Analyst: 32GB iPad Costs $287.15 to Make

Ed Sutherland ()

Analyst: 32GB iPad Costs $287.15 to Make

Another research firm is reporting how much it costs Apple to build it’s new iPad. ISupply said the 32GB version with 3G costs $287.15 for the parts and manufacturing. The iPad’s low cost to build may provide the Cupertino, Calif. company the “wiggle” room to lower the device’s retail price if needed.

Although the iPad’s parts cost $219.35, the $80 multi-touch screen and $17 processor adds to the final tally, according to iSuppli. Even so, the 32GB iPad costs only to build is only 39.4 percent of the eventual retail price, the analysts said.

Credit Suisse analyst Bill Shope said Apple officials are intent on staying “nimble” on iPad pricing, should a cut be needed to fuel consumer demand. “If they had to reduce the retail price, they certainly could,” iSuppli analyst Francis Sideco told BusinessWeek.

Earlier this month, Broadpoint AmTech analyst Brian Marshall said the low-end $499 iPad costs just $270 to build. Apple sees the biggest profit from the 3G radio which costs the company just $16 but adds $130 to the retail price. Another high-margin item in the iPad is memory. Although 32GB costs Apple just $25.50, it tacks on $100. While 64GB costs Apple only $76, the added memory costs consumers $200 more.

DON'T MISS
Google Nexus Parts Cost $174, Slightly Less Than iPhone 3GS

[Via 9to5Mac and BusinessWeek]

15 comments »

About the author

Ed Sutherland

Ed Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.

(sorry, you need Javascript to see this e-mail address)| Read more posts by .

Posted in News |

  • Joseph

    Why are these “costs Apple to build” numbers always reported without mentioning that there are a bunch of other costs that aren’t mentioned? Like costs of software development and maintenance, shipping, packaging, marketing, and the list goes on. The focus on costs of parts is extremely misleading.

  • Visitor

    @Joseph:

    The omission of those details is Cult of Mac’s, not the research firm. iSuppli’s reports always state that they are listing BOM costs. Some of these research firms take a stab at assembly costs, but they never guess on R&D, licensing/royalty fees, distribution, marketing, etc.

  • Justin

    Well Joseph, I don’t think the point is how much it costs to build the machine itself, but how much the cost of each physical component is. I think it’s well understood that the breakdown doesn’t include licensing fees, R&D, marketing, transportation, distribution, support, etc. Clearly they are only addressing the cost of each individual product and how much money went into specifically building one unit, apart from the other costs. The other costs are more the cost of doing doing business, which, I will agree with you, is often overlooked by the consumer.

  • sherman

    “its new iPad.” NOT “it’s new iPad.”

  • joh

    To understand what “BOM costs” actually means it may be quite useful to think of the BOM costs of a bottle of coke.

  • Joseph

    I appreciate the response, but I don’t think it is “well understood” that there are other costs. In fact, here’s a NY Times post that reports only “material, manufacturing, and warranty costs” and based on this makes the absurd claim that Apple will have a “43 percent profit margin” on the iPad:
    http://gadgetwise.blogs.nytimes.com/2010/02/05/the-cost-of-a-499-ipad-290/

    Most people don’t know what a “browser” is. They certainly don’t know that there a number of unmentioned costs that Apple has to put into the product, particularly costs of OS and software development.

  • http://www.toxicspark.com Andrew Macdonald

    @Sherman “its new iPad.” NOT “it’s new iPad.”

    Big f*cking deal. Your seriously moaning over a tiny punctuation error.

    At the rate these guys at COM bang articles out, there are bound to be tiny grammar errors here and there, but what a pathetic thing to write a damn comment about.

    If you don’t like it, head over to somewhere else, where Im sure there will also be the odd grammar error.

  • http://ipadhype.net Mike

    I agree with the 1st post….there is much more than what you see involved.

  • Matt

    “I think it’s well understood that the breakdown doesn’t include licensing fees, R&D, marketing, transportation, distribution, support, etc.”

    It isn’t though. Not to the average person. They just read something like this and say “OMG Apple’s making hundreds of dollars on every iPad!” And then they go tell their friends that. Even first person reads the comments from us, the people that person speaks to won’t have that benefit. I’ve seen it before. I’ve had people come up to me and say “do you know how much Apple made on that?” because they read one of these bogus blog posts or articles. I point out the other costs and I’ve actually been told that doesn’t count that much.

    In my opinion it is irresponsible for the author of this article is to come out here and post this in such a way that he essentially lies by telling just enough truth to lead people to the wrong conclusions. The only reason for articles like this is to generate hits on the site for ad revenue.

  • http://ObamaPacman.com ObamaPacman

    In other notes, Microsoft Windows costs $.50 to make. And Microsoft sells Windows Ultimate for $319.99.

  • http://www.toxicspark.com Andrew Macdonald

    @ObamaPacman – Dead right mate. LOL

  • Poppa

    The 32GB version with 3G costs $287.15, but what was the actual cost of design, developement and tooling etc?
    hopefully it will be worth every cent..

  • http://ObamaPacman.com ObamaPacman

    Here we go, an analyst determined that Microsoft makes 99% profit on windows

    Cost of MS Windows is $0.27:
    http://obamapacman.com/2010/02/microsoft-windows-office-27-cents-bom-component-costs-leave-room-for-pc-price-cuts/

    @Andrew Macdonald
    Hope you like it!

  • http://www.partsforipad.com Parts for iPad

    Thanks for sharing a great article..
    parts for iPad

  • http://www.facebook.com/people/Alicia-Hunter/100001738435975 Alicia Hunter

    Really interesting read, but its pretty obvious apple make huge margins.
    Still I love their products.

    http://ipadfans.co.uk