," said Jeff Brown, a senior UBM TechInsights analyst.
The new Retina Display is by far the most expensive single component, which runs $70 according to UBM TechInsights. After that, the battery sits in a distant second place at $30, followed by the A5X processor ($28).
