The $499 iPad costs Apple $270 in materials & manufacturing


robbieduncan

Moderator emeritus
Jul 24, 2002
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London
I seriously question the accuracy of the figure. This is a device that no one has so cannot have completed a tear-down containing components that Apple design and have manufactured uniquely for them that are not available for sale. So the cost of those components (the A4 CPU in particular) is a guess. Yes perhaps an educated one but a guess all the same.
 

maflynn

Moderator
Staff member
May 3, 2009
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Those figures and articles are never accurate. They fail to properly take into consideration the overhead, actual price (how much of a discount apple gets) and R&D costs in designing the device.

Yeah, out of pocket expense of the parts will be (and should be) less then the the retail purchase price. I might have missed it, but I didn't see any mention of assembly expenses, packaging, marketing etc. So while the expense is less then the asking retail price, I'm not sure the profit margin is as wide as they postulate.
 

VenusianSky

macrumors 65816
Aug 28, 2008
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Call me crazy, but I figure that Apple also pays their employees. That money has to come from somewhere.
 

bozzykid

macrumors 68020
Aug 11, 2009
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Those figures and articles are never accurate. They fail to properly take into consideration the overhead, actual price (how much of a discount apple gets) and R&D costs in designing the device.
Those articles always mention that fact too. They are only pricing the parts included in the device. I don't see why people freak out about such research.
 

lordhamster

macrumors 6502a
Jan 23, 2008
691
281
Those articles always mention that fact too. They are only pricing the parts included in the device. I don't see why people freak out about such research.
People freak out because inevitably some pinhead comes on the forums and claims Apple is ripping people off because it only costs $x to manufacture but they sell for $x + y.

This thread has been surprisingly levelheaded.
 

JackMaurer

macrumors member
Dec 22, 2008
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0
People freak out because inevitably some pinhead comes on the forums and claims Apple is ripping people off because it only costs $x to manufacture but they sell for $x + y.

This thread has been surprisingly levelheaded.
Even if it cost them $1 to manufacture and they sell it for $1000....

Apple is NOT forcing you to buy it...and people know how much something is before they buy it...so how can they be "ripped off"
 

lordhamster

macrumors 6502a
Jan 23, 2008
691
281
Even if it cost them $1 to manufacture and they sell it for $1000....

Apple is NOT forcing you to buy it...and people know how much something is before they buy it...so how can they be "ripped off"
Beats me. Since all purchases are consensual I have no clue how anyone ever claims this. But go back to when they dropped the price of the iPhone, everyone was suddenly outraged that a company had dared to make a profit off early adopters.
 

colmaclean

macrumors 68000
Original poster
Jan 6, 2004
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Berlin
Even if the figures don't tell the real story, it's interesting to note that as always for Apple the iPad's memory upgrades come at a considerable premium.
 

NT1440

macrumors G5
May 18, 2008
12,141
13,989
Uh, who has been able to get ahold of one and actually part out the device?

I hate speculation based off speculation for the sole purpose of more speculation.
 

bozzykid

macrumors 68020
Aug 11, 2009
2,176
232
Uh, who has been able to get ahold of one and actually part out the device?

I hate speculation based off speculation for the sole purpose of more speculation.
It isn't hard to speculate on the flash memory costs. And as has been the case for years, Apple clearly hikes the price of memory upgrades beyond what most people would consider reasonable considering there are no extra costs involved. I'm sure someone will reply with a snarky response telling me I don't have to buy it if I don't want it. But it is still a valid point.
 

lordhamster

macrumors 6502a
Jan 23, 2008
691
281
It isn't hard to speculate on the flash memory costs. And as has been the case for years, Apple clearly hikes the price of memory upgrades beyond what most people would consider reasonable considering there are no extra costs involved. I'm sure someone will reply with a snarky response telling me I don't have to buy it if I don't want it. But it is still a valid point.
Of course Apple will charge a premium for additional memory. Seems like a given. Like saying the Sky is blue.
 

maflynn

Moderator
Staff member
May 3, 2009
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30,377
Boston
I don't see why people freak out about such research.
Because people start using those articles as gospel, its an incomplete picture that will only serve to confuse matters and fail to accurately report the costs. It does nobody any good by saying that it only costs apple 270 dollars to build an iPad.
 

bozzykid

macrumors 68020
Aug 11, 2009
2,176
232
How much R&D does it take to make the iPod touch bigger? :eek:
Considering they are using an all new chip, I would imagine quite a bit of work went in to getting the iPhone software to work for that chip. My guess is that is why you don't see that many user facing changes in 3.2.
 

Chaos123x

macrumors 68000
Jul 8, 2008
1,693
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Must not be that trivial, otherwise you'd be writing that comment on your Chaos123-Pad while on the back of the Yacht you bought with all the profits. ;)
Almost did that. But saw how much trouble Pystar got into so I decided to make a oversized Motorola Razr instead.... didn't sell well. ;)
 

samcraig

macrumors P6
Jun 22, 2009
16,610
35,211
USA
Gee. What happened to the iPad being such a steal at 499. Now there are complaints that Apple is making a profit. Damn Apple! ;)

Who cares if it costs $1 or 1,000. If you want one and it fills a need for you and you find enough value to purchase one at 499, then that's all that matters.

If you don't find value in spending 499 for it - don't buy it.
 

zemzabob

macrumors regular
Feb 3, 2010
172
0
Gee. What happened to the iPad being such a steal at 499. Now there are complaints that Apple is making a profit. Damn Apple! ;)

Who cares if it costs $1 or 1,000. If you want one and it fills a need for you and you find enough value to purchase one at 499, then that's all that matters.

If you don't find value in spending 499 for it - don't buy it.
Well said!