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.
