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iSuppli Revises Entry-Level iPad Component Cost Estimate Up to $260

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Just two weeks after Apple introduced the iPad at a special media event, research firm iSuppli estimated the component costs for the entry-level 16 GB Wi-Fi iPad at about $219, compared to its retail price of $499. iSuppli's estimates offered some indication of a healthy profit margin for Apple on the device, although numerous other expenses such as research and development, marketing, and licensing were not included in the study.

Now that the iPad has been released in the United States, Bloomberg BusinessWeek reports that iSuppli has been able to actually tear the device apart to generate a revised estimate of nearly $260 for the entry-level model's component costs. The $40 increase over earlier estimates is due to several factors, including the use of more chips than originally thought.
Once it took one apart, iSuppli found more silicon chips than it had expected powering interactions with the iPad's 9.7-inch screen. Apple uses three chips to control the iPad's touchscreen, for example. "Because of the sheer scale of this device, we're seeing more here than we expected to," says Rassweiler.
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The most significant single price bump, however, appears to be the iPad's touchscreen, which checks in as a $95 part and up $15 from the company's earlier estimates.

iSuppli last week predicted that the iPad could sell 7.1 million units worldwide in 2010, increasing to 14.4 million in 2011 and 20.1 million in 2012. The estimate, which the company calls "conservative", is based on a belief that compelling new applications will rapidly come to the iPad while features are added and price points decline over time.

Article Link: iSuppli Revises Entry-Level iPad Component Cost Estimate Up to $260
 
Article Link
https://www.macrumors.com/2010/04/07/isuppli-revises-entry-level-ipad-component-cost-estimate-up-to-260/
Do we know where they get the prices for all the parts?

They're just making them up, right? No one really knows what Apple is paying for this stuff, do they?

I mean, these teardowns are pretty pointless to begin with, but when you throw in the fact that the numbers must be made up I fail to see any use for them at all!
 
Seems about right for the entry level model when you factor in manufacturing, packaging, and air freight. Apple does really seem to crank up the profit margins with higher capacities though.

If we do see a price drop some time in the next year, I bet it won't be in the form of a major low end drop, but rather in the form of shifting down the higher memory amounts, making the 32GB the $499 model etc.
 
Small White Car said:
Do we know where they get the prices for all the parts?

They're just making them up, right? No one really knows what Apple is paying for this stuff, do they?

I mean, these teardowns are pretty pointless to begin with, but when you throw in the fact that the numbers must be made up I fail to see any use for them at all!
Click to expand...

Probably straight from the manufacturer using a bulk pricing schedule...

Sam
 
Small White Car said:
Do we know where they get the prices for all the parts?

They're just making them up, right? No one really knows what Apple is paying for this stuff, do they?

I mean, these teardowns are pretty pointless to begin with, but when you throw in the fact that the numbers must be made up I fail to see any use for them at all!
Click to expand...

They use the actual part numbers of the parts that are installed and have sources to price out those parts. Not to hard to do if you have the right sources.

They probably estimate the cost of the pcb board, but the actual parts costs for the chips should be pretty accurate.
 
I figured that their initial estimates were low. I knew Steve was being honest when he said they tried to make this as low cost as possible. Obviously they are gouging on the 3g radio and more memory. I knew the profit margins on the entry level would be thin for apple.
 
Stetrain said:
Seems about right for the entry level model when you factor in manufacturing, packaging, and air freight. Apple does really seem to crank up the profit margins with higher capacities though.

If we do see a price drop some time in the next year, I bet it won't be in the form of a major low end drop, but rather in the form of shifting down the higher memory amounts, making the 32GB the $499 model etc.
Click to expand...

I think the juciest target for price cuts is the 3G model. I'm really not sure what that extra $130 is for...I can easily see them chopping the difference between wifi and 3G models down to $60 or even less.

Unlesss there's some secret deal where AT&T gets that money or something. Who knows...it's possible!
 
Not bad at all

usually 50% of the price and we have to calculate other items like software, marketing and so on...

roughly about 30 to 35% profit for apple, that is usual for AAPL 😉

man that LCD screen is expensive!!! 😎


Pros for APPLE
* software
* cheaper memory component because of iPod and other stuff
* millions of units sold
* iTunes integration
* execution

iPad sales will be slow but will grow over the period, wait for the 4.0 !!!
 
Still, it's pretty amazing to me how Apple can build such a quality product for such a small price.

Kudos, Apple!

🙂
 
Stetrain said:
Seems about right for the entry level model when you factor in manufacturing, packaging, and air freight. Apple does really seem to crank up the profit margins with higher capacities though.

If we do see a price drop some time in the next year, I bet it won't be in the form of a major low end drop, but rather in the form of shifting down the higher memory amounts, making the 32GB the $499 model etc.
Click to expand...

I wouldn't count on it. Remember, most tablets are struggling to make the $500 price point right now. The Courier uses Intel insides, which are more expensive than ARM CPU's, and so what you have is a $500 iPad, a $550 JooJoo, or a $600ish Courier. Apple would be smart to price cut everyone, knowing that if their tablet becomes the de-facto, much like Windows is on a computer, than they will more than make up the loss in app store sales.

Heck, at $300 that's an impulse buy for many people.
 
$260 actually sounds like a lot, but presumably a lot of the R&D was covered already under iPhone and iTouch work. At least, the core SDK and OS was there- better than starting from scratch.
 
MacRumors said:
"Because of the sheer scale of this device, we're seeing more here than we expected to," says Rassweiler.

iSuppli : iPad could sell 7.1 million units worldwide in 2010, increasing to 14.4 million in 2011 and 20.1 million in 2012. The estimate, which the company calls "conservative", is based on a belief that compelling new applications will rapidly come to the iPad while features are added and price points decline over time.
Click to expand...

Apple tries to set a "form factor" and a "price point" and incrementally adds features and performance to improve the value vs. time at that price point. I would think it unlikely to see price drops. If anything consumers tend to ramp up the feature offering over time and become less price sensitive as a group as a product line matures.

Rocketman
 
Small White Car said:
I think the juciest target for price cuts is the 3G model. I'm really not sure what that extra $130 is for...I can easily see them chopping the difference between wifi and 3G models down to $60 or even less.

Unlesss there's some secret deal where AT&T gets that money or something. Who knows...it's possible!
Click to expand...

Thanks for not even bothering to look around for reference points, maybe it's a lot more expensive than it "should" be, but really, the situation is a lot better than other options. It's a non-subsidized radio, and it's exactly the same as the non-subsidized price as a USB 3G stick I found on Verizon's web site ($130). AT&T has a $250 pre-contract price on all their USB 3G sticks. The iPad's data plan prices are a lot cheaper than Verizon too. ATT service for iPad is $15 for 250MB without contract, Verizon wants $40/mo on a contract. 5GB AT&T is $30, Verizon wants $60. Personally, I see the iPad's no-contract plan to be a plus, and it pays for itself vs. competing data plans within a few months.

I think the 3G version also has a GPS chip not found in the WiFi version.
 
Small White Car said:
Ok then, what do YOU think a DVD costs?
Click to expand...

What if I use a live download instead?

Also, not getting an iPad until Apple realizes it needs a webcam, just as the iPhone has one, and the MacBook has one. If this is an in-between product, it needs one, like yesterday. Also, RAM, 512MB is what I am aiming for, 256MB is too pitiful and I have seen apps saying "Oops! Out of memory, restart iPad"
 
irun5k said:
$260 actually sounds like a lot, but presumably a lot of the R&D was covered already under iPhone and iTouch work. At least, the core SDK and OS was there- better than starting from scratch.
Click to expand...

This time, though, Apple designed their own custom chips.
 
Apple would be smart to price cut everyone, knowing that if their tablet becomes the de-facto, much like Windows is on a computer, than they will more than make up the loss in app store sales.
Click to expand...
I heard somewhere that the App Store isn't all that profitable for Apple. After processing fees, hosting costs and all that. Someone please correct me if I'm wrong.
 
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