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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. lolcats1's Avatar
      lolcats1 -
      Quote Originally Posted by Melech518 View Post
      You are nothing but a Troll...
      this is a discussion thread. what should we do with it? post a single line opinion that will inspire no responses, and then x out the browser? that would certainty make a dull community.

      "Behold!
      For the vision they embrace
      And insanity
      Shall the negation rise
      And ourselves perish!
      For it is said!"
    1. Melech518's Avatar
      Melech518 -
      You could always get a hobby rather than trying to create a problem.
    1. awesomeSlayer's Avatar
      awesomeSlayer -
      Quote Originally Posted by lolcats1 View Post
      this is a discussion thread. what should we do with it? post a single line opinion that will inspire no responses, and then x out the browser? that would certainty make a dull community.

      "Behold!
      For the vision they embrace
      And insanity
      Shall the negation rise
      And ourselves perish!
      For it is said!"
      But, your previous post has nothing to do with the iPad. Therefore, it is off topic.
    1. lolcats1's Avatar
      lolcats1 -
      Quote Originally Posted by dsg View Post
      Apple needs bringing down to earth HARD!!!
      gotta agree with you there. although fanboys will certainty buy enough of them to keep the sales going. one they've bought into apple, they're afraid to admit that they've purchased inferior products, and so keep buying apple, hoping to justify that initial mistake

      Quote Originally Posted by awesomeiPod View Post
      But, your previous post has nothing to do with the iPad. Therefore, it is off topic.
      'twas discussing the issue of markup. and i brought to light a very valid example of a product that had a negative markup. now, attacking another user, and making accusations, that is off topic.

      iPad has a glass screen. now this post is ON topic
    1. Fallguy's Avatar
      Fallguy -
      I would have to say that if you like it and can afford it regardless of what it cost to make it , then buy it . Otherwise quit yer bitchin. I dont like it any more than the rest of you , but I can see it doesnt have what I want (flash, camera,etc.) and therefore I will not buy .
    1. lolcats1's Avatar
      lolcats1 -
      Quote Originally Posted by Fallguy View Post
      quit yer bitchin.
      lol, nicely put.
    1. awesomeSlayer's Avatar
      awesomeSlayer -
      Quote Originally Posted by Fallguy View Post
      I would have to say that if you like it and can afford it regardless of what it cost to make it , then buy it . Otherwise quit yer bitchin. I dont like it any more than the rest of you , but I can see it doesnt have what I want (flash, camera,etc.) and therefore I will not buy .
      Well said!
    1. rhekt's Avatar
      rhekt -
      in my line of buisness 50-70% from actual cost markup is not uncommon. the manufacturer makes a markup to the resaler. the resaler makes a markup to the retail. the world turns. we all live another day. in a perfect world 20-30% is fair. however your buisness profits will soon dwindle if everything is sold on that sort of structure.
    1. Periodic's Avatar
      Periodic -
      Quote Originally Posted by StealthBravo View Post
      Good for them. Glad they are making a decent profit margin on it
      assuming they sell any
    1. StealthBravo's Avatar
      StealthBravo -
      ^ they will sell tons
    1. rhekt's Avatar
      rhekt -
      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.
      well said
    1. lolcats1's Avatar
      lolcats1 -
      Quote Originally Posted by Melech518 View Post
      You could always get a hobby rather than trying to create a problem.
      am i being accused of thoughtcrime?
    1. MetallicaFan1991's Avatar
      MetallicaFan1991 -
      ^It might sell in the USA but over here in UK it will not sell. It'll be a failure like the AppleTV is. Apple need to cut more of the price if it only costs that much to make it if they want everyone to buy it. Putting in a microsim is ridiculous too just because Apple don't want us using our current sims with a data plan. So only suckers who have money to burn will pay for a data plan too. Hey at least you get to change your wallpaper without jailbreaking. Haha.
      I'm 19 so I guess I fall into SB's age "category" xD
      lolcats person is funny.
    1. lolcats1's Avatar
      lolcats1 -
      Quote Originally Posted by A.T View Post
      .
      I'm 19 so I guess I fall into SB's age "category" xD
      lolcats person is funny.
      oh joy! i've proved amusing. i'm sorry that i'm not able to effectively translate my fun and nonchalant personality over this medium.
    1. MetallicaFan1991's Avatar
      MetallicaFan1991 -
      ^Lol not in a bad way.

      The nano jokes been made already

      Lol too bad it wasn't called Mac's iPad. That name would be so close to Maxipad!!!!
    1. icreepin's Avatar
      icreepin -
      First let me say that Apple has said that the Ipad will take the place of the "Air" there over priced for the value "netbook" So Apple is figuring that people who want a light cheap easy accessory PC will buy a Ipad.

      With that being said when you take the market segment they are targeting and comparing it to the product they currently have in that line up the Ipad becomes a great deal.

      The downfall I see is that there are things that should come out working from the start that doesnt. Flash being one.

      Now profit isnt a dirty word and actually cost that a 3rd party offers and actual cost that apple has on there books I am sure is 2 diferent figures.
    1. Melech518's Avatar
      Melech518 -
      Apple takes 30% of AppStore sales, I am sure they are going to get a similar number with the iBookstore sales

      It is funny that throughout all of the complaining about the iPad, no one has said ONE WORD about the lack of a Verizon announcement....I mean, I knew it was BS from the very first rumor, but I love how no one has complained about that.
    1. z3r01's Avatar
      z3r01 -
      Quote Originally Posted by chrlswltrs View Post
      With that much of a profit margin why can't they include the basic functionality of a netbook so that the web is usable. Put freaking flash on it!!!!! Do that and I'll buy it.


      i hate people like u that wont hope off flashs penis....leave it alone and stop your nagging anad buy a netbook
    1. icreepin's Avatar
      icreepin -
      Quote Originally Posted by z3r01 View Post
      i hate people like u that wont hope off flashs penis....leave it alone and stop your nagging anad buy a netbook
      Not supporting flash is a valid complaint when you look and see what apple has said one of the many uses of the ipad could be used for.

      List 10 decent newspapers world wide that doesnt contain some type of flash product on there web site.

      List 5 strictly web based media companies that dont use flash in at least 40% of the content that they deliver.

      Not having flash support on the ipad from day one is about as smart as Microsoft releasing ME back in 2000.
    1. alz0rz's Avatar
      alz0rz -
      Quote Originally Posted by icreepin View Post
      Not supporting flash is a valid complaint when you look and see what apple has said one of the many uses of the ipad could be used for.

      List 10 decent newspapers world wide that doesnt contain some type of flash product on there web site.

      List 5 strictly web based media companies that dont use flash in at least 40% of the content that they deliver.

      Not having flash support on the ipad from day one is about as smart as Microsoft releasing ME back in 2000.
      ME did well.