Apple 32GB 3G iPad costs $287 to make?
Market research firm iSuppli has released their cost estimate of the new Apple iPad line, saying that the 32GB Wi-Fi plus 3G model, which retails for $729, will cost approximately $287 to build.
ISuppli is a market research and consulting firm which specializes in the analysis of the consumer electronics value chain, including the build cost of popular devices. Their analysis of the Apple iPad tablet computer is freshly available, and it indicates that Apple has a lot of wiggle room built into its pricing schedule for the device. One example is the model that might be the sweet spot in the lineup, an iPad with 32 gigabytes of memory and Wi-Fi plus 3G connectivity, which will retail for $729, carries a build cost of just $287, according to an article on 9to5Mac. That means that this particular iPad will retail for 2.5 as much as it costs to build.
That is a huge profit margin, even for Apple, and that disparity has a lot of people wondering about the pricing of the iPad. Most of those people remember the introduction of the iPhone, which came out of the gate as a very expensive handset. Shortly after the release of the iPhone, Steve Jobs and company decided to cut iPhone prices by $100, a move that made prospective buyers happy but drew understandable howls of protest from the early adopters, who clearly recognized that they had been done out of $100 on a corporate pricing whim.
The iSuppli report includes the comment, “The most profitable of the six iPads is the 32-gigabyte version with 3G network access. Its combined materials and manufacturing cost of $287.15 amount to 39.4 percent of the retail price,†and goes on to describe the iPad pricing philosophy as “nimble.†That easily translates into price cuts, not a phrase which is often heard in the halls of Apple’s Cupertino campus. Still, with this much profit margin to work with it, may be that it won’t be budgetarily wise to become an early adopter of the Apple iPad.
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February 10th, 2010
Standard retail markup is 300%, factor in R&D costs and apple is being generous. This is hardly anything to get righteously indignant about.
February 11th, 2010
Breaking news – Turns out Apple is not a charity or benevolent society but instead a company that wants to make as much profit as possible on their product. Stay tuned for more details!