New iPad bill of materials is around $320, profit margins drop slightly

New iPad bill of materials is around $320, profit margins drop slightly
The new iPad costs more to make and Apple had to sacrifice some of its sky-high margins to bring it to market. That’s the conclusion of UBM TechInsights after its preliminary estimate showing that the bill of materials of the third-gen iPad comes at around $310 for the 16GB 4G model.

This represents a profit margin of 51% over the $629 retail price of the product, much less than the 56% margin Apple gets from its equivalent iPad 2 with 3G.

The biggest expense in the third iPad is the 9.7-inch screen with a resolution of 2048x1536 pixels. The estimation says it costs around $70, well above the $49.50 price of the old 1024x768 display.

The other expensive component is the radio chip Apple has put into the new iPad. With bands covering pretty much every carrier’s frequencies including both AT&T and Verizon’s 4G LTE networks, the LTE chipset should have cost Cupertino some $21, more than the estimated $10 for the 3G chip in the iPad 2.

The brains of the new iPad, the A5X chip with quad-core graphical processor, costs roughly $28, also well over the $22 price of the original A5.

Now, we have to underline that UBM’s estimate is rough and preliminary, but analysts like it get pretty close with their guesses, so we don’t expect that the estimate is far off the actual component prices. The swing factor for Apple and components is volume - Apple orders in huge quantities so it’s likely to get some discounts other companies might not be able to get.

The margins quoted above don’t include the cost of assembly, shipping, marketing and R&D, which would be harder to include. One thing we’re sure of, though, is that Apple is far from selling this at a near loss like Amazon - it’s definitely profiting big. The question is how big and we’ll keep you posted on this as we learn more.


Related phones

iPad 3
  • Display 9.7" 2048 x 1536 pixels
  • Camera 5 MP / 0.3 MP VGA front
  • Processor Apple A5X, Dual-core, 1000 MHz
  • Storage 64 GB
  • Battery 11560 mAh

FEATURED VIDEO

10 Comments

1. TheLibertine

Posts: 484; Member since: Jan 15, 2012

Poor Apple.

2. droiddomination

Posts: 203; Member since: Dec 01, 2011

APPLE APPLE APPLE APPLE APPLE APPLE APPLE APPLE..UH UH UH UH UHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH....UH​. OH APPLE, "DO IT TO ME ONE MORE TIME". `~ PA OUT OF 80 ARTICLES CURRENTLY ON THE PA MAIN PAGE, 32 HAVE MENTIONS OF ITURD IN SOME WAY. AMAZING THE BIAS OF THIS WEBSITE!!! WINDOWS HAS LIKE 2 MENTIONS. APPLE IS SIMPLY ORGASMIC!!!! OHHHHHHHHHHHHHH!!! BAHH BAHHH BAHHHH

3. bbblader

Posts: 590; Member since: Oct 24, 2011

sorry dude accidentally pushed the t.down button when i sneezed but i agree with ya revolutionary iSight is going to be when there is a Nokia 808 PureView sensor on the iFpad untill then its an iNOvation

6. gallitoking

Posts: 4721; Member since: May 17, 2011

then change your name to droidnodomination...

4. Bluesky02

Posts: 1439; Member since: Dec 05, 2011

It make sense as they had to bring something big again. The new iPhone margin also will be less, probably because of higher resolution, Lte chip, improve dual core. Now what we'll see is competitors competing with iPad specs mostly notably the higher resolution.

5. jamrockjones

Posts: 345; Member since: Oct 26, 2011

I want to know that total profit margin, after all is said and done. I want an idea of how much Apple is screwing it's customers. There isn't anything wrong with wanting a decent profit, but Apple loves to rapes it's followers!

7. Hallucinator

Posts: 390; Member since: May 24, 2010

You can't rape the willing. Yes, Im one of them.

8. jmoita2

Posts: 930; Member since: Dec 23, 2011

Then bend over

9. CivicSi89

Posts: 349; Member since: Jul 23, 2011

Well it is a marginally better device so it would make sense that it would Cost more. Look at all the LTE Handsets when they launched. always touching the 500-700 mark before a 2 year contract. But i think the main thing your paying for is that beautiful retina display. Now i am still no iPad fan. But it does have some pluses.

10. stealthd unregistered

The bill of materials doesn't give you the profit margin; there's still shipping, marketing costs, R&D, etc.

Latest Stories

This copy is for your personal, non-commercial use only. You can order presentation-ready copies for distribution to your colleagues, clients or customers at https://www.parsintl.com/phonearena or use the Reprints & Permissions tool that appears at the bottom of each web page. Visit https://www.parsintl.com/ for samples and additional information.