32GB iPad 2 w/ 3G costs $336.60 to manufacture

[Justin Luck]

Article posted here:
http://www.digitimes.com/news/a20110314PR200.html

 

[darngooddesign]

This just in. The retail price of an item is higher than the cost to manufacture. Go ahead and file that under "duh".

 

[Davichi]

Display is 127.... dollars and people want retina display... It will be like 300 dollars for that display alone.

 

[Justin Luck]

I would be interested to know what the base model costs.

 

[Justin Luck]

After knowing the generous profit Apples makes on each of these units, it makes the notorious backlight bleed even more inexcusable.

 

[bchreng]

You're forgetting about the time, money and effort that went into R&D. It's like saying a fancy painting is only worth the price of the canvas and ink. You're totally forgetting about the labor and thought that went into the work.

 

[JRoDDz]

Don't forget apple gets a volume discount.. They buy parts by the millions.

 

[Imsuperjp]

How much does it cost to make spaghetti and how much do they charge at restaurants?

 

[DarwinOSX]

These estimates are idiotic and so is anyone who buys into them.

 

[Chupa Chupa]

You're forgetting about the time, money and effort that went into R&D. It's like saying a fancy painting is only worth the price of the canvas and ink. You're totally forgetting about the labor and thought that went into the work.

Yup. Plus other non-labor, non-manufacturing costs like warranty/replacement costs, regulatory approval, marketing (hey, they might sell themselves but that iPad web page and the videos on them still cost Apple money). Amazing how people who seemingly know zero about business feel so competent to be critical of it based on one raw numbers aspect.

 

[hlr element]

there's so many other costs.... RnD, shipping, stores, employees.

 

[shawndoc]

That's typical markup at retail. Keep in mind all of the following need to make some profit from each one to cover their costs and hopefully make some money:

1. Factory (Foxconn)
2. Apple
3. The distributor (Ingram Micro?)
4. The retailer

Its not like Apple is getting the entire difference between component cost and MSRP for themselves. They have to share it with others. Even when selling through their own stores, they still have to pay for the location and the salaries of all those helpful employees, not to mention all the R&D that went into designing the iPad and iOS.

 

[MBPLurker]

Licensing is also a huge hidden cost. Not everything in the iPad is patented by Apple.

 

[DS3]

I'd like to see a person who takes these numbers seriously take 337 dollars and build me an iPad 2.

It's an interesting thing to know, but as others said you have to look at the whole picture. The iPad is definitely not a price gouging product. Apple probably has had some comps where that's debatable though....

 

[SPEEDwithJJ]

How much does it cost to make spaghetti and how much do they charge at restaurants?

Excuse my stupidity, but I also wonder how much the restaurants invest in R&D on making spaghetti?

 

[bchreng]

Excuse my stupidity, but I also wonder how much they invest in R&D on making spaghetti?

The money probably goes towards paying the employees as well as paying for the upkeep of the restaurant and equipment.

 

[Piggie]

I like this bit:

Camera $4.30

Good job they didn't fit the iPhone4's 5 Megapixel unit that costs. $9.75

OMG, that would have pumped the component cost of the iPad up by $5.45 to give us a decent camera.

Don't know about you, but I'd happily paid twice that $11 to have the better camera fitted.

 

[nixiemaiden]

Excuse my stupidity, but I also wonder how much the restaurants invest in R&D on making spaghetti?

There could very well be R&D involved in spaghetti. There are different recipes they can use to make the pasta...different recipes used to make sauces...testing these recipes and the consumer response to them etc.

 

[GFLPraxis]

News flash: Photoshop CS5 costs $0.50 to manufacture.

 

[Justin Luck]

Yup. Plus other non-labor, non-manufacturing costs like warranty/replacement costs, regulatory approval, marketing (hey, they might sell themselves but that iPad web page and the videos on them still cost Apple money). Amazing how people who seemingly know zero about business feel so competent to be critical of it based on one raw numbers aspect.

You don't think I am well aware of this??

Also, this cost isn't for the base model. It is for the $730 version.

 

[PBG4 Dude]

Licensing is also a huge hidden cost. Not everything in the iPad is patented by Apple.

It also costs money to file and defend patents. How many patent lawsuits is Apple involved in at the moment?

 

[outz]

I like this bit:

Camera $4.30

Good job they didn't fit the iPhone4's 5 Megapixel unit that costs. $9.75

OMG, that would have pumped the component cost of the iPad up by $5.45 to give us a decent camera.

Don't know about you, but I'd happily paid twice that $11 to have the better camera fitted.

it's typical apple. gotta leave out obvious stuff so everyone will purchase the next revision.

 

[SPEEDwithJJ]

I'll also add in by saying that not only does the selling price have to cater to all their costs, Apple also has to make about a 30% profit on each iPad sold.... No?

 

[Justin Luck]

You gotta wonder how much it is going to cost Apple to replace all these defective backlight bleeding units.

 

[Nebrie]

I like this bit:

Camera $4.30

Good job they didn't fit the iPhone4's 5 Megapixel unit that costs. $9.75

OMG, that would have pumped the component cost of the iPad up by $5.45 to give us a decent camera.

Don't know about you, but I'd happily paid twice that $11 to have the better camera fitted.

Probably has more to do with the iPhone camera thickness.