Apple's entry-level iPad Air 2 costs $275 to build, retails for $499

[Shawn Knight]

Apple’s second generation iPad Air costs exactly $1 more to build than its predecessor, a teardown of the new tablet revealed. Even still, the company’s profit margins at the top end aren’t quite as nice as they were a year ago.

Research firm IHS iSuppli conducted a detailed analysis on the iPad Air 2 as they often do when new iDevices hit the market and determined that a 16GB Wi-Fi only model – which retails for $499 – carries a bill of materials (BOM) of $275.

The top-end model with 128GB of storage and an LTE radio, meanwhile, costs Apple roughly $358 to make and sells for $829.

As you can see, Apple’s profit margin widens at the upper end of the product line. The implied profit margin ranges from 45 percent on the lower end to 57 percent for the top-of-the-line iPad. That’s actually down slightly from the 45 percent to 61 percent that the company earned on the original iPad Air due to the fact that they eliminated the 32GB storage option from this year’s lineup.

Apple doesn’t disclose its profit margins on individual products but they do report a total gross margin which was 38 percent at last check.

Deemed by many as an evolutionary upgrade, the iPad Air 2 was unveiled on October 16 and went on sale a little over a week later. It includes a faster A8X chip with an additional processing core and 2GB of RAM (another first in an iOS device) inside a chassis that is 18 percent thinner than before. 

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https://www.techspot.com/news/58610-apple-ipad-air-2-manufacturing-cost.html

 

[Rippleman]

Interesting, but most (especially biased apple haters) will only see it as profit grab. Material alone is not a end factor of how much something "costs". Example: A windows 8 dvd costs about 8 cents to build and costs $119.99.

There is boxing, packaging, shipping, retailing, warranty, insurance, employees, equipment costs, equipment maintenance, rent cost, lease costs, fuel costs, replacement costs, taxes, employee benefits, research, development, and on and on and on.

 

[Hexic]

Interesting, but most (especially biased apple haters) will only see it as profit grab. Material alone is not a end factor of how much something "costs". Example: A windows 8 dvd costs about 8 cents to build and costs $119.99.

There is boxing, packaging, shipping, retailing, warranty, insurance, employees, equipment costs, equipment maintenance, rent cost, lease costs, fuel costs, replacement costs, taxes, employee benefits, research, development, and on and on and on.

Very true - the material cost alone isn't something to solely base off of. BoM and labor are the two that matter.

Although, even accounting for labor, with as much profit they have made (while shelling out the labor expenses) is still very high. I refuse to pay ridiculous premiums for mediocre hardware and software. :3

 

[mctommy]

Interesting, but most (especially biased apple haters) will only see it as profit grab. Material alone is not a end factor of how much something "costs". Example: A windows 8 dvd costs about 8 cents to build and costs $119.99.

There is boxing, packaging, shipping, retailing, warranty, insurance, employees, equipment costs, equipment maintenance, rent cost, lease costs, fuel costs, replacement costs, taxes, employee benefits, research, development, and on and on and on.

People would be amazed as to how much cost goes into supply chain management for a lot of products out there.

 

[cmbjive]

Interesting, but most (especially biased apple haters) will only see it as profit grab. Material alone is not a end factor of how much something "costs". Example: A windows 8 dvd costs about 8 cents to build and costs $119.99.

There is boxing, packaging, shipping, retailing, warranty, insurance, employees, equipment costs, equipment maintenance, rent cost, lease costs, fuel costs, replacement costs, taxes, employee benefits, research, development, and on and on and on.

As an "Apple hater" I don't see it as a profit grab. There are obviously other things that going into building an iPad and only giving people the "bill of materials" is a half-hearted attempt at pushing the meme that Apple is somehow gouging its customers for its products. If those consumers don't like the price don't pay it. At the time when people stop overvaluing Apple Apple will stop overvaluing its products.

 

[Uncle Al]

As an Apple stock holder I love to see the profits, but as one that has watched this market ever since the first consumer PC rolled out I have seen quite a bit of over priced devices out there. Gone are the days when a 10-20% profit margin was considered excellent. I have missed seeing the old studies that showed how many more sales could be generated through lower prices on consumer electronics. Of course, it's our own fault for leaping at every new thing that comes out. Long live the spontaneous buyer!

 

[Skidmarksdeluxe]

Interesting, but most (especially biased apple haters) will only see it as profit grab. Material alone is not a end factor of how much something "costs". Example: A windows 8 dvd costs about 8 cents to build and costs $119.99.

There is boxing, packaging, shipping, retailing, warranty, insurance, employees, equipment costs, equipment maintenance, rent cost, lease costs, fuel costs, replacement costs, taxes, employee benefits, research, development, and on and on and on.

I never knew Win 8 DVD's were built, I thought they were pressed, it just goes to show you learn something new everyday
It's not quite the same thing, you're not paying $120 for the physical copy of the DVD, you're paying a $120 license fee to use the software, whether you buy a physical copy or download it the price is the same.
Apple are overcharging for the tablet but it's understandable otherwise it just wouldn't be Apple.
Life is full of choices, if you don't like the price don't buy it, if you happy with it then go ahead by all means, you're free to make the choice (Choice is the only free thing you'll get from Apple anyway).

Interesting, but most (especially biased apple haters) will only see it as profit grab. Material alone is not a end factor of how much something "costs". Example: A windows 8 dvd costs about 8 cents to build and costs $119.99.

There is boxing, packaging, shipping, retailing, warranty, insurance, employees, equipment costs, equipment maintenance, rent cost, lease costs, fuel costs, replacement costs, taxes, employee benefits, research, development, and on and on and on.

As an "Apple hater" I don't see it as a profit grab. There are obviously other things that going into building an iPad and only giving people the "bill of materials" is a half-hearted attempt at pushing the meme that Apple is somehow gouging its customers for its products. If those consumers don't like the price don't pay it. At the time when people stop overvaluing Apple Apple will stop overvaluing its products.

I agree.

As an Apple stock holder I love to see the profits, but as one that has watched this market ever since the first consumer PC rolled out I have seen quite a bit of over priced devices out there. Gone are the days when a 10-20% profit margin was considered excellent. I have missed seeing the old studies that showed how many more sales could be generated through lower prices on consumer electronics. Of course, it's our own fault for leaping at every new thing that comes out. Long live the spontaneous buyer!

Good news for stock holders, bad news for consumers but that's the way it goes.

 

[SNGX1275]

I never knew Win 8 DVD's were built, I thought they were pressed, it just goes to show you learn something new everyday
It's not quite the same thing, you're not paying $120 for the physical copy of the DVD, you're paying a $120 license fee to use the software, whether you buy a physical copy or download it the price is the same.
Apple are overcharging for the tablet but it's understandable otherwise it just wouldn't be Apple.
Life is full of choices, if you don't like the price don't buy it, if you happy with it then go ahead by all means, you're free to make the choice (Choice is the only free thing you'll get from Apple anyway).

Doesn't the iPad come with iOS? (OS X updates have been free for a few years now)

 

[Skidmarksdeluxe]

Doesn't the iPad come with iOS? (OS X updates have been free for a few years now)

Yup. I've got to give them kudos for that. Honestly speaking I really do like some of their products, it's their corporate bs and aloofness that drives me away.