A new report from IHS iSuppli suggests that Microsoft's Surface RT tablet is more profitable than Apple's iPad. The company's preliminary teardown report on a 32GB Surface with the optional black touch cover reveals a bill of materials (BOM) of $271.00. That figure increases slightly to $284 after manufacturing expenses are applied.
Microsoft sells the 32GB Surface RT with touch cover for $599 which equates to about $315 in profit on the hardware alone. According to the teardown experts, this shows that manufacturing profits are higher, in percentage terms, than Apple's entry-level $499 iPad.
Andrew Rassweiler, senior principal analyst of teardown services at iSuppli, says the Surface represents a key element in Microsoft's strategy to transition into a devices and services provider. By build and selling hardware that generates high profit, they're essentially following in the footsteps of what Apple has been able to achieve with the iPad and iPhone.
Some tablet makers even sell their products at a loss with plans to make up revenue (and then some) through their ecosystem of apps and multimedia. Amazon's original Kindle Fire tablet is a perfect example of this. According to iSuppli, it cost $201.70 to build the tablet after manufacturing expenses - a couple of bucks more than Amazon charged customers.
IHS also estimates that it costs Microsoft no more than $18 to manufacture the touch cover, an accessory that tacks on $100 to the price of the 32GB Surface RT tablet.