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.