back to article iPad 3 costs Apple 30% more to make than iPad 2

One thing Apple's doing with its massive cash mountain: giving punters more iPad for their money. The News iPad - aka the iPad 3 - costs as much to buy as the iPad 2 did, but it costs a lot more to make. Case in point: the 16GB Wi-Fi only iPad 2 has an estimated bill-of-materials and assembly cost of $245.10 per unit, market …


This topic is closed for new posts.
  1. g e

    As if anything could be anything other than '30%' with Apple!

    So it seems to work both ways, eh? :o)

    1. Anonymous Coward

      Re: As if anything could be anything other than '30%' with Apple!

      The apple tax taxes apple!

    2. Anonymous Coward
      Anonymous Coward

      Re: As if anything could be anything other than '30%' with Apple!

      Is anyone else NOT doing 30%?

    3. Anonymous Coward
      Anonymous Coward

      Re: As if anything could be anything other than '30%' with Apple!

      By who gains from this price drain?

  2. Anonymous Coward

    Samsung supplies parts?

    Irony overload!

    1. Giles Jones Gold badge

      Re: Samsung supplies parts?

      Samsung is a huge company with many divisions. If it doesn't sell to Apple then it loses quite a huge chunk of business.

      Sharp tried to make the screen but couldn't do it well enough. So they licenced the required patents to Samsung so they could.

      1. Peter 48

        Re: Samsung supplies parts?

        Not only that, Samsung are rumoured to be considering splitting their LCD screen manufacture off which would separate them even further from the legal handbags at dawn between their mobile division and apple.

  3. Jedit

    "Cannily taken the cost on the chin"

    Or as we like to think of it, "reduced their extortionate gouging a bit".

    Apple didn't raise the price of the iPad 2.1 only because they know the market won't bear it. Even at the same price point it's not selling as many as they can ship the way the first two iterations did. A good business move, to be sure, but don't confuse it with altruism for a second.

    1. Anonymous Coward
      Anonymous Coward

      Re: "Cannily taken the cost on the chin"

      "Not selling as many"

      Are you sure? Prove it

      1. Craigness

        Re: "Cannily taken the cost on the chin"

        "not selling as many as they can ship"

        Get it right!

        If you want proof that they're not selling all they can ship, buy one.

        1. Anonymous Coward
          Anonymous Coward

          Re: "Cannily taken the cost on the chin"

          I've ordered one and it won't arrive until 5th April.

          So maybe they are selling

      2. jonathanb Silver badge

        Re: "Cannily taken the cost on the chin"

        On Saturday my local Apple store was busy, but not so busy that there were queues outside the door. The weekend after the iPad 2 launch, there was a queue for fondleslab buyers.

  4. FunkyEric

    I wonder

    If the breakdown cost of the iPad2 is what they cost when first released, or what they currently cost? I'd be surprised if this hadn't reduced in the year since it was released as technology improves. This could reduce or even eliminate the apparent difference in price.

  5. Tom 7 Silver badge

    And how reliable are iSupli?

    Just asking as I've often found the actual cost of items when purchased in bulk can, for some companies, be less than 10% the generally available bulk price.

    Or more if you live in the UK.

    1. Anonymous Coward
      Anonymous Coward

      Re: And how reliable are iSupli?

      iSupply's business is about knowing the lowest prices in the supply chain, so their paying customers know how far they can go when negotiating their own deals.

      These reports are marketing for that service, so I'd expect the prices shown to be the lowest possible - maybe even lower.

  6. Anonymous Coward
    Anonymous Coward

    "Even at the same price point it's not selling as many as they can ship the way the first two iterations did."

    So you know that for a *fact*... or mere guesswork.

    My guess is the new iPad will sell extremely well AND the lower price point will increase demand for the iPad 2 and make it even harder for the others who are now selling sub-iPad 2 tablets at a higher price.

  7. Anonymous Coward
    Anonymous Coward

    This who article is based on guesswork not the actual deals Apple has done and the prices it has secured for the volumes they are shipping.

  8. Anonymous Coward
    Anonymous Coward

    Apple do not need massive queues to sell massive quantities. The new iPad is a significant upgrade (even more so than the iPad 1 to 2) and selling at the same price - so expect it will sell in bucket loads. Even though it's a significant upgrade it does not mean Apple did not get significant discounts from it's supplies.

    I bought a new iPad and know quite a few others who did - seems most bought online or bought it with intend to buy with a data contract. Apple have greatly widened their supply base which is probably more likely to explain less queues at the stores.

  9. Tony Paulazzo

    >what matters is that Apple has cannily taken the extra cost on the chin<

    Thanks Apple - other companies please take note, your profit margins don't need to be obscene, you just need to make a profit.

    >If you want proof that they're not selling all they can ship, buy one.<

    You might have to drive some, but PCworlds still showing shop floor stock (16 miles from me), Argos and Amazon are out - and PCWorld could be lying: Reserve an ipad3, get there and they say, we've got these nice ipad2s at a good price, or how about a first generation Asus Transformer ('cause even tho gen3 is almost out PCW still have no Primes to sell).

    PS Lovin' my 'The New iPad 3' iPad...

    1. fandom

      That was irony, wasn't it?

      "Thanks Apple - other companies please take note, your profit margins don't need to be obscene, you just need to make a profit."

      Most companies would love to get the reduced margins Apple is getting on the new iPad.

      It is hard to tell from a single post but you were kidding, right?

  10. TechnicianJack

    In Soviet Russia, product taxes company!

  11. nigel 15

    Cost when released

    surely the comparison is the production cost of the iPad2 when it was released.

    it's a year old now. of course the production cost has gone down.

  12. Alistair MacRae

    Have I missed something?

    It seems strange that they aren't charing more when they seem happy to charge crazy amounts for the increase in storage.

    Is there a real reason for this that I'm missing?

    1. I ain't Spartacus Gold badge

      Re: Have I missed something?

      The 16GB WiFi iPad screws over the Android manufacturers brilliantly. It's the same sort of price as the premium Android tablets, and therefore the one that people compare the price with, even if the Android tabs have built-in sat nav and/or 3G.

      Apple then make the really obscene profits on the £80 they charge for 16GB more of storage, or the £180 for 48GB extra.

      They also charge £100 extra for the Sat nav and mobile chips, which are probably less than £10 of extra cost.

      Huge economies of scale help them to maintain their market lead. Plus, because they bring out one model a year, and don't cut prices - their profit margins keep rising throughout the year.

      It's a brilliant combination of marketing, design and supply-chain work that's put them in this lead. I seem to remember from one of their annual reports that they'd paid out nearly $10bn in pre-orders for parts. When you place huge orders, and are willing to pay in advance, you can probably get some amazing deals, meaning the competition have to take huge risks in order to beat you on price, for similar levels of kit.

      Love 'em or hate 'em, you've got to admire the way Apple have done this. They took on a complacent telecoms industry with the iPhone, and gave them a righteous shoeing. Then they took a multi-billion dollar gamble on the iPad, that's netted them huge rewards, and a market lead they might not lose for another 2-3 years (at least).

      1. Dan 55 Silver badge

        Re: Have I missed something?

        The 16Gb WiFi iPad screws over the Android manufacturers brilliantly inside the US. However the WiFi chip is just a useless lump of metal which adds more to the BOM outside the US.

        (Or maybe it's worth including it just to be able to mention it on the advertising. Who knows...?)

      2. dssf

        Re: Have I missed something?

        I gave you a thumbs up because I too think it is brilliant from a strategy perspective.

        However, I don't care about retina. For me, my Android's resolution is fine. My EVO 4G may in fact perform in an inferior mode to the iPhone in some if not many ways. But, aside from rooting options, i really don't want to take from my pocket a phone that is in every god**#mn hand around me. I give Apple thumbs up for making things a LOT of people like or love, but I cannot myself bear to be "just/yet one MORE clone".

        I'm NOT player hating. I do recognize that products cost money to produce. But, surely, Apple can make multiple same-year models of differing appearances. Every time I damn time I get on a bus, or on two different transit agencies' trains, and when I'm in a cluster of 8-15 people, 8-10 of them have THE SAME DAMNED PHONE!

        Uggh... It's the same feeling as if all cars were of only 3 makes or models, and one have 2/3 of the visible share.

        Apple needs to diversify their models to stave off comments of lack of product diversification. Aren't they supposed to be wizardrous artists who know how to marry art and tech?

        (Note: I'm only saying this about Apple's PHONES, not their laptops. The 17" laptops look hellatiously nice, but my pockets are not that deep. As for the iPad vs Galaxy Tabs and others, I see more iPads vs other tablets, but I don't see all that many iPads anyway. I don't know where all these millions of them are. I see them mostly on transit, or the few dumb coffee-sipping, sacheting types who forget that almost every DAY in SF someone is being conked over the head or threatened at gunpoint for their laptop, bag, phone, and wallet. So, maybe most of the invisible tablets are actually tucked/hidden in bags in most open areas?

  13. qwarty

    more like 10% if iSuppy figures reliable

    The 32Gb GSM/HSPA version iPad 2 cost (BOM+assembly) $336.60 at launch ($326-60-IHS-iSuppli-Teardown-Analysis-Shows.aspx), now $271.00 according to iSuppli so a drop of around $65 about 20% over a year. So margin reduced but cost increase probably more in the 10% bracket not 30%. Somebody else can do the exact sums.

  14. Matt 53

    Apple can afford to

    ... Sell at next to no profit because it's an entry to the iTunes ecosystem. In a similar way to Kindle, mobile contracts, Sky TV, and maybe even printers and Ink - its about the long term profit.

    Do android device manufacturers have this assured revenue stream?

  15. Anonymous Coward
    Anonymous Coward

    I'm surprised all the Apple haters aren't now encouraging fanbois to buy as many iPad 3s as possible to gouge 30% from them.

    The iPad 3 screen is fantastic I must say and, as a gadget/tech fan, I for one couldn't resist the opportunity to own such a bleeding edge product. Makes me wonder about the sanity of the haters tbh. Don't they want the best tech? Apparently not. Or is more a case of they can't afford the best tech? Either way, they're missing out on some great tech and no Apple fan(c.f. real tech fan) gives a stuff.

This topic is closed for new posts.

Biting the hand that feeds IT © 1998–2021