Preliminary teardown suggests Surface RT is more profitable than iPad

[Shawn Knight]

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.

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https://www.techspot.com/news/50731-preliminary-teardown-suggests-surface-rt-is-more-profitable-than-ipad.html

 

[MilwaukeeMike]

Am I completely missing the point of these 'how much profit per gadget' articles? MS and Apple have zero profit until they sell enough of them to recoup requirement/design/testing costs. Is the cost for building a tablet so low that we can just forget about fixed costs and only look at the variable ones?

 

[Guest]

I'm sure it does play a part but its not hard to build a tablet with the right resources which microsoft definitely has the right hardware technology programmers engineers and new stuff in research development really I'm surprised they haven't done better surely they could build the most of it themselves from scratch and they already have all the software, apple are worried because they cant compete price wise but maybe google can get on the scene and start a price war for christmas new year sales

 

[Guest]

I prefer surface pro..

 

[Greg S]

The advantage MS has over apple is that millions of people want to buy windows already. There are not too many people getting the ipad because it has iOS. They want the apps and the ease of use, but could really care less what OS it's running as long as it's easy and has apps.

 

[Guest]

The key point here is that Microsoft ripping off its customers substantially more than Apple.

So much for the Apple Tax.

 

[Camikazi]

The key point here is that Microsoft ripping off its customers substantially more than Apple.

So much for the Apple Tax.

They did it this way to make sure that their hardware partners had room to make cheaper Windows 8 tablets and still make a profit. Basically the Surface is the bar, the quality, the specs and the prices have set the bar for Windows 8 RT tablets and the partners need room to breath so MS gave them some. It's not the same as Apple that has no partners at all and takes in all the profits from their hardware.

 

[tipstir]

Just holding out for Windows Surface Pro as the Windows Surface RT seems more like what Android Tablets use like with Tegra3 but with 2GB RAM. 2GB of RAM can quickly fill-up. These tablets need 4GB to 8GB of RAM to really do anything serious on it. 16GB would be more usable. Just 2GB just seems so limited and the price you have to pay for the RT for 2GB is overkill.