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16GB iPad components estimated to cost Apple $219

post #1 of 205
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Parts for Apple's forthcoming iPad, which will retail starting at $499, are estimated to cost the hardware maker as little as $219.35, a new analysis has calculated.

iSuppli Corp. said the multi-touch 9.7-inch display on the iPad could cost around $80, while its custom-designed A4 processor, believed to be manufactured by Samsung, would cost about $17 per unit -- $2 more than the chip that lies in the iPhone 3GS. In addition, the 16GB of memory is estimated to cost about $29.50.

With a total parts cost of $219.35, that's well below the starting price of $499 for the 16GB iPad, which does not offer 3G connectivity. Factoring manufacturing costs add just $10 to the total cost of the low-end model, bringing it to $229.35.

However, the $499, 16GB model is also predicted to be the least profitable version of the hardware for Apple to sell.

iSuppli projects Apple will earn the most from selling the 32GB version with a built-in 3G radio, which will sell for $729. The combined materials and manufacturing costs for that model is estimated to cost Apple just $287.15.

The findings lend support to a recent report that Apple could lower the price of the iPad if initial sales are not as strong as the company hopes. That information was revealed this week after executives from the Cupertino, Calif., company allegedly told one analyst. Management allegedly said it "will remain nimble" in pricing the iPad.

Arguably the biggest surprise of the iPad's unveiling was its $499 starting price. Previously, analysts had expected the new touchscreen tablet to cost around $1,000.



3G connectivity on the hardware carries a $130 premium, making the 16GB model $629. The iPad will offer up to 64GB of capacity which, when paired with a 3G radio, will make the device cost $829 at its highest price. The 64GB of capacity will cost Apple an estimated $118 per unit, iSuppli said.
post #2 of 205
Is that greed or what?
Expect it at $399 by July 1st.
post #3 of 205
Quote:
Originally Posted by TEKSTUD View Post

Is that greed or what?
Expect it at $399 by July 1st.

I never understood this complaint. We live in a capitalist society, companies have the right to charge whatever the market will bear. Microsoft charges 200-300 dollars for a Vista service pack called Windows 7. Adobe charges almost 2,500 dollars for CS4. GM charges you more for a Cadillac than a Chevrolet. Apple has every right to charge whatever they want for their products. Would I like to see it cheaper? Of course. I'd like to just be given one, but that's not how things work.
post #4 of 205
Quote:
Originally Posted by hittrj01 View Post

I never understood this complaint. We live in a capitalist society, companies have the right to charge whatever the market will bear. Microsoft charges 200-300 dollars for a Vista service pack called Windows 7. Adobe charges almost 2,500 dollars for CS4. GM charges you more for a Cadillac than a Chevrolet. Apple has every right to charge whatever they want for their products. Would I like to see it cheaper? Of course. I'd like to just be given one, but that's not how things work.

tekstud is a well know troll so anything he reads on here he'll troll about
just add him to your ignore list and be done with it...
post #5 of 205
This about the second or third time a report like this has posted. Even this report is posted on several sites and I have made my comment on Mac 9 to 5. I don't know which of these posted first, but I responded to the first one I read.
無心 The idea of wilderness needs no defense, it only needs defenders., Wilderness is not a luxury but a necessity of the human spirit__Edward Abbey
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無心 The idea of wilderness needs no defense, it only needs defenders., Wilderness is not a luxury but a necessity of the human spirit__Edward Abbey
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post #6 of 205
This is insane. I don't care paying that much, I really don't, for a good Apple product but damn! No camera, no multitasking in the OS, no connectivity (you have to buy adapters!) and a long list of other 'no's make the iPad a much less attractive product every day.

Really, the iPad is a great product in diapers... I'll wait to get at least the teenage version
post #7 of 205
Quote:
Originally Posted by hittrj01 View Post

I never understood this complaint. We live in a capitalist society, companies have the right to charge whatever the market will bear. Microsoft charges 200-300 dollars for a Vista service pack called Windows 7. Adobe charges almost 2,500 dollars for CS4. GM charges you more for a Cadillac than a Chevrolet. Apple has every right to charge whatever they want for their products. Would I like to see it cheaper? Of course. I'd like to just be given one, but that's not how things work.

As a New Yorker -we never buy at retail. And we know when we're being had (except by Bernie).
Pay as much as you like- we live in a free society.
post #8 of 205
Quote:
Originally Posted by FullGaz View Post

Really, the iPad is a great product in diapers... I'll wait to get at least the teenage version

AKA- "hobby".
post #9 of 205
Quote:
Originally Posted by doyourownthing View Post

tekstud is a well know troll so anything he reads on here he'll troll about
just add him to your ignore list and be done with it...

NO troll- just a realist.
And what are you?
post #10 of 205
Gotta love iSuppli for having component breakdowns of a product 2 months before it launches. But I'm being too hard on them since this is about as accurate as their other claims. Now we get an entire thread of trolls claiming Apple is ripping everyone off because they are not selling it at that price while is well below the actual cost.


Quote:
Originally Posted by doyourownthing View Post

tekstud is a well know troll so anything he reads on here he'll troll about
just add him to your ignore list and be done with it...

I think the term troll was coined to describe him. Seriously, what's the point of deleting his account if they are just going to let him continue his antics under a new name where newer posters can't see his long term trollish behaviour. They should change the Title of his account to red stating Troll instead of Registered User.


Quote:
Originally Posted by FineTunes View Post

This about the second or third time a report like this has posted. Even this report is posted on several sites and I have made my comment on Mac 9 to 5. I don't know which of these posted first, but I responded to the first one I read.

First time for AI. For Apple news, this is one of the few places I monitor in my RSS.
Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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post #11 of 205
Quote:
Originally Posted by TEKSTUD View Post

Is that greed or what?
Expect it at $399 by July 1st.

Go buy the parts, build it yourself, and let the rest of us live in peace.
post #12 of 205
Quote:
Originally Posted by TEKSTUD View Post

Is that greed or what?
Expect it at $399 by July 1st.

It's all about whatever the market can bear, Tek.
post #13 of 205
Quote:
Originally Posted by hittrj01 View Post

I never understood this complaint.

Socialist are difficult people to understand.
post #14 of 205
Quote:
Factoring manufacturing costs add just $10 to the total cost of the low-end model, bringing it to $229.35.


Wow! Only $10 a unit to manufacture, boy those machines work cheap.

Reminds me of that huge Budweiser plant I toured, nearly completely automated. 5 people worked the whole floor, making 1000's of cans of beer a second. The there were more tour guides and truck drivers carting off the beer and bringing supplies than factory workers.

Maybe Apple could due away with a little profit, say $50 a unit, and give some people in U.S. jobs pushing paper around, brainstorming or something.

Remember, a economy works when what goes around, comes around.

Keep "take, take, take" and nobody will have nothing eventually.
The danger is that we sleepwalk into a world where cabals of corporations control not only the mainstream devices and the software on them, but also the entire ecosystem of online services around...
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The danger is that we sleepwalk into a world where cabals of corporations control not only the mainstream devices and the software on them, but also the entire ecosystem of online services around...
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post #15 of 205
Quote:
Originally Posted by TEKSTUD View Post

Is that greed or what?
Expect it at $399 by July 1st.

I gather you have the expertise to price out the variables and other fixed costs.

What do you think that they should charge/assign/account just for:
  • Research & Development
  • Packaging
  • Advertising/Promotion
  • Sales & Marketing
  • Distribution/Shipping
  • Accounting
  • Legal
  • On-line/In-Store Support
  • OS
  • Apps
  • iTunes App/iBook Book Store
  • Third-Party Licenses
  • Liability Insurance
  • Fixed Overheads, e.g., equipment depreciations/property taxes/salaries
  • Keeping Green

Or don't you believe in free enterprise?
post #16 of 205
Anyone know what the iPod Touch margin was at launch (1st, 2nd, or 3rd gen)?
- preferably from iSupply

- this would tell us if Apple is charging more than it's usual margin, and therefore whether or not we can expect a price cut....
post #17 of 205
Quote:
Originally Posted by MacTripper View Post

Wow! Only $10 a unit to manufacture, boy those machines work cheap.

Reminds me of that huge Budweiser plant I toured, nearly completely automated. 5 people worked the whole floor, making 1000's of cans of beer a second. The there were more tour guides and truck drivers carting off the beer and bringing supplies than factory workers.

Maybe Apple could due away with a little profit, say $50 a unit, and give some people in U.S. jobs pushing paper around, brainstorming or something.

Remember, a economy works when what goes around, comes around.

Keep "take, take, take" and nobody will have nothing eventually.

Where do you think the other $260 goes? It doesn't all go to investors or Apple's cash pile. A huge amount of that goes to American engineering jobs. $220 manufacturing component cost doesn't go to packaging, marketing, shipping, overhead, engineering, etc.

BTW, that isn't the way the economy works.
post #18 of 205
Quote:
Originally Posted by TEKSTUD View Post

Is that greed or what?

Generally the 2X factor is a good place to start when pricing something for retail. Even then success is not assured.

If you go to the hardware store to buy ten screws for 4.99 you don't really believe they cost $0.50 to make do you? The reality is they cost significantly less than that to make.

As to these estimates they are shotgun figures thrown about based on informed guesses. Apple however has not released enough info to determine the actual cost to manufacture. For example how much RAM is in the device or what exactly is A4 made up of. ARM IP costs could be anywhere from 0.50 to $2.50 per chip depending upon the IP included. The guesses are not bad though and come close to my own. Personally I think $30 has to be added to the total for the out of the factory cost.
Quote:
Expect it at $399 by July 1st.

That depends. If Apple really wanted to stimulate sales they would double the flash in the base model and quadruple it in the high end model. This will have a greater impact on sales and is something easily done within the current hardware. The reality is 16GB in the lowend model makes it unsalable. At least to anybody with any sense.

In anyevent before complaining about the price how about running a business yourself successfully. It is no where as easy as some imply.
post #19 of 205
Quote:
Originally Posted by FelixMendeldog@mac.com View Post

You are all retarded:

None of you have made mention other business expenses which include but are not limited to:

R&D, salaries, insurance (health, workers compensation, liability, property etc.), legal, taxes (payroll, property, capital gains, income), marketing, support, software development and deployment, maintenance, tooling, servers, utilities etc.

I need not make an exhaustive list to support this point: products cost far more than the sum of their parts to bring to market. Profit does not equal retail price minus cost of parts, idiots.

Retards I could take. It it the asshole at the other end that bothers me.
post #20 of 205
Quote:
Originally Posted by FelixMendeldog@mac.com View Post

You are all retarded:

None of you have made mention other business expenses which include but are not limited to:

R&D, salaries, insurance (health, workers compensation, liability, property etc.), legal, taxes (payroll, property, capital gains, income), marketing, support, software development and deployment, maintenance, tooling, servers, utilities etc.

I need not make an exhaustive list to support this point: products cost far more than the sum of their parts to bring to market. Profit does not equal retail price minus cost of parts, idiots.

It clearly states in the title "components" but believe me some people here have reading deficiency and lack of comprehension
post #21 of 205
That's an awful lot of R&D money to take an iPod touch and make it 3x as big.
post #22 of 205
So, we have a pure mark up of... $270 (229 vs 499)

From that 270, lets take out -
Price of packaging (and packaging development)
Price of waste management (wait, this is china, NVM)
Shipping from China
Distribution in the US
Cost of sales (wholesale discount, internal sales people, marketing, sales software, inventory management, etc).
Administrative Charges (at apple, and other location)
Development and Design Charges (a not insubstantial charge)

It is not unreasonable to believe that Apples operating margine to be between 10-15% ($50-$75 USD) when spread across 1MM units.

It is probable that the cost of developing, packaging, marketing and shipping this device will exceeed the actual manufacture cost of this product.
post #23 of 205
Quote:
Originally Posted by MacVicta View Post

That's an awful lot of R&D money to take an iPod touch and make it 3x as big.

Then why didn't you or somebody else do it?
post #24 of 205
What is the actual materials cost of the 3G addition (that Apple is charging $130 extra for)? From the article, one can infer that it is no higher than $60, but probably much less, say around $30 (since I would assume that the 32GB memory costs $30 more, and one can back this out from the $287 materials cost for the 32GB model versus the $220 for the 16GB).

Why would Apple be getting a gross margin of closer to 75% on this (as opposed to around 50% for everything else)? I wonder if there a payment to ATT embedded in the pricing (to make up for the seemingly very good $30 per month unlimited data 3G deal).
post #25 of 205
Quote:
Originally Posted by Onhka View Post

I gather you have the expertise to price out the variables and other fixed costs.

What do you think that they should charge/assign/account just for:
  • Research & Development
  • Advertising/Promotion
  • Sales & Marketing
  • Distribution/Shipping
  • Accounting
  • Legal
  • On-line/In-Store Support
  • OS
  • Apps
  • iTunes App/iBook Book Store
  • Third-Party Licenses
  • Liability Insurance
  • Fixed Overheads, e.g., equipment depreciations/property taxes/salaries

Or don't you believe in free enterprise?

Well done. I love to see newer posters with a logical mind.
Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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post #26 of 205
Quote:
Originally Posted by Onhka View Post

I gather you have the expertise to price out the variables and other fixed costs.

What do you think that they should charge/assign/account just for:
  • Research & Development
  • Advertising/Promotion
  • Sales & Marketing
  • Distribution/Shipping
  • Accounting
  • Legal
  • On-line/In-Store Support
  • OS
  • Apps
  • iTunes App/iBook Book Store
  • Third-Party Licenses
  • Liability Insurance
  • Fixed Overheads, e.g., equipment depreciations/property taxes/salaries

Or don't you believe in free enterprise?

I was going to make a similar list, but you beat me to it.

I'd like to see iSuppli do a "breakdown" analysis of the latest version of MS Office. Let's see: 10 cents to stamp the DVD (if even that) and about 5 cents to make the box it ships in. And how much do they charge for Office these days?

Just one example of why comparing the component costs to the sale price is an exercise in ignorance.
post #27 of 205
Quote:
Originally Posted by Mr. Me View Post

Go buy the parts, build it yourself, and let the rest of us live in peace.

Well put!!!!!
無心 The idea of wilderness needs no defense, it only needs defenders., Wilderness is not a luxury but a necessity of the human spirit__Edward Abbey
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無心 The idea of wilderness needs no defense, it only needs defenders., Wilderness is not a luxury but a necessity of the human spirit__Edward Abbey
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post #28 of 205
Quote:
Originally Posted by MacVicta View Post

That's an awful lot of R&D money to take an iPod touch and make it 3x as big.



and took 3 years to come up with?
post #29 of 205
Quote:
Originally Posted by solipsism View Post

Well done. I love to see newer posters with a logical mind.

you tawlking about me again?
post #30 of 205
Quote:
Originally Posted by Onhka View Post

I gather you have the expertise to price out the variables and other fixed costs.

What do you think that they should charge/assign/account just for:
  • Research & Development
  • Packaging
  • Advertising/Promotion
  • Sales & Marketing
  • Distribution/Shipping
  • Accounting
  • Legal
  • On-line/In-Store Support
  • OS
  • Apps
  • iTunes App/iBook Book Store
  • Third-Party Licenses
  • Liability Insurance
  • Fixed Overheads, e.g., equipment depreciations/property taxes/salaries
  • Keeping Green

Or don't you believe in free enterprise?

You really think I believe that's the final cost? Literally? Did you get that out of a textbook?
post #31 of 205
Quote:
Originally Posted by anantksundaram View Post

What is the actual materials cost of the 3G addition (that Apple is charging $130 extra for)?

According to a previous iSuppli breakdown for the 3GS it's about $20 in components, but that of course excludes many things. I've seen 3G add ons for networks be more than $150 and I've paid $300 for a 3G USB card so it doesn't seem excessive for the market though I'm sure Apple is making a healthy profit.
iSuppli iPhone 3GS teardown What I'm curious about with the 3G model are the chips they'll use. They say unlocked but only mention AT&T. It wouldn't be the first time they've not specified a function on their spec sheet to keep it simple. Maybe it does have the 1700MHz band for T-Mobile USA but they won't publicly state it (or enable it) until after the contract ends.

Surely it has at least 7.2Mbps HSDPA, but what about 2.9Mbps HSUPA for upstream. I think that is the next stop for 3GSM mobiles. CAn we infer that the chips we find in the iPad will likely be used in the next iPhone?
Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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post #32 of 205
Quote:
Originally Posted by TEKSTUD View Post

you tawlking about me again?

Please shut up, instead of making an ass* of yourself.


*I mean that in the sense of asinus subgenus
post #33 of 205
Quote:
Originally Posted by Wiggin View Post

Just one example of why comparing the component costs to the sale price is an exercise in ignorance.

Generally, selling prices trend towards the marginal cost of production.

Just one example of why comparing the component costs to the sale price is an exercise in enlightenment.
post #34 of 205
Quote:
Originally Posted by reliason View Post

It is not unreasonable to believe that Apples operating margine to be between 10-15% ($50-$75 USD) when spread across 1MM units.

Apple's operating margin in general is about 30% and their net profit margin is 20%. I think this device should fall pretty much in line with those numbers.
post #35 of 205
Quote:
Originally Posted by MacTripper View Post

Wow! Only $10 a unit to manufacture, boy those machines work cheap.

Machines do work cheap that is why factories are made up of machines. You have heard of Ford and his assembly line, right?
Quote:

Reminds me of that huge Budweiser plant I toured, nearly completely automated. 5 people worked the whole floor, making 1000's of cans of beer a second. The there were more tour guides and truck drivers carting off the beer and bringing supplies than factory workers.

Yep a generic plant for a generic bear! You do have choice with craft bear at $5 a bottle. Besides all that cheaply made bear means there is plenty of money to feed the horses.
Quote:

Maybe Apple could due away with a little profit, say $50 a unit, and give some people in U.S. jobs pushing paper around, brainstorming or something.

I'm almost certain you didn't mean to say what you did above because I simply don't believe anybody on this planet is that ignorant. First off Apple employees a lot of people in the US and is currently building another campus to higher even more. The money to employ those people comes from the cash between the 219 number and Apples $499 price. The $219 number is the cost to build and has nothing to do with running Apple, it's engineering departments or any of the other common business expenses.
Quote:

Remember, a economy works when what goes around, comes around.

You must be a very left leaning Democrate. The economy works when people have money and the desire to spend it. It does not work when a large portion of the population expects to get something for free or as you imply handouts.
Quote:

Keep "take, take, take" and nobody will have nothing eventually.

Again I'm not sure if you are trying to troll here or are just amazingly ignorant. It's a business transaction when buying from Apple. You see what they have on offer and buy based upon the item meeting your needs. It is an exchange that you are free to avoid.


Dave
post #36 of 205
Quote:
Originally Posted by TEKSTUD View Post

You really think I believe that's the final cost? Literally? Did you get that out of a textbook?

Yes, just like everybody else has

No. Actually it is one of the courses I teach.
post #37 of 205
Quote:
Originally Posted by MacVicta View Post

That's an awful lot of R&D money to take an iPod touch and make it 3x as big.

Actually when you build your own processor it is a lot of R&D money so yes. Apple paid 278M for PA Semi. The 150 extra engineers have been working on something since April 2008. IF we pay them 100K each on average we get another 15M per year in salary. Add in the ARM and Power VR IP licenses. For a few million more and we are already over 300M without selling a single IPAD. That's called risk and Apple has to mange the risk to make a profit. If Apple sell only one IPAD they still spent the 300M.
post #38 of 205
$219 for parts ... lucky for Apple that R&D, marketing and manufacturing cost nothing!
post #39 of 205
Quote:
Originally Posted by MacVicta View Post

That's an awful lot of R&D money to take an iPod touch and make it 3x as big.

How much was PA Semi? About $280m?

So, assuming they sell 5 million of these things, that's $56 of outgoings per unit right there before you even think about the ongoing costs for running the place for the last couple of years.
post #40 of 205
Quote:
Originally Posted by FullGaz View Post

Really, the iPad is a great product in diapers... I'll wait to get at least the teenage version

Oh, grow up...
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