Before the iPad was first announced at the Apple event on January 27th, analysts claim that it will come with an introductory price of $1,000. However, to the dismay of many Apple fans, it has an unbelievable retail price of just $499. You may think that Apple will not make much from the sale of the iPad, but Broadpoint AmTech’s analyst Brian Marshall proved us wrong.
Although the exact specifications of Apple’s new iPad have not been revealed, but Marshall puts the estimated cost to produce the 16GB iPad (Wi-Fi version) at $207.50, suggesting a relatively high profit margin on a per device basis for the California-based tech juggernaut. Meanwhile, the 64GB model, which cost $829, will generate profits of $446 per unit when the device becomes available in the market (March 2010). These translate to a 42.9 per cent and 54 per cent gross margin respectively, giving Apple a lot of room to play with the price in the future. The calculations were based on the going rate for component parts, manufacturing cost and built-in warranty repair costs, disregarding costs needed for research and development, software development, marketing, shipping, etc.
The bill of materials (BOM) analysis states that the most expensive hardware of the iPad is its 9.7-inch LCD touch panel, which apparently cost $100 or more than one third of its total BOM cost. Besides its aluminum stylish casing and 16GB NAND flash memory costing around $25 each, its 10-hour battery (enough for you to travel on plane from San Francisco to Tokyo) is priced at $30. Even the A4 chip that powers the device is listed at just $15.
*I apologized for the small image as this is the only available screenshot I can find.
“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 what they want for a portable work and play device, a netbook or get an iPad.”
Via ComputerWorld