The Cost of a $499 iPad: $290 (according to NYTimes)

The Cost of a $499 iPad: $290 (according to NYTimes)
[06-02-2010]

If a 43 percent profit margin sounds about right to you, then Apple Computer has priced its new iPad tablet fairly.

According to a report in Computerworld, the total cost to Apple to market the basic-configuration $499 iPad is just about $290 to pay for material, manufacturing and warranty costs. The higher-end models are even more profitable.

Analyst Brian Marshall of BroadPoint AmTech, a firm that provides institutional investment advice on information technology, undertook the breakdown. He told the site that the most expensive component in the device is the 9.7 inch LCD screen, which he estimates costs $100. He said that the aluminum casing costs about $25, and the price is about the same for the 16 gigabytes of flash memory in the base model.

That screen, by the way, has caused a good deal of debate among the Apple cognoscenti, because of its format: a nearly square ratio of 4:3, rather that the widescreen look of 16:9, which is most common for watching video content. However, if the iPad is to serve as an ebook reader, the 4:3 size is more appropriate for that kind of content.

Mr. Marshall further figures that the upscale $629 iPad, offering 3G data connectivity along with Wi-Fi, costs Apple only about $16 additional from the $499 model. He estimated that sales of all iPads this year could amount to seven million units.
Source: [NYTimes.com]

Posted under: IPAD