$259.60: Cost of Components to an iPad 16GB

Holy freaking profit batman!

You forgot to mention the amount apple pays to it's child labor overseas. Oh wait I see it now. It's in .000001 font. Tricky.

And they sold how many hundred thousand of these puppies? This is a fine example of capitalism. Good for Apple.

I was thinking of getting the basic model to read comics. But now that I've seen this, I won't be getting it until the price goes to at least $359.60

Normally I would say that the software development and testing would make up more of the cost, but in this case Apple basically ported everything over from the iPod touch and iPhone so my usual statement doesn't apply. There's probably a price drop built into the price like the iPhone. In my mind, the basic iPad should be $350-$400 tops considering the lack of features and what little effort apparently went into development.

not surprising actually, I'm not a fan of apple myself but it seems people don't consider all the costs involved in the overall product and only ever looks at the base cost of hardware, things like.. warranty, customer support, the cost of the software that runs the hardware (the costs involved in updating and supporting the software), nevermind the costs in actually setting up manufacturing facilities and prefab costs for all the items in it that are not a standard component. (im sure the mainboard inside it is not an "off the shelf item") obviously once they start recouping some of the costs of the initial outlay, the price will come down, as what usually happens to all things.

"The A4 custom-packaged CPU/GPU/RAM chip costs an estimated $26.80."

*Chokes*

*Dies*

Funny that the only thing good about it costs the most.

I just knew there'd be a bunch of young.... errr... what's the nice world.... less sharp.... people commenting on insane markups, capitalism, greed, etc.

You do realize a company spends years working on a product and paying engineers and developers 6 figure salaries? Paying rent for their offices, retail stores? Paying salaries to staff retail store employees? Shipment fees? Marketing and advertising?

Certainly they will make a profit... then again that's kind of the point, isn't it? Would you go to your job if you didn't make a profit?

@dimar,
Do you KNOW Apple...look at tere MacBook Pro..(its still at 3200) ...THERE NOT GOING TO GO DOWN...WANT TO KNOW WHY>>>>>>.....Apple has a sort of monopoly on the OSX OS. Not Allowing Anyone To Use It Unless Its APPLE. there For they can put the price at 500000000 and people....well eventually buy it ..you know>

Let's do a comparison,
Intel 2009 Q4, gross margin percentage is 65%, which means only 35% of the sale price is production cost.

If you really think about Apple's business model it's so fundementally flawed. Jobs still thinks that Apple prducts are just better than everyone elses so they charge 30% more than what the product is actually worth. Yes I know the consumer dictates what something is worth but read on. That line might have worked back in the day but everyone knows it's just not the case anymore. If Apple took that 30% off their MSRP they would move 10x more inventory.

it probably costs less than that considering the part prices listed are "retail" in a sense. ALSO apple buys HUGE quantities of parts thus lowering the price further.

LOL do people do realize this very much a normal markup. Quit acting like apple is evil, because in this case their no different then any other company.

Before you cry fanboi I own literally nothing of apple, and would never buy a mac, iphone or i anything for that matter lol.

yep im with danyaa
the whole hating apple for being a company is pathetic guys. Lets take a step back. Apple makes money selling things people want, employ thousands, make products for people who are not tech savvy. Jobs isnt just hording money for himself he is reinvesting it and pushing things forward. Im not saying apple is a godsend but lets not beat up on an imagined demon here.

APPLE rulez ~ LOL "499" good price !

That's a good thing. The other thing is boycott any apple product. Any person who cares for the health of the "sheep" should do that.

I'm actually gonna say that the estimate was way too high. Especially given the margins of difference given between the different flash sizes. They suggest that the difference between 16GB and 32GB is $29.50US, and twice that, $59.00US, to go from 32 to 64. In other words, they're suggesting the chips are costing Apple ~$1.85US per gigabyte. ($118US for 64GB) That's the price you'd typically pay (or perhaps a little less) for a full flash product with controller, packaging, interface, etc; you'd be looking at the range of $130-150US or so for a 64GB flash drive or SSD.

Obviously, Apple isn't even buying SSDs; they're buying the flash chips and packaging them onto the motherboard themselves. And they're not buying them individually, with packaging and all; they're buying them in trays, packed into pallettes, like other OEMS do; they do it by the thousand. So a more reasonable estimate is that they'd be paying closer to $50US for 64GB, or less.

However, I can see the cost of the touchscreen. (it's ALWAYS been the most expensive part of portable electronics) Similarly, their estimate for the A4 sounds about right for an embedded logic chip of that size. I'd estimate that Apple spends maybe $60-100US for the circuit board and its contents, (depending on flash size) $20US for the battery, $10US for the other internal parts, (like the antennae) $95US for the screen, and $15US for the frame/casing.

So all told, I'd estimate perhaps $190US for the 16GB version, $205US for the 32GB version, and $230US for the 64GB version. 3G support would likely add in another $10-20US or so in hardware costs. So, for the non-3G versions, you're looking at respective cost ratios of 38.0%, 34.2%, and 32.9% respectively.

Actually, that markup's a bit high for a high-profile piece of consumer electronics. ESPECIALLY upon launch, as those costs do not take into account economies of scale and miniaturization, both of which ensure the production cost will CONSTANTLY drop for Apple as they make and sell more.

Microsoft applied this with their Xbox 360; when it launched, they LOST MONEY on what they sold. Though with later cost reductions due to scale and miniaturization, the costs came down under the price they sold 'em at. Sony's done the same thing with the PS3. (actually, I still dunno if they're making a profit on the hardware itself)

And no, this applies to Apple as well; not only do they sell the hardware, but they ALSO make a killing in their cuts in downloaded aps, as well as the fact that they intend to charge for OS upgrades for this thing.

It's the simple matter of fact: Apple has higher markup than their competition. It shows when you compare their products to their competitors'; comparable ones are much cheaper (like Freescale's proposed tablet) and comparable-priced ones offer superior capabilities. (like Slate or CrunchPad) This applies to their other products, too; iPods ALWAYS cost more than otherwise-equal music players by other people.

its not that significant. they only pay them .0024 yen.

Which is why they've been one of the most profitable businesses over the past 10 years.

I dislike Apple as much as the next guy but to say that their business is flawed after looking at their profits (and their customer retention rate) would be obtuse.

Why did this surprise so many?

The device has actually been in development for years now but it went through countless redesigns before a product was finalized. Honestly though this is supply and demand. Apple has no incentive to offer cheaper products if the demand is still high. If this thing continues flying off the shelf I would actually raise the price until demand started tapering off.

And yet the mass continues to buy it.. dam people should've researched the iPad first. Mass profit here!

nexus one costs around 180 to make and selling for 500 too XD

Companies make money off other people's lack on knowledge in that area.

I build computers, so I know that most companies which sell pre-built systems are either raising component parts pricing, or selling people stuff they don't need. Apple is the largest and largest offender of these two practices.

It's like if you get your car fixed, and the mechanic lays you a huge list of fees for things he fixed; you don't really know if your car needed them or not because in essence you're not a mechanic.

With Intel however much of that money goes into making the next processor.
I'd rather see my money invested, even if I get no direct returns.

My question though, why not a OLED, or even a fancy smancy Samsung Super AMOLED running 1920x1080? I'd pay $100 more for that.

Except mechanics can rape people a lot harder than consumer level techs, generally.
There's laws to prevent them from doing it, but they aren't enforced anywhere I've been...

I wish I had sunk all my money into Macintosh stocks a month ago now.

Those prices I am sure are based on large quantity shipments. Go ahead and try and purchase those parts by themselves, then put it all together (solder). Also, Apple is allowed to charge for the OS as well. @Von Death: Everyone makes money off of people lack of knowledge!

All this CRAP about how Apple and every other company is trying to screw you over is ridiculous. People can charge whatever they want! You can't afford it??? TOUGH COOKIES!

Did anyone know which one is better? S-IPS screen or Super AMOLED? Why hi end HP not using S-IPS but AMOLED or SAMOLED? And the opposite, why Samsung doesn't create a 15" - 103" SAMOLED LCD?

I think that the cost of materials might be even much lower than this

TH has now way to know exactly how much Apple pays. They are buying volumes and $95 LCD might cost $20 then The largest cost would be the RnD and not the components I guess.

But why? How do you know they would make more money by doing that? Making more for less is not always the best strategy. Apple is making money doing something right while most business's in the world are floundering right now. You shouldn't be questioning their business plan, you should be studying it.

Before some of you jump to overpriced conclusions, you have to understand the total cost of ownership to design, build, sell, and warranty a product. LOH is a big, big number that never gets mentioned in these idiotic articles.