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  • Apple's Cost for $499 iPad? $270


    A $499 16GB iPad costs Apple $270.50 US to manufacture, according to an estimate by industry analysts Broadpoint Amtech, resulting in a profit of $228 for each one the company sells. For the top-of-the-line 64GB model, the profit goes up to $446. Large profit margins are common for Apple, with many analysts estimating that it makes 60% profit on each iPhone 3GS sold. Given that the original iPhone sold for $599, though, some observers believe that the low cost may make it possible for Apple to drop prices in the future to boost sales.

    Broadpoint Amtech's Brian Marshall did an analysis of the Bill of Materials (BOM) of the various parts that go into the iPad. The single most expensive component was the 9.7-in. IPS LCD touchscreen, which Marshall estimates costs Apple $100. The 16GB of NAND memory in the low-end unit costs $25 each, he believes, and the battery costs $30. The Apple A4 chip, manufactured by Samsung to Apple's specifications, costs $15. The list doesn't include the cost of warranty service, which Marshall estimates will add another $20 to the overall bill.

    Ezra Gottheil, an analyst with Technology Business Research, opined that the large margins gives Apple room to play with price.

    If [Marshall] is right, this shows that there's room going forward for Apple to reduce the price of the iPad. I think the $499 price point is very aggressive, but if they dropped [the price] it would really put the iPad in the netbook range. At a lower price, consumers will have to decide what they want for a portable work and play device, a netbook or get an iPad.
    Though Apple prices the 3G-enabled iPad at a hefty $130 US over similarly configured WiFi-only models, the actual hardware difference between the two is only a $12 baseband processor and a $4 transceiver. This surcharge struck one observer as "slightly ridiculous," and led him to speculate that Apple had artificially inflated the price tag on the 3G models to essentially subsidize the low-end iPads. Aaron Vronko, the chief executive of Michigan-based Rapid Repair - a company that specializes in iPhone and iPod service and repairs - said that he thought "the 3G price is where Apple wanted the price of the iPad to be, but they felt a lot of pressure to hit a pricing mark." In fact, Steve Jobs made pretty much that point in his presentation, saying that Apple "not only had specific technical goals and user interface goals, but an aggressive price goal, because we want to put this in the hands of a lot of people."

    Apple has not yet released pricing for iPad units that will be sold outside the United States. "We hope to have our international deals in place in [the] June/July time[frame] - we’re starting on that tomorrow," Steve Jobs said on Wednesday of last week.

    image via The Guardian
    This article was originally published in forum thread: Apple's Cost for $499 iPad? $270 started by Paul Daniel Ash View original post
    Comments 80 Comments
    1. Melech518's Avatar
      Melech518 -
      Quote Originally Posted by L00i3 View Post
      I can see your point, but where is the value at $499? You can get a 32GB iPod Touch for $299. The screen costs them $100, so that equates to about $80 or so over the Touch. The storage capacity is halved on the Pad, so that's about $25 less.

      So Touch (299) + screen (80) - storage (25) = 354

      I could maybe see $399 being a decent price for the low end Pad since it's nothing more than a big iPod Touch.
      FYI- The iPhone 3GS is $599 for the 16GB model and $699 for the 32GB. The $99, $199, and $299 pricing is what's called "subsidized pricing" through At&t and other official carriers. The carrier takes on the burden of the actual cost of the device and offers it at a reduced rate when entering into a 2-year agreement of service. You are actually paying much more than the retail price of the phone through subsidized pricing due to your monthly fees over a 2-year period.
    1. kingskid07's Avatar
      kingskid07 -
      It would seem that with such a profit margin, the least they could do is find a means to include flash support. I've used nothing but Apple products since about 1999. I love their products, but am growing weary of half-delivered quality on key products~
    1. gthugballin's Avatar
      gthugballin -
      Quote Originally Posted by StealthBravo View Post
      lol. Honestly they are mostly 14-20. The age of arrogance and entitlement

      PHEW glad i'm 21, no arrogance and entitlement for me ^__^ LOL
    1. dale1v's Avatar
      dale1v -
      Quote Originally Posted by StealthBravo View Post
      lol. Honestly they are mostly 14-20. The age of arrogance and entitlement
      I'm 20; fix your post
    1. StealthBravo's Avatar
      StealthBravo -
      lmao. There are exceptions to the rule but I'm not sure you are one
    1. hancoma's Avatar
      hancoma -
      Quote Originally Posted by dale1v View Post
      I'm 20; fix your post
      LOL @dale1v.
      Asking for this change IS accurately depicting entitlement of said age group....
    1. Melech518's Avatar
      Melech518 -
      Dale!! Where you been?
    1. dale1v's Avatar
      dale1v -
      Quote Originally Posted by StealthBravo View Post
      lmao. There are exceptions to the rule but I'm not sure you are one
      Quote Originally Posted by hancoma View Post
      LOL @dale1v.
      Asking for this change IS accurately depicting entitlement of said age group....
      Go away!

      Quote Originally Posted by Melech518 View Post
      Dale!! Where you been?
      around, lol.
    1. tudtran's Avatar
      tudtran -
      Mtf
    1. lolcats1's Avatar
      lolcats1 -
      Quote Originally Posted by Melech518 View Post
      Well said, both of you!
      that was the same person

      Quote Originally Posted by Melech518 View Post

      I would never expect a company to produce a product and give it away without making a decent profit from it. This economy would fall apart if business cannot turn a profit...
      are you speaking of the american economy? because there is a very, very fine line between a "decent profit" and a 100% markup. as for the economy "falling apart" think of all the micro companies this giant has strangled, just so they can run their OS in more households. companies like this, ones that have become "too big to fail" have become veritable monopolies, and are the reason that, to say it bluntly, shits goin down.

      The essence of capitalism lies in consumers making selfish choices, and companies having to cater to those whims, or perish. Companies like Apple are attempting to reshape this process, at not theirs, but at our peril.

      Quote Originally Posted by StealthBravo View Post
      lol. Honestly they are mostly 14-20. The age of arrogance and entitlement
      ah, the ignorance burns. it burns us precious, shall we put it out?
    1. Melech518's Avatar
      Melech518 -
      Quote Originally Posted by lolcats1 View Post
      that was the same person

      No it wasn't, go back and read who I quoted a second time.

      are you speaking of the american economy? because there is a very, very fine line between a "decent profit" and a 100% markup. as for the economy "falling apart" think of all the micro companies this giant has strangled, just so they can run their OS in more households. companies like this, ones that have become "too big to fail" have become veritable monopolies, and are the reason that, to say it bluntly, shits goin down.

      The essence of capitalism lies in consumers making selfish choices, and companies having to cater to those whims, or perish. Companies like Apple are attempting to reshape this process, at not theirs, but at our peril.
      If you knew anything about business or even retail for that matter you would know that there is almost always a 100% or more markup.
    1. dsg's Avatar
      dsg -
      With apple making so much profit not just on the iPad wtf are they doing not paying royalties for lets say Nokia's patented material, or anyone else they decide they don't want to pay,

      Apple needs bringing down to earth HARD!!!

      Don't get me wrong I like Apple products, but the way the treat market competitors or even people willing to work with them 'Adobe' is wrong

      Apple are P!$$!^& Me Off
    1. north_star_13@hotmail.com's Avatar
      What everyone is forgetting is how much everyone estimated the device to be in the first place! the lowest guess i saw was $800 us. and Apple knocked off $300! that sounds pretty great to me. And so what if its a giant ipod touch. Bigger screen= bigger fun. After all Apple is marketing it as a gaming device.

      Oh and if you dont like how much apple makes off its products, Then DONT SUPPORT THEM by buying their stuff stupid.
    1. lolcats1's Avatar
      lolcats1 -
      Quote Originally Posted by Melech518 View Post
      If you knew anything about business or even retail for that matter you would know that there is almost always a 100% or more markup.
      oh, well you must have achieved a higher state of being than I have. because i so foolishly believed that Microsoft losing money on every xbox they sold was a negative markup, and that they intended on making that up through their hardware sales.

      how foolish of me, i now see that 21 year olds posses infinite and all seeing knowledge. i will attempt to communicate to all 18 - 20 year olds our ignorance.
    1. Melech518's Avatar
      Melech518 -
      You are nothing but a Troll...
    1. StealthBravo's Avatar
      StealthBravo -
      ^ agree
    1. dsg's Avatar
      dsg -
      Quote Originally Posted by [email protected] View Post
      Oh and if you dont like how much apple makes off its products, Then DONT SUPPORT THEM by buying their stuff stupid.
      If you actually read my post and understood what I said, I'm not agaist their profits, it how they like to screw other companys that ticks me off,

      learn to read and think about what you read!
    1. L00i3's Avatar
      L00i3 -
      Quote Originally Posted by Melech518 View Post
      FYI- The iPhone 3GS is $599 for the 16GB model and $699 for the 32GB. The $99, $199, and $299 pricing is what's called "subsidized pricing" through At&t and other official carriers. The carrier takes on the burden of the actual cost of the device and offers it at a reduced rate when entering into a 2-year agreement of service. You are actually paying much more than the retail price of the phone through subsidized pricing due to your monthly fees over a 2-year period.
      FYI - I said 32GB iPod Touch since this thing is a big *** ipod touch, not a big *** iphone.

      I know the difference between a phone and an mp3 player. And I am also well aware of the pricing scheme of iPhones.

    1. Melech518's Avatar
      Melech518 -
      Quote Originally Posted by L00i3 View Post
      FYI - I said 32GB iPod Touch since this thing is a big *** ipod touch, not a big *** iphone.

      I know the difference between a phone and an mp3 player. And I am also well aware of the pricing scheme of iPhones.

      You are right, you did say iTouch. My mistake
    1. awesomeSlayer's Avatar
      awesomeSlayer -
      For Apple, it is a good profit.
      For me, it might worth it since I own a first gen iPod touch by comparing the tech specs.
      For others, it varies.