iPad Air allegedly costs Apple measly $274 to make, $42 less than iPad 3
After getting the teardown treatment a few days ago, Apple’s hottest, slimmest, coolest and possibly most popular large iPad ever, the one dubbed Air, has been evaluated by research firm IHS at its true value.
“True” meaning before stuff like marketing and of course profit enter the equation. Unsurprisingly, the actual manufacturing cost of the 9.7-incher is noticeably south of what Cupertino charges for the one-pound tablet, namely $274 in a base, 16 GB, Wi-Fi only variation.
Mind you, that’s a whopping $225 less than the list price, with the gap growing proportionally for better equipped models. For instance, the top-of-the-line 128 GB version packing cellular data service is up for grabs for the end user for a handsome $929 while costing a modest $361 to build.
Granted, Apple bosses pocketing the lion’s share of iPhone or iPad prices is not exactly news (just remember the bill of materials for the iPhone 5s and 5c), so let’s move on to the real shocker. Ready for this?
Despite being far superior to last year’s iPads from a raw power standpoint, the fifth-generation 9.7-incher is actually cheaper to make. $42 bucks cheaper than the iPad 3, to be exact, as far as the entry-level config is concerned.
How is that possible? Simple, beneath all the marketing hoopla and breathtaking benchmark results, the 64-bit A7 CPU is not that special and it costs an estimated $18, so five bucks less than the A5 18 months back.
Meanwhile, the display department is where Apple has truly spared no expense, coughing up roughly $90 for the LG and Samsung-made panels and an additional $43 for other touchscreen parts. Qualcomm’s cellular data network chips are an extra $32 a piece (though Wi-Fi only variants don’t need them), with flash memory modules yielding between $9 and $60 expenditures.
All in all, it’s crystal clear iPad Air’s BOM and pricing structure are new samples of Apple’s incredibly successful business model, albeit all the numbers presented above have to be taken with a little grain of salt.
For one thing, they’re ballpark figures and thus not 100% trustworthy. Also and more importantly, the report doesn’t take into account R&D (research and development), which in the long run may be more expensive and time-consuming than, say, scoring the displays. Still, when all is said and done, Tim Cook and the gang are destined to make a boatload (or ten) of moolah off the Air.