Analyst: iPad Costs Apple $270.50 to Manufacture

With all the rumors pointing to a nearly-$1,000 price point for the Apple tablet, Steve Jobs surprised onlookers last week when he revealed that the starting price for the iPad would be $499. Of course, in comparison to netbooks, $499 is still very expensive.

Granted, the iPad does come with an LCD display that surpasses the quality of many notebooks, let alone netbooks, but don't be fooled – Apple will still make a tidy sum from the iPad, according to analyst estimates.

According to Computerworld, Brian Marshall of BroadPoint AmTech estimates that the cost of goods inside a 16GB Wi-Fi-only iPad totals to $270.50. This would mean that Apple would make an estimated $208 on every 16GB iPad sold. Of course, the bill of materials does not include the R&D behind the iPad and other value-added services along the supply chain, but it does show that there will be money made at all levels.

Predictably, the most expensive component in the device is the 9.7-inch IPS panel, which costs an estimated $100. The rest of the components are considerably cheaper: 16GB of memory and the aluminum case cost about $25 each, while the Apple A4 chip was listed at $15.

Apple's profit margin on the iPad grows with the larger capacity models, with steeper premiums charged for the 32GB and 64GB models. Interestingly enough, Apple will charge an added $130 for the 3G-enabled versions of its iPad, but analysts guess that the added hardware will only jack up costs by $16.

Marcus Yam
Marcus Yam served as Tom's Hardware News Director during 2008-2014. He entered tech media in the late 90s and fondly remembers the days when an overclocked Celeron 300A and Voodoo2 SLI comprised a gaming rig with the ultimate street cred.
  • brendano257
    Cue flaming of Apple.....

    Congratulations, trolls will always win.
  • pink315
    I believe this a product before its time. I feel its searching for a market, instead of inventing one. Right now its a fail, in a couple years we will all own something like this where we get our digital media fix. Right now though, a product between a laptop and smartphone isn't needed, and if it was wanted, the ipad certainly leaves much to be desired. No 16:9 support, no flash, and wallet burning prices. I'm all for this, but they need to get it right number one, and there has to be a market for it.
  • Niva
    What I'm honestly surprised by is that they're not charging more. That's the real news here.
  • AMW1011
    I'll stick with the Archos 9, Viliv S10, Viliv S7, Viliv E70X, or Archos 7 IT if I wanted a UMPC, ultra mobile PC. What I am really interested in is the pocketable market, like the Viliv S5, Viliv N5, Cowon W2, or UMID BZ.

    Every single product I listed is a real PC, can multi-task, and many have true dedicated keyboards.

    So why should someone buy an iPad again?
  • idisarmu
    I think the iPads should be $100 cheaper, and instead of going up by $100 for each tier-up, it should go up by 50, with 3g being added adding another $50-75.

    The base model should then be 400, and the top model should be 550-600.
  • doc70
    how is this news, if apple would have charged less then yes, that would have been news.Overpriced apple hardware is nothing new.
    On a different note, it is good to know. One can make an informed decision about not buying one.
  • JohnnyLucky
    Manufacturing cost is only part of the total cost.
  • A product ahead of it's time? This tech is already old as crap as far as computer lives go (see: HP Compaq TC1100). The only difference is the price, which has of course down as the technology aged. I'd rather have something new than rehashed garbage that tools will gobble up because of the brand name.
  • touchdowntexas13
    That's strange. I wonder why it costs so much to produce. I mean you can get laptops/netbooks with the same amount of firepower for cheaper. Either Apple just has really high costing production methods, or the profit margin for the laptops/netbooks is much much smaller.

    Either way, I'm surprised they didn't charge more. But still, I don't find myself needing or even really wanting the device...
  • dsaver
    R&D didnt cost a thing, hmm lets make the iphone bigger, beautiful, blah blah blah