iSuppli Corporation, market research and consulting firm specialized in the electronics value chain, a.k.a gadgets!iSuppli’s analysis of the cost of the components to make an iPad revealed some awesome results.
The hardware itself for the ipad makes up about half the cost.
iSuppli’s analysis also indicates that production costs aside, the hardware components as such make up a total of $259.60, which would help critics who claim iPad is overpriced.
Apple surely wants to take a chunk of costs to pay for its advertising and other production costs not to forget the profit margin it intends to have.
A tear down of costs include a majority of the numbers being used by the touch screen display – was the most expensive one. With its LCD display, touch sensitive panel and other units accounted to about 40% of the total cost. Other parts include the flash memory which was expensive and added to the cost.
iSuppli has come up with the costs associated with all the iPad’s models as shown in the table below. May be these kids knew they were dealing with a $260 hardware and not $499 worth.
|MODEL||Retail Price||Hardware Cost Estimate||Margin|
|iPad WiFi 16GB||$499||$259.60||48.0|
|iPad WiFi 32GB||$599||$289.10||51.7|
|iPad WiFi 64GB||$699||$348.10||50.2|
It is clear that Apple intends to make a profit by marking up its hardware unlike other firms which bank primarily on software sales. Apple’s markup has historically been about 30 percent on most hardware which is higher than what most hardware firms stick to.
Apple believes, and as we can see its working!; that with good software and sleek looks consumers would not bother shelling out more as long as the product is catchy!
Other companies might come out with cheaper alternatives and its just a matter of time. Whether or not if Apple will reduce its stand on iPad’s pricing is something to keep an eye for.