Costs of The New iPad

Teardowns Reveal The Actual Manufacturing Costs of the New iPad

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Costs of The New iPadAs usual, Apple has left itself with a sizable profit margin when it set the price for the new iPad. The new tablet went on sale last week and interesting details emerged from teardowns of the device. IHS reported recently that the tablet costs more to manufacture than the predecessors. There’s a caveat though, the teardown doesn’t take into account development and marketing expenses, so the actual cost for a single unit can be higher. From the teardown, analysts can create an approximate BOM (bill of materials) to determine the cost of each component. For example, after HIS dissected an iPad model with 4G support and 32GB of internal storage, the BOM is estimated to be about $364, which is roughly 50 percent of the retail price ($729) for that particular model.

In the meantime, the cheapest model (no 4G support and 16 GB of internal storage) is estimated to cost $316, while the most expensive model (4G support and 64GB of internal storage) costs about $408. The Retina Display is iPad’s most interesting addition and it contributes to a significant hike in manufacture costs. The first two versions use 1024 x 768 pixels resolution and the new iPad is a huge step up with its 2048 x 1536 display. The new display costs about $87, compared to $57 for the display used on older models. In essence, the display constitutes about a quarter of the cost of the new iPad. Just like with previous versions, the NAND flash memory used for the internal storage plays an important part in Apple’s profit margin. For example, the 32GB model can be $100 more expensive than the 16GB model; however a closer examination reveals that the 32GB NAND flash memory is only $17 more expensive than the 16GB NAND flash memory.

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