Build an iPad for as Little as $260
PrintAs they tend to do, iSupply has broken down the iPad and worked out just what all those magical components are. After compiling and pricing all the individual parts, iSupply has estimated that there are $259.60 in parts in each 16GB Wi-Fi only iPad. That model retails for $499 leaving Apple with a healthy 48% gross margin.
The components associated with the display accounted for the largest proportion of the price, over 40%. The flash memory was also a big contributor to cost, but the increased price of these models keeps the margins around 50%. Clearly these numbers don't include R&D costs, but Apple has a reputation for maintaining higher margins than other hardware makers, who try to make up for lower margins with more sales over time.
We may not know just how much Apple is making on each iPad, but it seems clear they aren't taking a loss. The upcoming release of that 3G edition (with an extra $130 charge) should help as well. We look forward to the iSupply teardown of that model so we can see just what sort of magical 3G chip it has.
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jnmayes
April 07, 2010 at 7:24pm
R&D, manufacturing costs, marketing, warranty, 3rd party licenses, the box, materials in the box, etc. etc. A lot goes into products that most folks don't consider.
bobbxy
April 07, 2010 at 6:29pm
It must be nice that there aren't manufacturing expenses to making the ipad. Even in automated processing, there are overhead costs. Sales price - parts does not equal profit.
Even Chinese workers aren't free, even though they are cheap.
Walnut
April 07, 2010 at 4:36pm
As much as I dislike the iPad, a 48% margin isn't really all that unfair. That's on the PARTS alone, and says nothing for all the R&D work and production costs.
Vrok Vrokoglou
April 07, 2010 at 4:07pm
Please give me the display, the battery, an iphone connector and a program for jailbroken iphones to switch the OS to ipad mode. Why didn't they release the ipad as an iphone case? It would be too convenient
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