Apple Profits $208 on Every Entry-Level iPad Sold
Apple Profits $208 on Every Entry-Level iPad Sold
Posted 02/01/2010 at 9:07am
| by Paul Lilly
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Whether you're a fan of Apple's recently unveiled iPad or not (and judging by the reader comments, many of your are not), you were probably expecting the tablet to cost much more -- maybe even twice as much -- than the entry-level unit's $499 price tag. As it turns out, Apple stands to make $208 on every $499 iPad sold, giving the company headroom to drop the price if the market (and competition) dictates.
That's according to a bill of materials (BOM) analysis by Brian Marshall of BroadPoint AmTech. According to Marshall, individual parts inside Apple's 16GB Wi-Fi-only iPad adds up to $270.50, which includes a $10 line item attributed to manufacturing. Factor in another $20 for warranty service, and the bottom line comes to $290.50, leaving $208.50, or a nearly 43 percent profit margin.
"If [Marshall] is right, this shows that there's room going forward for Apple to reduce the price of the iPad," said Ezra Gottheil, an analyst with Technology Business Research. "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 waht they want for a portable work and play device, a netbook or get an iPad."
The profit margin's even wider on the 16GB iPad with Wi-Fi and 3G, which Marshall estimates runs the company $306.50 to produce but will sell for $629. The end result is a 52 percent profit, a number videogame console makers can only dream of.
Image Credit: Apple
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QUINTIX256
February 02, 2010 at 6:08am
There is a reason why Microsoft insists that everyone pay at least $100 a pop for a full operating system dispite its sales volume.
If you look at the "profit" on just the box and disk, Microsoft's margins may seem huge, when in fact they are not.
You can have your recession. I'm not participating.
cynical
February 01, 2010 at 12:13pm
As much as I hate Apple and the iPad, these numbers are bullshit as they don't take into account the overhead costs such as marketing, development, etc. The profit margin is probably about half of what they're saying when those costs are taken into account.
nekollx
February 01, 2010 at 12:30pm
no relevant this is hardware cost analysis, you know like the one for the Nexus which contains about $300 bucks worth of hardware and is sold unlocked for $500...
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Coming soon to Lulu.com --Tokusatsu Heroes--
Five teenagers, one alien ghost, a robot, and the fate of the world.
samiup
February 01, 2010 at 11:25am
Apple excells only in propaganda and hype. that's how they make money and its clear but to the extremist fanboy.
i wont pay $20 bucks for the iPad, it looks retarded and useless and im already paying for a connection at home and i have my own WiFi but still Apple wanna force me to pay AT&T for 3G ?! i gotta be a certified idiot to do so.
nekollx
February 01, 2010 at 11:45am
so get the wi-fi only model and use your home network, their not forcing you to use AT&T at all
------------------------------
Coming soon to Lulu.com --Tokusatsu Heroes--
Five teenagers, one alien ghost, a robot, and the fate of the world.
Bender2000
February 01, 2010 at 11:20am
So far the only comparable device is the JooJoo, still on preorder just like the iPad. So how did it compare? How much is the profit on the JooJoo? When is the next pad PC like thing due out? When is the big round up test coming? Until then all you netbook users can go download a book from Amazon and turn your netbook into portrait mode and flip through the pages with your finger.
DogPatch1149
February 01, 2010 at 11:05am
Think of how much they save by not including irrelevant, unnecessary features like:
- USB ports
- User-replaceable battery
- Webcam
- Multitasking
- Adobe Flash compatibility
You know...the things that many netbooks have...at a lower price...
SSquirrel
February 03, 2010 at 10:09am
Try pricing multitouch tablets. You won't find anything cheaper than around $460 or so. With a TN screen and probably lower resolution to boot. *shrug* I don't own any Apple stuff, just saying.
Hagen
kjrviking
February 01, 2010 at 10:57am
why are they comparing this thing to a netbook? a netbook can do more - hell, even an actual tablet pc can do more!
for the love of god, please stop comparing this thing to netbooks and tablets and start comparing to the ipod touch and ebook readers like the kindle
dbonderczuk
February 01, 2010 at 10:11am
What engineers, its just a stretched i-touch, minus the stretched hard drive. My samsung P3 has double the space, flash support and nearly half the cost.
nekollx
February 01, 2010 at 9:54am
But that's not a perpetual thing, that's a one time investment. Once you have the specs some machine mass produces them. There isn't a team of enginers hand crafting each MAXiPad
------------------------------
Coming soon to Lulu.com --Tokusatsu Heroes--
Five teenagers, one alien ghost, a robot, and the fate of the world.
Digital-Storm
February 01, 2010 at 9:28am
But then again, They have to have such a huge profit on it because no one is going to buy one.
Caboose
February 01, 2010 at 12:26pm
You underestimate the power, of the MacTard...
to spend money on anything with an Apple logo
-= I don't want to be dead, I want to be alive! Or... a cowboy! =-
americaeh
February 01, 2010 at 2:32pm
I've had real word discussions with mactards. Other than being extremely painful because they claim that their baseline macbook is better than my amd 955 X4 OC to 3.9ghz per core, sapphire 4890 1gb gddr5 runs crysis at the same levels and that his runs windows seven better because its a mac, and that macs are better than pcs because of many other BS reasons. Trust me they are going to make huge profits. Personally i won't even consider the thing because its a friggin blown up iphone with a higher price point
sudo apt-get install windows 7
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