• 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
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