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New iPad 4G 16GB Costs an Estimated $310 in Parts

By - Source: EETimes | B 57 comments

Despite the addition of 4G LTE, a new Retina display, and quad-core graphics, Apple's latest iPad carries the same launch price as the iPad 2 and the original iPad. But how much does it cost Apple to produce? According to preliminary analysis from UBM TechInsights, the components for Apple's newest iPad carry an estimated cost of $310. Now, we all know that cost of parts aren't everything, especially when you throw in production costs, R&D, marketing, and all of the other costs associated with designing, producing, and shipping a product. However, this is interesting in that, if accurate, it means Apple isn't making as much with the iPad 3 as it did with the iPad 2 or the iPad 1.

 

According to the following table from UBM TechInsights, the cost of parts for the original 16GB iPad was $270.86 with a profit margin of 57 percent). Things crept up just a little for the iPad 2. UBM prices the components for the 16GB iPad 2 at $276.27 for March 2011, which represents a difference of 1 percent (56 percent) in the profit margin. However, for iPad 3, which boasts a more expensive display, battery, camera and processor, the cost of parts is estimated to be $310. With a retail price of $629, this represents a profit margin of just 51 percent. Still a lot, but quite a dip from the 57 and 56 percent margins of the iPads 1 an 2. Additionally, Apple is losing a little more on the iPad 2 with a drop in price pushing the retail price of the iPad 2 down to $529.

"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,” Jeff Brown, a senior UBM TechInsights analyst, is quoted as saying by the EETimes. Apple “will hope to offset that margin decrease with a slightly higher margin on the iPad 2,” he said.

We'll have a better idea of where things stand once the iPad is officially available and we can get some more precise figures. However, with the insane demand Apple has seen for the new iPad, we can't imagine Apple being too preoccupied with a 5 percent drop in profit margin.

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Top Comments
  • 25 Hide
    maga , March 12, 2012 7:14 PM
    apple,apple,apple,apple....,again its everywhere ,just STOP it i had enough OK .
  • 22 Hide
    LuckyDucky7 , March 12, 2012 7:14 PM
    In other news, luxury technology that has few actual uses still costs a lot of money.
  • 22 Hide
    kawininjazx , March 12, 2012 7:14 PM
    A profit of JUST 51%? That's not too bad considering a lot of other electronics manufacturers. Heck, we just had that article where Acer said they were breaking even with their entry level ultrabook.
Other Comments
    Display all 57 comments.
  • 25 Hide
    maga , March 12, 2012 7:14 PM
    apple,apple,apple,apple....,again its everywhere ,just STOP it i had enough OK .
  • 22 Hide
    kawininjazx , March 12, 2012 7:14 PM
    A profit of JUST 51%? That's not too bad considering a lot of other electronics manufacturers. Heck, we just had that article where Acer said they were breaking even with their entry level ultrabook.
  • 22 Hide
    LuckyDucky7 , March 12, 2012 7:14 PM
    In other news, luxury technology that has few actual uses still costs a lot of money.
  • 12 Hide
    siman0 , March 12, 2012 7:18 PM
    They will pay even if apple put apple 4000GSTX Type 2 on an old apple 2 and then anounce it as the god giving wonder device. Its from apple people follow that band waggon
  • 12 Hide
    jaber2 , March 12, 2012 7:19 PM
    I call BS on cost, you can quote me on that.
  • 17 Hide
    drwho1 , March 12, 2012 7:32 PM
    On other news Apple's R&D has been working on their very own Apple Pie which according to "sources"
    will regenerate itself as you bite on it.

    /sarcasm
  • 6 Hide
    MKBL , March 12, 2012 7:42 PM
    When a giant company like Apple orders its product to be produced in a facility at likes of FoxConn, it dictates how much margins the manufacturers would get. Apple also has a lot stronger buying power than regular high-tech companies, so their component prices are more likely to be cheaper than for others. Apple can control its profit margin by controlling those two fronts, parts and manufacturing, without much exposure to the usual risks of manufacturing and part sourcing.
  • -7 Hide
    elkein , March 12, 2012 7:44 PM
    magaapple,apple,apple,apple....,again its everywhere ,just STOP it i had enough OK .

    Wakey Wakey, the world is passing you by. I love my homebuilt machine, I advocate and tech support other people. But at work I'm tearing out numerous PC terminals, because iPads are replacing them. When one gets eaten by a vat of acid, no big deal, have another, there's a stack of backups.
  • -6 Hide
    zzz_b , March 12, 2012 8:01 PM
    I do not understand where they loose on the iPad 2.
    The price is still $399 and the parts are less than $277. They make less profit, but do not loose anything. Also, iPad 3 being out, the iPad 2 is becoming obselete.
  • -5 Hide
    AznCracker , March 12, 2012 8:09 PM
    And they charge double?
  • -1 Hide
    danwat1234 , March 12, 2012 8:13 PM
    The battery in the 'new ipad' is only $8 more than the ipad 2's battery? 25wh vs 42.5wh, a 70% increase in energy capacity but only a 40% increase in part price. Unless they grabbed a great deal on batteries, while maintaining or exceeding the energy density of the ipad2 battery, this is bogus.
  • 0 Hide
    jaber2 , March 12, 2012 8:18 PM
    Open the floodgates for referb iPad 2.
  • 8 Hide
    beardguy , March 12, 2012 8:19 PM
    Profit of "only 51%"

    Maybe to Apple-loving Toms Hardware this isn't much. But doubling the price of the hardware, Something tells me most other companies don't even come close to this profit margin.

    iPad = rip off
  • 1 Hide
    syrious1 , March 12, 2012 8:23 PM
    Quote:
    The battery in the 'new ipad' is only $8 more than the ipad 2's battery? 25wh vs 42.5wh, a 70% increase in energy capacity but only a 40% increase in part price. Unless they grabbed a great deal on batteries, while maintaining or exceeding the energy density of the ipad2 battery, this is bogus.


    Wait till the battery explosion reports start rolling in... =)
  • 5 Hide
    LuckyDucky7 , March 12, 2012 8:25 PM
    @azncracker

    Tablets and smartphones, while cool technology, don't have much of an actual purpose (browsing the web, making calls, and playing Angry Birds does not a useful device make).

    So manufacturers can charge what they want and don't have any real incentive to push prices down. Laptops, on the other hand, actually have a real use and real demand exists for them (i.e. to do work, playing games is usually an afterthought)- which is why you see many of them at the 450-dollar price point since there's actual competition.

    There isn't a real business use for them either, apart from replacing some paper and demonstrations- I don't believe elkein knows what he's talking about. You can't replace a PC with an iPad; PCs do work, iPads are screw-around devices whose primary capabilities center around media consumption, not production.

    It's primarily why people don't choose tablets over laptops, especially when money gets tight.
    Do you choose the cheaper do-it-all laptop, or do you pick the more expensive, less-capable tablet?
    The answer, for many, is obvious.
  • 5 Hide
    rosen380 , March 12, 2012 8:36 PM
    "Maybe to Apple-loving Toms Hardware this isn't much. But doubling the price of the hardware, Something tells me most other companies don't even come close to this profit margin. "

    I think if you knew the markups that the electronics stores tacked on alone, you might re-think that statement. The difference is that When Best Buy sells a Samsung TV, Samsung takes a piece and Best Buy takes a piece... For Apple, since they are selling most of their stuff themselves, they get both of the pieces.
  • 3 Hide
    wildkitten , March 12, 2012 8:46 PM
    LuckyDucky7@azncracker Tablets and smartphones, while cool technology, don't have much of an actual purpose (browsing the web, making calls, and playing Angry Birds does not a useful device make).So manufacturers can charge what they want and don't have any real incentive to push prices down. Laptops, on the other hand, actually have a real use and real demand exists for them (i.e. to do work, playing games is usually an afterthought)- which is why you see many of them at the 450-dollar price point since there's actual competition.There isn't a real business use for them either, apart from replacing some paper and demonstrations- I don't believe elkein knows what he's talking about. You can't replace a PC with an iPad; PCs do work, iPads are screw-around devices whose primary capabilities center around media consumption, not production.It's primarily why people don't choose tablets over laptops, especially when money gets tight. Do you choose the cheaper do-it-all laptop, or do you pick the more expensive, less-capable tablet? The answer, for many, is obvious.

    Why I don't think a tablet will replace an actual laptop/desktop anytime soon, they actually do have quite a lot of use.

    They are exploding on the POS (point of sale) scene. You can get very good, and very inexpensive POS apps, set up the ipad or Android tablet, and you have almost an instant business with inventory tracking, accounting information and everything. Receipts can be texted or emailed to customers, or a wireless receipt printer can be used. I've even seen iPod touches be used by waiters and waitresses when combined with a restaurants POS system.

    A very cheap attachment can be gotten to allow the use of credit cards on a tablet, even a smart phone. So these are pointless devices.

    Now that said, the price is ridiculous. Amazon did something that Apple was very stupid for not learning from. They sell the Fire at a slight loss and count on app and content sales for their profit. I think if Apple were to come out and sell a 64GB iPad for $200, they may lose some money, $110 initially but hardware costs would soon come down quickly, but the increase in sales would mean more people buying apps which would make up the difference, probably allowing for even more profits to be made over time.
  • 5 Hide
    jn77 , March 12, 2012 8:47 PM
    You would think that at those prices, Apple would be smart and make a 128gb and 256gb version this time around.
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