TechInsights: Xoom Costs More to Make than iPad

Posted 03/02/2011 at 6:09am | by Paul Lilly

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Those of you disappointed that Motorola didn't seriously undercut the competition with its Xoom pricing, it turns out there's good reason they didn't. Perhaps Motorola couldn't. According to a teardown analysis by TechInsights, the estimated bill of materials (BOM) on the Xoom comes to $278. That's $33 more than Apple's iPad, which carries an estimated BOM of $245 for its 3G, 32GB model, The Wall Street Journal reports.

Going with a larger 10-inch, 1280x800 screen only added $5 to the Xoom's bottom line. Instead, the 5MP rear- and 2MP front-facing cameras ended up being the most costly additions, which added $14 to the tablet. Motorola chose to price its Xoom 3G at $799 (sans contract), while a similarly equipped iPad runs $729.

At least one analyst, and probably several consumers, thinks Motorola made a mistake by not releasing a feature stripped version to go head-to-head with Apple's $499 16GB Wi-Fi iPad.

"We do think it will hurt them," said Susan Kevorkian, an analyst at IDC. "Device makers who would otherwise have a good shot at this market are effectively pricing themselves out of it from the get-go."

How much would you be willing to pay for a tablet?