One of the few surprises to accompany the release of Apple’s iPad last week was its price. That is to say, the long-awaited tablet will cost much less than many had expected.
BroadPoint AmTech analyst Brian Marshall has an idea why. Running through the cost of the components, Marshall says the device could be highly profitable for Apple, even at the relatively modest price point. Hardware Central takes a look.
Apple’s recently launched iPad could yield a tidy profit for the company thanks to its relatively low cost for parts, if an analysis of the components proves accurate.
According to BroadPoint AmTech analyst Brian Marshall, the low-end $499 version of the new tablet costs about $270 in materials and manufacturing.
Marshall concluded the most expensive piece in the iPad’s bill of materials (BOM) is the 9.7-inch touch-sensitive display, which he put at $100. Apple’s (NASDAQ: AAPL) most profitable item, meanwhile, is the 3G radio: Models carrying the unit cost $130 more than those without, while it only costs the company $16.
The total BOM for the 16GB WiFi-only iPad is $270.50, plus a $10 line item dedicated to manufacturing and another $20 set aside for warranty service costs. The 16GB of memory and the aluminum case are estimated to cost about $25 each, while the Apple A4 processor chip is put at $15.
Profitability appears to scale up as the lineup increases in capacity, since the 32GB and 64GB iPads only see their costs rise another $25.50 and $76.50, respectively, but their suggested prices go up $100 and $200.
