Apple's profit margin slightly slimmer on iPad 3, estimates reveal

By on March 9, 2012, 5:00 PM

According to BOM (bill of materials) estimates by UBM TechInsights, Apple may be cutting its profit margin slightly with its new iPad compared to previous generations. 

The firm's estimate shows a total BOM cost of $310 for the iPad 3 -- more specifically -- the 4G LTE 16GB model. This model retails for $629 making Apple's profit margin a healthy 51 percent. This is down by about 6 percent compared to similarly equipped, previous iterations.

The firm does warn that a teardown is necessary to refine its numbers, but these types of preliminary estimates typically match more accurate teardowns within just a few dollars. More precise numbers will almost certainly not be available until the iPad 3 ships on March 16.

A comparably equipped, first-generation iPad had a profit margin of 57 percent at release. Similarly, the iPad 2 debuted at a 56 percent margin of profit. 51 percent is definitely under the status quo, although still a substantial markup.

After a year in production and shipping many tens of millions of units, the 2012 version of the iPad 2 has a BOM cost of $248.07 -- around 10% less than when it launched. However, because of the iPad 3 release, Apple will be cutting iPad 2 retail prices by about 17%.

The estimates take into consideration the display, digitizer, battery, camera, wireless communications chipsets and transceivers, flash storage, memory, processor, non-electronic costs, supporting materials and "other" aspects.

Beefier hardware is the primary reason profit margins will be lower than previous generations. One of the most anticipated features, the high pixel density display, will cost about $12 more while the AX5 CPU , LTE chip and 11666mAh battery will collectively add about $22.




User Comments: 1

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captaincranky captaincranky, TechSpot Addict, said:

I believe Foxconn had to give raises to everybody in the iPad / iPhone factory. That probably didn't help.

BTW, Foxconn's factory made a two night stint on ABC's "Nightline"!

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