New iPad 16GB WiFi + 4G Costs $630: Guess How Much Profit Apple Makes?

 
on March 20 2012 10:35 AM
New iPad Bill of Materials
New iPad Bill of Materials iHS iSuppli

When you go out to buy the new iPad, one thing you would realize is the fact that it is not cheap to purchase, especially the 64GB version. But what if you knew the amount Apple actually spends to produce each new iPad? You would be surprised by the price difference, and you may feel that Apple is fleecing you when you get to know how much profit Apple is actually making from each new iPad sold.

The 16GB version of the new iPad, which also comes equipped with 4G LTE, is on sale for a whopping $630, but according to a preliminary teardown analysis performed by market research firm IHS iSuppli, the new iPad costs Apple no more than $360 to produce (bill of materials + assembly costs), which means Apple is raking in $270 profit from every 16GB new iPad sold. The 32GB LTE iPad costs Apple $375 to assemble and 64GB LTE version costs $409 (bill of materials + assembly costs).

The manufacturing cost of the WiFi-only iPads have been estimated at $316 (16GB), $333 (32GB) and $366 (64GB). Which means that every time you choose an iPad with a bigger storage option, Apple gets to profit more.

Now you have an idea how Apple has over $100 billion dollar in the bank, or its war-chest, if you want to be fancy about it.

Obviously, some of that money has to go into marketing and other costs that we do not know about to get the new iPad into consumers hands, but after factoring into all that, we are sure Apple is still profiting heavily from its newest toy.

Jeff Brown, a senior UBM Tech Analysts, had this to say:

The bottom line is the new iPad’s margin should take a little hit because of some expensive adders like LTE, the high-res display and camera, a bigger battery and faster processor.

Furthermore, we understand that new iPads with only Wi-Fi capability cost Apple a little bit less than the 4G LTE versions to produce, which is expected since 4G LTE is new compared to Wi-Fi which has been around for years. The most expensive component on the new iPad is what you would expect, the Retina display, because it cost $80 per device, while the battery cost $30, followed by the A5X processor which sits at $28.

(reported by Vamien MacKalin, edited by Surojit Chatterjee)

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