iPad Costs Could ‘Leave Room for Price Cuts’

| Analysis

Research firm iSuppli has produced a preliminary estimate of the iPad’s component costs -- based on what is known about it, rather than tearing one down, as the company usually does -- that could be as low as US$219.35, leaving room for potential price cuts.

Writing about the report for BusinessWeek, Arik Hesseldahl quoted iSuppli analyst Francis Sideco as noting: "There's certainly a decent amount of headroom in there. If they had to reduce the retail price, they certainly could." Mr. Hesseldahl also cited a Feb. 8 research note from Credit Suisse analyst Bill Shope, who said he had recently met with Apple executives who said they “will remain nimble” on pricing.

According to iSuppli’s estimates, the iPad’s most expensive part is its 9.7-inch multi-touch screen, which came in at $80. The A4 processor at its heart, which was developed by Apple after it purchased PA Semi, was estimated to cost about $17, not much more than the $14.46 Samsung chip used in the iPhone 3GS.

Mr. Sideco said that the most profitable iPod model is the 32GB one with 3G cellular network connectivity: it came in at $287.15, or 39.4 percent of its retail price. At the other end of the margin spectrum is the 16GB version without 3G access, which totaled $229.35, or 46 percent of its retail price.

Keep in mind that those are simply the costs for parts. Marketing, advertising, distribution, and other costs were not included.

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4 Comments

Lee Dronick

“Keep in mind that those are simply the costs for parts. Marketing, advertising, distribution, and other costs were not included.”

I wish that they would include those costs so that the Apple hater don’t screech about Apple charging exorbitant prices.

Josh

So this is a guess at the parts cost based on a guess at the parts list?  How is this really news?

havochaos

Really? People are actually still listening to the tripe that comes out of iSuppli? Guessing at parts costs of with they have no actual data on and still fail to factor in cost of manufacturing, R&D, etc. Great reporting guys. I just love the link baiting on slow news days.

cb50dc

Keep in mind that those are simply the costs for parts. Marketing, advertising, distribution, and other costs were not included.

Nor labor. Nor shipping.

Nor years and years of development, involving who knows how many engineers, designers and executives, most of whom are paid probably quite well.

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