Arik Hesseldahl reports for BusinessWeek, “Materials for the iPad, which went on sale Apr. 3, include a touchscreen display that costs $95 and a $26.80 processor designed by Apple and manufactured by Samsung Electronics. iSuppli’s analysis means that the components of the lowest-priced iPad, which includes 16 GB of memory, constitute 52% of its $499 retail price, on par with other Apple products including the iPhone 3GS.”
“A midpriced 32 GB version of the iPad that sells for $599 contains $289.10 worth of materials. A high-end 64 GB version, which retails for $699, contains components that cost $348.10, according to iSuppli,” Hesseldahl reports. “Much of the iPad’s component costs went toward making the device appealing to use, says iSuppli principal analyst Andrew Rassweiler, who supervised the ‘teardown’ analysis of the product. More than 40% of the iPad’s costs are devoted to powering its touchscreen display and other components of the computer’s user interface—’what you see with your eyes and what you feel with your fingers,’ he says. The distinctive aluminum casing on the back of the device contributed about $10.50 to the cost of materials.”
Hesseldahl reports, “The estimates don’t include costs for intangible items such as software development, advertising, patent licensing, [packaging], or shipping.”
“In February, iSuppli had estimated that the least expensive iPad would carry a $219.35 cost of materials,” Hesseldahl reports. “Once it took one apart, iSuppli found more silicon chips than it had expected powering interactions with the iPad’s 9.7-inch screen. Apple uses three chips to control the iPad’s touchscreen, for example. ‘Because of the sheer scale of this device, we’re seeing more here than we expected to,’ says Rassweiler.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “JES42” for the heads up.]
A capitalist Win-Win. Profit for Apple and plenty of demand.
All this really tells you is that if you wanted to fill up your Chinese warehouse with enough parts to make a million iPads, it would run you $259 million.
Get ready for the all the Win-Fan-Boys to crow about how Apple doesn’t give them enough choices for components, and it’s cheaper to build your own HackPad, and how they built an over-clocked, dry-ice-cooled Pentium 4 HackPad with a 500 GB HD and a GeForce 8600M GT with 512 MB of VRAM, a DVD Burner, USB, Optical, PS2, and Component ports, a 22-variety card reader, with stand, mouse, and physical keyboard. “It weighs 27 pounds and is 13″ X 13″ X 13″, and cost only $398 to assemble from parts scrounged off eBay and it almost runs an OS just like Apple’s, and so where does Apple get off trying to rip people off with their smaller, lighter, and yet more expensive iPad ?!!”, the Win-Fan-Boys will screech.
Sure, I wrote the preceding, run-on sentence in jest.
But I also am pretty sure that I will hear and read some variant of the above, stated in earnest, within the next few months.
Growing up, it was typically the case that wholesale cost was 60% of suggested retail, leaving roughly 40% gross (not net) profit. (My father had a retail store, and I also worked in department and electronic stores.) Based on this analysis, the raw parts alone amount to some 50% of selling price. Apple as a preferred customer of course may be getting better prices.
Hesseldahl reports, “The estimates don’t include costs for intangible items such as software development, advertising, patent licensing, [packaging], or shipping.” What about the cost of labor (or is that counted in “packaging”)? Add it all up and Apple’s selling price is more than fair.
Problem about all this part cost comparing is no on figures in the cost of R&D;, Cost of Employee wages, Salaries to senior research directors and marketing, Not to forget also about the Millions of dollars needed to make the Specific machines for tooling purposes.
And of course we will soon see some smart a** say’s that Apple is making a killing and they could do the same thing. My Response is I will gladly purchase the parts just to see some idiot make good on that claim,
No Cardboard cutout body’s for the final product and please no sloppy welding.
P.S. Should we make the use of glue gun’s optional just to help the handicap?
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Peace to all and I Like my iPad even in it’s low cost bag of parts without assembly price of $259.00
Makes a great gift to.
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MDN’s sales projections really need to be right if Apple is to make up for their higher margin computers, especially MBPs, that are cannibalized by iPads being so heavily promoted as the magical future of computing.
Funny how the screen keeps going up in price. I first read the screen was going to cost $40, as some analyst said it was 4x as large as the one in the iPhone and that one cost $10.
Odd thing is the iPad screen is actually 5x bigger in numbers of pixels.
Then, I kept reading the iPad screen was actually $80. And, now, it’s $95!!!
As for the labor cost question someone asked, it’s $12, but could be more, since the analysts keep pushing the cost up.
The SECOND one cost $259.
The first one cost $50,000,000.
They use the low cost of the ipad to
attract the buyers and they use the app store for all there real profits.
@Lucid4000
Actually, it goes the other way around. Apple is a Hardware company that makes/sells software to help it sell the hardware. You don’t get to rich selling $.99 software to beging with.
Stupid. The price of all the components says nothing about the value of the device. What about R&D;?