Why The iPad Mini Doesn’t Sell For $199

Why The iPad Mini Doesn’t Sell For $199

Premium parts don’t come cheap.

The iPad mini is Apple’s answer to smaller Android tablets from the likes of Amazon and Google. But there’s a good reason why it doesn’t come with the same $200 price tag. A teardown has revealed that the new iOS device costs at least $188 to build, and that price rises when you add bigger storage options and 4G connectivity.

Analysts at research firm IHS, previously known as iSuppli, have torn apart Apple’s iPad mini — not for the first time — and found that the entry-level 16GB device costs a minimum of $188 to build. The 32GB model costs an additional $31, while the 64GB model costs an additional $64.

Add 4G to the mix and the iPad mini is even more expensive to build. However, it’s not clear at this point just how expensive without a 4G model to pull apart.

Taking those prices into account, then, it’s clear why Apple cannot sell the iPad mini from $199 to compete with the Nexus 7 or the Kindle Fire HD. Once you add in other costs involved with the device — such as marketing, shipping, packaging, and more — the Cupertino company would see very little profit from its tiny tablet.

IHS also found during its teardown that the iPad mini’s 7.9-inch display, supplied by LG Display and AU Optronics, accounts for about 43% of the bill of materials (BOM) for the device at $80. According to its report, the panel uses a new technology known as GF2, which allows the display to be thinner than previous iPad displays.

However, that technology also pushes the cost of the display up a little bit. All Things D reports:

Andrew Rassweiler, an IHS analyst and head of the company’s teardown team, says that the new technology is proving somewhat problematic to manufacture, which is, for the moment, driving costs on the display up. But as kinks in the manufacturing process are worked out, those costs will come down.

The iPad mini’s memory chips, supplied by Elpida, cost around $15.50, according to IHS.

Samsung still produces Apple’s A5 processor for the iPad mini, but Apple is avoiding the Korean company’s components wherever it possibly can, IHS reports. Other components are supplied by Cirrus Logic, STMicroelectrics, Broadcom, Murata, and more.

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  • TheKnightWhoSaysNi

    I don’t think anyone was expecting $199.
    $250 was the consensus. $299 would be reasonable.

  • Senturion

    No reasonable person was expecting $199. I think $299 would have made most of the criticism go away.

    $329 is such an odd, uneven price. It looks like an accountant got a hold of the pricing and insisted it be raised to match Apple’s margin guidelines.

    If the Mini had a Retina display $329 would be a great price, without it it’s is overpriced.

  • FriarNurgle

    As much as I really really wanted to see the iPad mini for $250 (specially with it’s specs), the higher price makes sense. Apple had to squeeze the mini pricing in with the iPods, iPad 2, and refurb iPads. Thinks might have been different is the iPad 2 was discontinued IMO, but instead Apple chose to kill the iPad 3 for some odd reason. I’d speculate it was due to ensuring developers keep making apps work with the older specs of the mini & iPad 2.

  • burkino

    iPad Mini is a 2 years plan. Don’t misjudge it on a daily basis.

    Next year Apple will launch an iPad Mini Retina and that will give Apple the most competitive priced product: iPad Mini Original for just 250?!!!

  • extra_medium

    I’d like to know how they figured out what apple was paying its suppliers for those parts.

  • Adrayven

    I was expecting $299, the extra $29 was a bummer, but, ahh, not exactly ‘OMG’ worthy … I’m amazed at some of the negative.. but guess I shouldn’t be.. Many are likely non-apple folks who enjoy bashing.. not sure how much that really impacts sales though.. mostly just us geeks read these blogs I suspect.

    My mom had no clue, she was like, OH.. thats a lot better that $499.. I suspect the average person will say the same.. While others may yet compare to a kindle HD.. I find the Nexus 7 isn’t really in general circulation.. It seems to me to be mostly a Kindle vs iPad mini comparison with most I talk to..

    Here, our Apple store is sold out of the 16 and 32 gb models.. Shoot, the 16gb sold out that morning.. I had to pick up the 32gb model (I wanted that one anyway to store more games)..

    I like it, even w/o retina.. I never could tell the difference anyway. I always thought it was mostly gimmick.. OMG, it’s NOT RETINA!?? ROFL! yeaaaaaa…

  • Matthew Gonzales Landry

    No reasonable person was expecting $199. I think $299 would have made most of the criticism go away.

    $329 is such an odd, uneven price. It looks like an accountant got a hold of the pricing and insisted it be raised to match Apple’s margin guidelines.

    If the Mini had a Retina display $329 would be a great price, without it it’s is overpriced.

    The reason why I believe that it’s $329 is because they want a price difference between the 64GB iPad min ($529) and the 16GB iPad ($499). If they were the same price, perhaps someone might question the iPad’s existence in some way. And critics are saying $329 will be the price of the Retina version down the line.

  • Matthew Gonzales Landry

    I was expecting $299, the extra $29 was a bummer, but, ahh, not exactly ‘OMG’ worthy … I’m amazed at some of the negative.. but guess I shouldn’t be.. Many are likely non-apple folks who enjoy bashing.. not sure how much that really impacts sales though.. mostly just us geeks read these blogs I suspect.

    My mom had no clue, she was like, OH.. thats a lot better that $499.. I suspect the average person will say the same.. While others may yet compare to a kindle HD.. I find the Nexus 7 isn’t really in general circulation.. It seems to me to be mostly a Kindle vs iPad mini comparison with most I talk to..

    Here, our Apple store is sold out of the 16 and 32 gb models.. Shoot, the 16gb sold out that morning.. I had to pick up the 32gb model (I wanted that one anyway to store more games)..

    I like it, even w/o retina.. I never could tell the difference anyway. I always thought it was mostly gimmick.. OMG, it’s NOT RETINA!?? ROFL! yeaaaaaa…

    Why do people always talk about gimmicks as if they’re bad or disqualifying in any way? All a gimmick means is that the subject, which is probably a single feature or two, was meant to attract attention. Of course features are meant to attract attention: it’s how companies get people to buy their products.

    $329 is better than $499, and a lot of people will notice, but that’s not going to stop the average person from seeing the $130 between the Kindle and this.

    If you really can’t tell the difference between a Retina display and a non-Retina display, I think you need glasses. Seriously.

  • jahsoul

    I am one who was thinking that this will run in the $250 – $300 range. But seriously, I’m not going to get sucked into the premium parts don’t come cheap. I don’t make subjective comparisons so I did a little reading and found out that once the price of the screen comes down, the Nexus 7 and the iPad Mini will have a similar BOM. At the end of the day, it’s all about profit margin. It is what it is. I’m just waiting on the Mini 2 with the A6 and better resolution.lol

About the author

Killian BellKillian Bell is a freelance writer based in the UK. He has an interest in all things tech, but most enjoys covering Apple, anything mobile, and gaming. You can follow him on Twitter via @killianbell, or through his website.

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