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macrumors bot
Original poster
Apr 12, 2001
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Bloomberg BusinessWeek reports on new estimates from market research firm iSuppli detailing component costs for Apple's lowest-priced iPad at $219.35 plus an additional $10 in manufacturing costs, compared to a retail price of $499. While the component cost calculations do not include such expenses as research and development, software, marketing, distribution, and patent licensing, the tally still suggests that Apple is set to make a healthy profit on its new tablet device.
The most profitable of the six iPads is the 32-gigabyte version with 3G network access, Sideco says. Its combined materials and manufacturing cost of $287.15 amount to 39.4% of the retail price. The least profitable is the 16-gigabyte non-3G version, which sells for $499. Its combined costs amount to $229.35 or 46% of the retail price, leaving the slimmest potential profit margin of the six.
iPad models offering 3G wireless connectivity will carry a $130 price premium at retail over the corresponding Wi-Fi-only models, while iSuppli calculates that the additional cost to Apple is only approximately $27.10 ($24.50 for 3G components and $2.60 for GPS). Other items of interest included in the estimates are the 9.7-inch multi-touch display at $80.00 and the custom Apple A4 system-on-a-chip serving as the brains of the device at $17.00.

A report earlier this week claimed that Apple executives have left the door open to iPad price cuts if consumer demand fails to meet expectations, and iSuppli's estimates appear to suggest that the company may have sufficient profit margin on the device to lower retail prices if necessary.

Article Link: iPad Component Costs Estimated to Begin at $219.35
 

Corruptitudes

macrumors regular
Nov 24, 2009
100
0
So why is there 400 dollar markup on the 3G model? I didnt think it would cost that much to add 3G capability, but they are charging an arm and a leg for it.

Maybe I will wait for when the price drops. as Steve says there is room for reduction in price
 

leomac08

macrumors 68020
Jul 12, 2009
2,096
0
Los Angeles, CA
and people told me i was crazy that apple should sell the iPad as the same price as the ipod touch.... $199. $299. $399... and $330, $430, $530 for 3G versions

but people don't want their AAPL stock to plumit down....:rolleyes:
 

rpaloalto

macrumors 6502a
Sep 19, 2005
730
0
Palo Alto CA.
So what else is new, Apple always has a huge premium on all their products.
Remember how apple used to charge like 5x the amount on their Apple branded ram. Now they just charge double;)
 

NewSc2

macrumors 65816
Jun 4, 2005
1,044
2
New York, NY
So why is there 400 dollar markup on the 3G model? I didnt think it would cost that much to add 3G capability, but they are charging an arm and a leg for it.

Maybe I will wait for when the price drops. as Steve says there is room for reduction in price

I don't think the lowest iPad will drop in price, and if any drops in price were to come, it'd likely be at least 9 months after introduction. This isn't the first iPhone, which everybody said was too expensive to start—most people think the iPad is reasonably priced.

Anyway, I'm just debating between the 16gb and 32gb non-3G versions. I think I'll be using it as more of a web browser/e-mail checker than a media center, and the money saved could go to the 2nd or 3rd generation iPad.
 

MacDannny

macrumors member
Jan 19, 2010
45
0
i appreciate that apple is a high profit company, but those markups look waaaaay OTT for electrical items!

thanks Steve, you sly dog!
 

CQd44

macrumors 6502a
Jul 27, 2009
630
0
Edinburg, Texas
We all know Apple has huge profit margins. That much shouldn't be news.

EDIT: huge profit margins on hardware alone. needed to clarify.
 

nwcs

macrumors 68020
Sep 21, 2009
2,249
3,534
Tennessee
It's a very misleading list. It doesn't include overhead, software development costs, QA, etc. Without that, all you have is a pile of parts that doesn't do anything.
 

gwangung

macrumors 65816
Apr 9, 2003
1,110
87
Hate these threads. It's a feeding trough for mass ignorance. Few people know how to price things appropriately.
 

macduke

macrumors G4
Jun 27, 2007
11,746
16,418
Central U.S.
I'm still hoping for a student discount. $50 seems doable but if they did $100 (unlikely) I bet a lot more students would jump on board as it would be a lot more competitive with netbook prices.

I wonder why the iPad components are so cheap? Perhaps because they don't need to be as small as the iPhone ones?
 

gwangung

macrumors 65816
Apr 9, 2003
1,110
87
We all know Apple has huge profit margins. That much shouldn't be news.

No, we DON'T know that.

Fact of the matter is that Apple has pretty much average operating margins for manufacturers. It's an urban myth that they're fat. (For example, these costs don't include R&D. Or transport costs. Or overhead for the company)
 

mccldwll

macrumors 65816
Jan 26, 2006
1,345
12
"The most profitable of the six iPads is the 32-gigabyte version with 3G network access,"


Actually, the most profitable is the 64GB w/ 3G, even though it has a lower profit margin.
 

pagansoul

macrumors 65816
Aug 10, 2006
1,041
40
Earth
What is the software cost? The first buyers are always the ones to pay for the R&D. The price of being first. You also have to think about resell value like with the old iphones, no one wanted the 4GB model.
 

Claytoniss

macrumors regular
Apr 9, 2007
171
0
Denver
No, we DON'T know that.

Fact of the matter is that Apple has pretty much average operating margins for manufacturers. It's an urban myth that they're fat. (For example, these costs don't include R&D. Or transport costs. Or overhead for the company)

I AGREE!
 

CQd44

macrumors 6502a
Jul 27, 2009
630
0
Edinburg, Texas
No, we DON'T know that.

Fact of the matter is that Apple has pretty much average operating margins for manufacturers. It's an urban myth that they're fat. (For example, these costs don't include R&D. Or transport costs. Or overhead for the company)

I was just talking hardware alone.
 

BaldiMac

macrumors 604
Jan 24, 2008
7,412
8,735
and people told me i was crazy that apple should sell the iPad as the same price as the ipod touch.... $199. $299. $399... and $330, $430, $530 for 3G versions

but people don't want their AAPL stock to plumit down....:rolleyes:

You were crazy. Apple would lose money on the 3 or 4 cheaper models at your prices.
 

Claytoniss

macrumors regular
Apr 9, 2007
171
0
Denver
No, we DON'T know that.

Fact of the matter is that Apple has pretty much average operating margins for manufacturers. It's an urban myth that they're fat. (For example, these costs don't include R&D. Or transport costs. Or overhead for the company)

I AGREE! Not the fact it has to pay for all the people involved in the process... these stats are ridiculous.
 

chrisgeleven

macrumors 6502
Apr 28, 2002
471
53
Manchester, NH
Umm, how the heck do you estimate a cost of a device only a few people have even touched, never mind seen the components inside?

Sure you could make guesstimates based on what say a 3G chip probably costs, the LCD screen probably costs, etc., but seriously, how do you know until you tear apart the thing and see the actual electronics being used, who made them, etc?
 

MacNut

macrumors Core
Jan 4, 2002
22,527
9,344
CT
The cost to produce a medium Pepsi is a fraction of the full retail price at the movies.
But you are paying for the training of the attendant to work the machine. That is like 30 seconds of valuable time that had to be spend on teaching the kid how it works.;)
 

macduke

macrumors G4
Jun 27, 2007
11,746
16,418
Central U.S.
Edit: Never mind, read the linked article. Says 512mb, which is a decent amount for such a light OS.

Original Post:
How much RAM does the iPad have? 512mb? 1gb? It's got to be more than the 256mb the 3GS has. $11.90? Can anyone derive from this price their estimate--I mean, is it actually known yet?
 
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