The Estimated iPad Bill of Materials

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.