Research firm: New iPad more expensive to make

Mar 18, 2012 By PETER SVENSSON , AP Technology Writer
This March 16, 2012 file photo shows a customer talking with an Apple worker, in blue, inside an Apple store on the first day of the launch of the new iPad, in San Francisco. A research firm that has taken apart a new iPad says it's more expensive to make than the previous version was when it launched a year ago. The tablet's retail price is the same so that means Apple is making less from each sale. Since the first iPad, Apple has been pricing the tablet aggressively, making it hard for competitors to match its features for the same price. (AP Photo/Paul Sakuma)

Apple appears to be making less of a profit from each new iPad than it did when it launched the previous model a year ago, according to a research firm's analysis.

IHS took apart a new iPad on Friday, the day the device went on sale in the U.S. and nine other countries, and found that the components are more expensive than those of the iPad 2.

The third iPad comes in several versions starting at $499, the same price as the iPad 2 at .

Apple has priced all three generations of the tablet aggressively, making it hard for competitors to match its features at the same price. It makes less from each iPad than from each .

As a whole, Apple is wildly profitable, earning $33 billion in on $81 billion in revenue in the last calendar year.

ISuppli said a new iPad with 32 gigabytes of RAM and a cellular modem, which costs $729 in stores, costs $364.35 to manufacture. That's 9 percent more than the $335 it cost to make the corresponding iPad 2 a year ago, when it came out.

The corresponding version of the first iPad cost about $276 to make in 2010, according to iSuppli's estimate.

The higher-resolution display and the larger battery needed to support it are the main reasons the new iPad is more expensive than the iPad 2. It has four times as many pixels as the iPad 2's screen. ISuppli estimates the display costs Apple $87, plus $40 for the touch-sensitive layer.

The new iPad battery has 70 percent more capacity, but the new display consumes all that additional power, so the is the same as for the old model.

Also contributing to the cost increase is the new cellular modem in some models. It can use faster "4G LTE" networks in the U.S. and Canada.

Co. remains the largest single supplier of iPad components. It made the display in the unit iSuppli examined and it supplies all iPad processors. ISuppli suspects Samsung also made the battery and supplies flash storage memory for some versions of the new .

In fact, half of the new iPad's "bill of materials" may be for Samsung components, iSuppli said.

Apple and Samsung don't comment on their business relationships.

Samsung also makes its own tablets and they have succeeded better than most competitors.

ISuppli's cost estimate does not include packaging or overhead costs like design, marketing and software.

Explore further: GoGlove wearable aims to control life's soundtracks

5 /5 (6 votes)
add to favorites email to friend print save as pdf

Related Stories

Research firm puts $499 iPad costs at $259.60

Apr 07, 2010

(AP) -- The iPad may promise a computing revolution, but Apple's new gadget is also a pile of glass, metal and electronic innards - $259.60 worth, or about half the retail price, according to an independent estimate released ...

Solid debut for Amazon's Kindle Fire: research firm

Feb 16, 2012

Amazon's Kindle Fire, which went on sale in November, had a solid debut, leapfrogging Samsung tablets to become the top-selling device after Apple's iPad, a market research firm said Thursday.

Samsung to stick with Google for its tablets

May 31, 2011

Samsung Electronics will depend on Google's Android mobile-device software to run future versions of its tablet computers, a senior Samsung official said in an interview published Tuesday.

Recommended for you

GoGlove wearable aims to control life's soundtracks

1 hour ago

Technology creatives are seeing the key attraction in wearables as being in solutions that save the user from fumbling around with the phone to make app adjustments or changes, or from repeatedly taking it ...

Amazon cuts Fire phone price to ignite sales

1 hour ago

Amazon on Wednesday slashed the price of Fire mobile phones that stalled after launch early this year, becoming a drag on the US online retail titan's bottom line.

Tech review: Another year, another iPad

Nov 25, 2014

Some years, Apple introduces a new version of a product and the world rejoices. Other years, the updates are more under the hood, but they still sell a ton.

Gift Guide: Lots of tablet choices, oh my!

Nov 25, 2014

Time for a tablet? People tend to hold onto tablets longer than smartphones, so take time to weigh your options. A major consideration is what phone you or your gift recipient already has. Although it's possible ...

User comments : 1

Adjust slider to filter visible comments by rank

Display comments: newest first

mysticfree
3 / 5 (2) Mar 18, 2012
Big deal. If you make your product cheaper, you inundate the marketplace and make more through volume. This is a successful business practice of companies who think long-range, as opposed to those bean counters who try to save a dollar today while ignoring the loss of five dollars tomorrow.

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.