Samsung Galaxy Note 10.1 Has Bigger Profit Margin Than iPad

According to IHS, the HSPA+-equipped Galaxy Note 10.1 has a bill of materials (BOM) of $283, excluding assembly cost. The device sells for about $640 to consumers.

The Wi-Fi only $499 Galaxy Note 10.1 has a BOM of $260. In comparison the 16 GB, Wi-Fi only iPad as an estimated BOM of $316. At least in theory, Samsung can make more money per device than Apple does.

“With the Galaxy Note 10.1, Samsung continues to seek the magic formula for a media tablet that can rival the iPad’s market penetration,” said IHS' Andrew Rassweiler. “And where some other tablets introduced in recent times generated small or no hardware profit, the Galaxy Note 10.1 could turn a decent per unit margin for Samsung, and stands to be a money maker, if the company can extend the recent success of the Samsung Galaxy Note smartphone to its tablet line.”

Rassweiler noted that the Google Nexus 7 and the Amazon Kindle Fire generated "little or no hardware profit". Obviously, the actual profit will lie in demand - and Samsung still has to show that it can sell the tablet in substantial numbers, which will help sustain the current retail pricing. At this time, there hard no substantial discounts available for the Galaxy Note 10.1.

 “Samsung is a behemoth in the electronic industry and its competitive strength lies in its control, via internal sourcing, of a large percentage of the components that go into its final products,” Rassweiler said. “This allows Samsung to keep costs down, while delivering competitive differentiation. The company’s internal sourcing strategy is certainly in evidence in the Galaxy Note 10.1, where Samsung supplies the memory, both flash and DRAM, as well as the core processor, battery and many other components.”

IHS said that, compared to its predecessor, the Galaxy Note 10.1 only has an incremental set of improvements.

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