Apple has proven with the iPhone 3G and iPhone 3GS that they know how to work profit margins. The iPhone maker enjoys the distinction of earning highest profits per smartphone sold, and it looks like they’ll be continuing that trend with the Apple iPad. A new report today indicates that the iPad will net Apple an amazing $208 for the $499 base model, with the highest-end $829 model leaving Apple with $446 in profits. While some business out there would kill for even a quarter of Apple’s margins on the iPad, it’s apparently business as usual for Steve Jobs & Co.
According to BroadPoint AmTech’s Brian Marshall, Apple’s bill of materials (BOM – not to be confused with bowel movement) rakes up to $270.50 for the 16GB WiFi-only iPad. The priciest component, it turns out, is the 9.7-inch touchscreen, which is estimated to cost Apple $100 a pop. The “custom” A4 processor, in comparison, costs just $15 per unit. The estimated BOM includes manufacturing costs. And, like the iPhone, the iPad enjoys a roughly 50% profit margin across all variants.
Interestingly, the most appealing variants of the iPad – those with 3G cellular connectivity – net Apple the most profit per unit sold. Apple realizes that no self-respecting techie will buy the WiFi-only version, and has seemingly worked it out so that they make the most money on 3G variants. Perhaps more intriguing, though, is the possibility that Apple’s high iPad profits margins could allow Apple to drop the price of the entry-level iPad into netbook territory. Wouldn’t it be nice to see the iPad price drop by a $100 or so later this year?
[Via: ComputerWorld]