“Previously known as iSuppli, and widely known for its so-called ‘teardown’ analysis reports, IHS has just completed its teardown report on the Apple’s newest iteration of the tablet [iPad mini],” Arik Hesseldahl reports for AllThingsD. “The verdict: The base model, a Wi-Fi-only 16 gigabyte iPad mini, which sells for a starting retail price of $329, costs about $188 to build. Adding additional memory — the options are 32GB and 64GB — adds only incremental cost but a fair amount of profit, amounting to an additional $90 for the 32GB version and $162 per unit on the 64GB model.”
Hesseldahl reports, “Aside from the cost of materials — known in industry lingo as a Bill of Materials (BOM) — the teardown also revealed the identities of several key suppliers on the latest device. The most visible component is the 7.9-inch touch-sensitive display. LG Display and AU Optronics were found to have supplied the display components… [and] Samsung continued its role as the manufacturer of Apple’s A5 processor.. However, wherever Apple has a choice to buy components from other suppliers not named Samsung, it appears to be doing just that. Memory chips and displays, a portion of which have, in previous generations of iOS devices, been purchased from Samsung, appear to be coming from other players. This also appeared to be true of the iPhone 5, released earlier this year.”
Read more in the full article here.
MacDailyNews Note: The BOM, of course, doesn’t include R&D, industrial design, software development and design, significant marketing costs, etc.
Patent agreements, packaging…
… wages and costs at the assembly facility …
In light of this BOM, I think that $325 is a fair price where you can make a healthy profit for a sustainable business without ripping off your customer. It also means that you can make a profit without needing to force your customers to buy additional materials (like ebooks, movies or TV shows) or to sell personal data of your customers, like some cheapskate manufacturers need to do.
Makes for a much more trustworthy relationship with your customers, really.
Apple’s margins on iPads are well established at slightly above 30%, which puts their total cost for the entry level mini at about $220.
Nobody can match Apple’s build costs, so either the Nexus 7 uses markedly inferior parts or Google is losing money on every sale. (Or both.)
I’ll run right down to Radio Shack and pick up the parts!