The Estimated iPad Bill of Materials

| Product News

The Bill of Materials (BOM) is a listing of all key components for a device and how much they cost the manufacturer. Broadpoint AmTech's Brian Marshall has published his estimate of the iPad BOM. It shows that the base iPad model, retailing for US$499, costs Apple about US$290 to manufacture.

Note that the difference between the retail price and the cost, divided by the retail price is the Gross Margin. For example, for the base iPad model, ($509 - $290.50)/$509 is 42.9 percent.

Here is the Broadpoint AmTech BOM, published January 28th.

iPad BOM

iPad BOM - Published with permission

Note that Apple charges an extra $100 over the 16 GB model to get to 32 GB while the memory cost goes up $25.50. Then Apple charges another $100 over the 32 GB model to get to 64 GB, while the component cost goes up $51. So it's really more cost effective to buy the 64 GB iPad - based on Apple's pricing scheme.

Some of these components are amazingly inexpensive. Remember, however, that the total cost of the device does not include, for example, shipping from China, packaging, warranty service, telephone support, and marketing. Also, a certain percentage of the profit is allocated to the cost of running the company, so the Gross Margin isn't a exorbitant as one might think at first blush.

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Comments

geoduck

For example, for the base iPad model, ($509 - $290.50)/$509 is 42.9 percent

$509?
I thought it was selling for $499.
Why the difference?

John Martellaro

Of course, the retail price is $499, but analysts have a magical way of accounting for all kinds of costs—in this case an implied carrier subsidy that folds into his spreadsheet analysis.

geoduck

Ok makes sense.

The Margin is great, far better I’ll wager than any NetBook maker or that Amazon gets on a Kindle.

Intruder

Remember, however, that the total cost of the device does not include, for example, shipping from China, packaging, warranty service, telephone support, and marketing.

Or assembly. Somebody has to put the thing together…

John Martellaro

Intruder: Manufacturing is already a line item.

pats

We now have stock analyst guessing how much parts cost. The A4 SOC most likely contains the Application processor, Video Processor and DSP on a single die.  It looks like he took the iphone price guess and made some assumptions.  Apple’s cost on the SOC depends on the die size and yield once they amortize the design cost.  They are paying someone probably Samsung to Fab the chip but there per unit cost are probably closer to $10 rather then the $25 in this estimate but then Apple has to pay the designers wether they build 1 or 100M so they better get making chips.  Here is an easy guess the BOM is 50% of the retail cost.  Lot less detail but then you can go have a drink at 4:30 instead of searching for all this parts pricing info.

iVoid

Of course, the retail price is $499, but analysts have a magical way of accounting for all kinds of costs?in this case an implied carrier subsidy that folds into his spreadsheet analysis.

The iPad isn’t subsidized by a carrier, so that really doesn’t apply here.

Intruder

Intruder: Manufacturing is already a line item.

Ahh. Sorry. Didn’t see it there, although $10 seems awfully low for any assembly and testing. Even in China.

Terrin

These numbers are meaningless because the cost amongst the already pointed out omissions doesn’t include development cost. If Apple spends 100 million in development costs before the product is released, the profit margin is meaningless until that outlay of initial development cost is paid.

overhead

  Remember, however, that the total cost of the device does not include, for example, shipping from China, packaging, warranty service, telephone support, and marketing.

Or assembly. Somebody has to put the thing together?

Or developing and maintaining the OS.

Or distribution costs.

Or helping cover the salaries of 30,000+ employees.

Etc etc.

calebcar

Or advertising.
OTOH I almost everything else associated with the Ipad including apple care, higher priced models, Itunes store, apps store,accessories have much higher margins.

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