Apple's iPad only costs $270 to make, says analyst | Cult of Mac

Apple’s iPad only costs $270 to make, says analyst



Although that $499 entry-level iPad is pretty much affordably by everyone, Apple will still be making a rather sizable profit on each one, if a bill-of-materials (BOM) breakdown conducted by BroadPoint AmTech analyst Marshall is to be trusted.

According to the BOM, the low-end $499 iPad only costs $270 to make, with the 9.7-inch touch-sensitive display being the most expensive element at around $100, with the 16GB SSD and aluminum case each costing only about $25.

As the storage jumps, so do Apple’s profits: the 32GB and 64GB iPads only see their costs rise another $25.50 and $76.50, respectively, but their suggested prices go up $100 and $200.

Apple’s most profitable BOM item? The 3G radio: it only costs them $16, but Apple’s charging over $130 for it. I personally wonder if some of that mark-up might be shared with AT&T to compensate them for assumed profit losses related to the month-by-month, cancel-anytime iPad 3G deal, but either way, Apple’s charging a premium for the functionality.

It’s all an estimate, of course — no one will know the iPad’s true cost until it’s actually vivisected after launch — but Apple knows how to put together a high-quality product that is both extremely profitable and an extremely good value. I wouldn’t be surprised if these numbers were exactly right.