iPad Air Component Costs Estimated to Begin at $274, Roughly 13% Cheaper Than iPad 3

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IHS Suppli has released its estimate of the component costs involved in building the new iPad Air, performing a virtual teardown based on information revealed by Apple and industry knowledge. According to IHS estimates, the component cost of the iPad Air is between $274 and $361 depending on the model, with the base model's components actually totaling $42 less than that of the entry-level third generation iPad last year despite significant technology improvements to reduce size and weight while improving performance. IHS iSuppli did not perform a cost analysis on the fourth-generation iPad, which was released in late 2012.

The estimates from IHS iSuppli cover only the cost of the various components that make up the device and do not include other costs involved in product development, manufacturing, and sales, such as research and development, software, patent licenses, marketing, and distribution expenditures. The full report has not yet been released but AllThingsD received early access.


The bill of materials includes $90 for the display, $43 for the touchscreen components, $18 for the A7 chip manufactured by Samsung, between $9 and $60 for the Toshiba-made flash memory chips, $10 for the DRAM chips manufactured by Elpida, and $32 for the cellular data network chips made by Qualcomm for the LTE-ready versions of the iPad Air.

IHS analyst Andrew Rassweiler also points to the iPad Air's advances when it comes to supporting various LTE frequencies:
With the iPad Air, Apple appears to have reached a new milestone on the wireless front: It can support every LTE frequency with a single combination of chips. "This is something Apple tried to do with the iPhone 5S and 5C, but it couldn't quite get there," Rassweiler says. "One single model of the iPad Air is able to work with all US wireless carriers."
IHS iSuppli reported last month that iPhone 5s component costs were estimated to begin at $199, with the cheaper iPhone 5c's costs estimated to be starting at $173. The iPad Air was released last Friday with adoption rates reportedly outpacing last year's iPad 4 and iPad mini launches, although Apple has yet to release official sales numbers for the device's opening weekend.

The full IHS Suppli report should be released tomorrow.

Article Link: iPad Air Component Costs Estimated to Begin at $274, Roughly 13% Cheaper Than iPad 3
 

macduke

macrumors G4
Jun 27, 2007
11,045
14,859
Central U.S.
It's pretty ridiculous that Apple still charges $500 for the 16GB base model. Should be at least 32GB.

I'm not surprised that the thing is cheaper. The 3rd gen was pushing the limits on what you could do at the time with a giant battery and brand-new display tech. The iPad Air has many of the same components: 5MP camera, same screen resolution, same amount of RAM, same storage capacities. It's probably a big reason why they could make the Retina Mini for $100 less. The Air helps subsidize it.
 

Lapidus

macrumors regular
May 14, 2012
198
159
I guess that's excluded the costs of innovation & research etc. etc...
 

musika

macrumors 65816
Sep 2, 2010
1,285
458
New York
To the folks who are all up in arms about Apple's profits being down a little bit: whatever.
 

Squilly

macrumors 68020
Nov 17, 2012
2,260
3
PA
This may explain the cheaper feeling glass on the iPad air compared to previous models. Surprised to see how much an LTE chip costs for Apple. Is the flash storage like an SD card or more like an SSD?
 

HenryDJP

Suspended
Nov 25, 2012
5,084
843
United States
That's almost $300 without the labor of building it. My colleague in the first post thinks it's pretty ridiculous of Apple to charge so much for the 16GB but at already close to $300 without labor, R&D and advertising what do you expect Apple to do to make a profit? Would I love for it to be cheaper? Surely, but at the end of the day it's business and you don't have to buy, just remember that.
 

dol4n

macrumors member
Sep 8, 2012
81
0
Then they should reduce the price by 13%.

In the end they would still earn more anyways!

Time for apple to show some good-will after everything they have put us through the last 24 months.
 

Lesser Evets

macrumors 68040
Jan 7, 2006
3,500
1,264
Profit is good. I'm willing to pay for these awesome devices to ensure they continue improving.
 

Jaro65

macrumors 68040
Mar 27, 2009
3,718
628
Seattle, WA
Looks like it would cost Apple an extra $10 to double the RAM? I wish Apple offered this as a BTO option, if they're not willing to include it in the baseline configuration.
 

cardfan

macrumors 68030
Mar 23, 2012
2,533
3,416
Buying an ipad Air and paying that much margin. Not impressive. At least the retina Mini is a better buy.
 

HenryDJP

Suspended
Nov 25, 2012
5,084
843
United States
Then they should reduce the price by 13%.

In the end they would still earn more anyways!

Time for apple to show some good-will after everything they have put us through the last 24 months.
Oh yeah exactly, just like they are still charging for OS X and iWork, even for customers that have the previous versions of these. They never show any goodwill and give anything for free for customer appreciation. :rolleyes:
 

macduke

macrumors G4
Jun 27, 2007
11,045
14,859
Central U.S.
This may explain the cheaper feeling glass on the iPad air compared to previous models. Surprised to see how much an LTE chip costs for Apple. Is the flash storage like an SD card or more like an SSD?
The cheaper feeling glass, I believe, is because the new glass is thinner and lighter?

As for the flash storage, I think it's somewhere in between. Maybe more like a higher-end CF memory card? I don't believe it's anywhere near as fast as the SSDs in Macs. Maybe 100-150MB/s if I had to guess.
 

Squilly

macrumors 68020
Nov 17, 2012
2,260
3
PA
If you squeeze the iPad air 3G version, you get a lot of flex in the screen. It forces air out of the sim port giving a new meaning to Air.
That's the model I'm getting. Hope I don't have this issue. Of course, if I do, Apple will say its normal and call it glass-gate.
 

Marc-SP

Guest
Oct 7, 2013
165
0
It's pretty ridiculous that Apple still charges $500 for the 16GB base model. Should be at least 32GB.

I'm not surprised that the thing is cheaper. The 3rd gen was pushing the limits on what you could do at the time with a giant battery and brand-new display tech. The iPad Air has many of the same components: 5MP camera, same screen resolution, same amount of RAM, same storage capacities. It's probably a big reason why they could make the Retina Mini for $100 less. The Air helps subsidize it.
Are you saying the Mini 2 is cheaper than it should be? :eek:
 

OC40

macrumors 6502
Sep 20, 2013
349
197
Chicago, IL
That's almost $300 without the labor of building it. My colleague in the first post thinks it's pretty ridiculous of Apple to charge so much for the 16GB but at already close to $300 without labor, R&D and advertising what do you expect Apple to do to make a profit? Would I love for it to be cheaper? Surely, but at the end of the day it's business and you don't have to buy, just remember that.
I was just about to write a post similar to this. Labor, R&D and advertising would consume quite a bit of the perceived profit. Your last sentence sums it up bet nicely.
 

macduke

macrumors G4
Jun 27, 2007
11,045
14,859
Central U.S.
Are you saying the Mini 2 is cheaper than it should be? :eek:
Considering that it has the same exact specs as the iPad Air, and yet is a miniaturized version—yes, yes I am. How often do you see a tiny laptop that has the same power as a full-sized laptop but is actually cheaper? Making things smaller while keeping them powerful costs a lot.

I was one of the early people on the forums saying the new Mini Retina would be $399 and the old one would drop to $299. First of all $329 was a weird price. But second of all, something had to give. It's just not possible to have your cake and eat it too. Apple doesn't subsidize these devices like Google by selling your personal info to advertisers or Amazon by putting ads everywhere and taking a loss on each device sold. And it's way faster than those devices. That's worth paying more for.
 

M7ck

macrumors member
Dec 6, 2010
35
2
Glasgow
Also this doesn't take into account the coat of logistics, packaging, advertising, retail store overheads, staff overheads, 1st year warranty. I think this report just proves that the iPads are remarkably good value. Especially with all the added software.
 

rei101

macrumors 6502a
Dec 24, 2011
976
1
Go a bake a cake. Take a look at how much the material costs and then the time you put into it from the idea to the cake done. Now, try to sale cakes and create a web site and an strategy.

Yes, they are making a profit but it is not beyond 3% to 5% per unit at the most! Actually it may be even 1.5%
 

bbeagle

macrumors 68040
Oct 19, 2010
3,406
2,665
Buffalo, NY
Coca-Cola is just sugar, flavoring and water.

It costs about 5 cents in materials to make a 2-liter. They sell it for between $1 and $2.

That's a 1,000-2,000% markup. Where are the articles on this? :rolleyes:
 

Dan--

macrumors regular
Jul 30, 2008
237
23
I really wished they dropped the 16GB model and dropped the rest of the models down the price ladder. Sigh.
 
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