iPad Cost Analysis Leaves Apple Plenty of Profits
A teardown analysis conducted by iSuppli on Wednesday estimates the total manufacturing cost of the 16-Gbyte Wi-Fi Apple iPad at $259.60, far less than the $499 Apple is charging for it.
Specifically, the firm estimated that the individual components within the iPad cost $250.60, known as a bill-of-materials cost. Both the BOM and the manufacturing cost exceeded iSuppli's initial estimates of $219.35 and $229.35, respectively, based on higher than anticipate costs for the display, the battery, the user-interface chips and the power-management circuits.
With the release of the iPad this past weekend, very little about the device remains unknown, at least with the first Wi-Fi-only devices. PCMag.com has , , and even . But what it costs to manufacture has remained unknown.
The most expensive component within the iPad is the 1.024-by-768, 9.7-inch touchscreen display manufactured by LG Display, priced at $65 and representing 25.9 percent of the product's BOM, iSuppli said. The touch-screen assembly, the next most-expensive part, costs $30. The flash memory, supplied by Samsung, costs about $29.50. The A4 chip which powers the iPad, and designed by Apple's PA Semi subsidiary, should cost about $19.50.
According to iSuppli, the $21 battery knits together two cells into a single pack, suggesting that it could be replaced.
The iSuppli analysis suggests that Apple could be recording substantial profits on its new iPad tablets. However, the teardown analysis doesn't factor in what Apple spent in research and development and other design, nor does it factor in the development costs of the iPad's OS (based on the iPhone) or the costs associated with developing its on-board apps. Since the iPad iSuppli analyzed doe not contain an integrated 3G module, the cost of that chip has also been excluded.
iFixit conducted a similar, illustrated teardown of the iPad, with more of an emphasis on which specific parts the iPad contains. For example, iFixit discovered that Apple shifted from DRAM manufactured by Toshiba to Samsung memory in the shipping version of the tablet.