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Topic: iPad

iPad mini costs $329 to buy, but costs Apple only $188 to build

Summary: While Apple's pricing for the iPad mini starts at $329, the device itself only costs the Cupertino giant $188 to build. And the most storage you buy, the more profit Apple makes.

Adrian Kingsley-Hughes

By for Hardware 2.0 |

Each iPad mini costs Apple less than $200 to build, according to a teardown carried out by research firm IHS.

Apple's iPad mini starts off at $329 for 16GB of storage, but according to figures published by AllThingsD, the device has a bill of materials of only $188. The bill of materials only includes the parts, and not assembly costs, but as a rule assembly costs are usually only a few dollars.

Of the materials, the touchscreen itself is estimated to cost around $80. This, according to IHS analyst Andrew Rassweiler, is because the thinner screens are proving more difficult to manufacture. As manufacturing costs fall -- and fall they most certainly will -- Apple's profit margin for the device will grow.

Think you're paying too much for an iPad mini? Wait until you see how much Apple makes off higher storage capacity models.

Apple sells the iPad mini in 16GB, 32GB and 64GB models, and charges $100 per storage bump. However, the additional storage costs Apple very little. In fact, the jump between 16GB and 32GB costs about $15, while the bump between 32GB and 64GB costs about $45.

Storage is quite cheap, yet Apple -- along with the likes of Google and Amazon -- charges a premium for customers wanting more storage. Charging extra for storage also means that companies are not so eager to make it easy to add storage to devices using micro-SD cards and the like. Neither the iPad, the iPad mini, Amazon's Kindle Fire HD, nor Google's Nexus 7 have the capability to take a storage card, which forces users to either buy the higher capacity devices at a premium, or add storage using an external Wi-Fi storage device.

In comparison, IHS estimates that Microsoft's Surface tablet, which retails for $499 for 32GB, has a bill or materials of $271, while Amazon's Kindle Fire HD tablet, which retails for $199, costs just $165 to build.

How Apple makes products difficult -- and expensive -- to repair

Topics: iPad, Apple, Hardware, iOS, Tablets

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50 comments
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  • Shocking!

    Of course, there are no costs for labor, insurance, marketing, shipping, distribution, employees, healthcare, leases, utililties, R&D...

    You're really going to be upset when you learn the BOM for your Ford!
    tvalleau
    Reply 4 Votes

    • lets not forgot...

      lets not forget taxes too!
      doh123
      Reply 2 Votes

      • iPad mini is overp pricing

        Doesn't matter just see the point made in this video about pricing between the iPad mini and Nexus 7. It's robbery
        http://www.youtube.com/watch?v=Zum5WVTbdqw
        Theo Mills
        Reply Vote

    • Apple sucks

      Overpriced junk is what it is.

      Screw you people and by people I mean ignorant blind Apple loyalists that would buy anything with that clunkly logo on it.

      (1) It's not just profit and R&D or anything else other than another product Apple is overcharging for. Same as how you can buy a PC with better specs at a much lower cost, I recently looked up a couple of computers for an argument, PC had double ram, double HDD & $400 cheaper. That was for cheap models so $400 is a huge savings.

      (2) You people are acting like Apple doesn't make huge profit on each App, Song, Movie or whatever is sold to the device.

      (3) Amazon "R&D, designers, even shipping charges to get things around" didn't require them to charge $141, they are at $30 profit yet they also give a better product.

      Kindle Fire HD:

      *Better screen
      *Better speakers
      *Better Wifi Speed
      *HDMI out
      *Don't have to use itunes Yay!

      The only thing going for the ipad mini is the 5 megapixel rear facing camera which is okay but it's still a pad and is unecessary. I'll take better everything else at $140 cheaper price please.

      Also Nexus 7 whoops ipad mini in terms of raw power.
      Allen Heffley
      Reply 1 Vote

      • Yeah, keep telling yourself that

        you can at least convince yourself.
        GoPower
        Reply 2 Votes

      • Wrong

        (1) iPad mini margins are actually lower than for other iPad products; it is official. And Samsung Galaxy Tab 7.7 -- until it was ceased recently, costed $469 -- all for that cheap plastic flexible case and much slower graphic power than iPad mini (in fact, iPad mini is dramatically faster in graphics than any current small tablet).

        (2) Apple does make profit there, but it is not "huger" than others do -- typical 30% fee. Of course, Apple does profit bigger than others, but it is because their applications and media libraries are bigger than rival's from Google and Amazon.

        (3) Amazon's sells their tablets for zero profit or even for losses, so it is not comparable. And their slower cheaper SoC, cheap flexible plastic case, small screens are worse than what iPad mini offers, not "better".

        Kindle HD:
        * higher resolution screen, but still far cry not a Retina, so it is an advantage, but not principal comparing to a case if there was a rivalling device with true Retina resolution.
        * dramatically smaller screen
        * speakers and Wi-Fi are no better (this was false advertisement points for which Amazon had to remove their "comparison" advertisement)
        * iPad mini does not require HDMI, because there is AirPlay (1080p); and if you really need one, there is Lighting to HDMI adapter
        * there is no need to use iTunes for more than a year already.

        Also both Nexus 7, Kindle Fire HD, Nook HD -- all of those are far behind iPad mini in terms of graphical power:

        http://www.anandtech.com/show/6426/ipad-4-gpu-performance-analyzed-powervr-sgx-554mp4-under-the-hood

        Add 20% to iPhone 4S results in the diagrams from this link and you will get iPad 2/iPad mini graphic power (20% is because A5 SoC has higher frequency in tablets comparing to the phone).
        DDERSSS
        Reply 2 Votes

        • I also forgot to say that competing small tablets have 40-100 g more weight

          ... even though iPad mini's screen is like 35% bigger. They are so way thicker.
          DDERSSS
          Reply 1 Vote

        • Your link is wrong...

          It does not compare the graphical power between the Nexus 7, Kindle Fire HD, and iPad Mini. It only benchmarks the latest iPad along other 10" tablets and other smartphones. OF COURSE the iPad 4 will spank a Nexus 7 in graphical performance. Its in a different class of tablets (10" vs 7")
          pcon
          Reply 1 Vote

        • The mini is NOT more powerful than Nexus

          The link you have posted is about the iPad 4, which features an A6x, while the iPad mini is powered by an A5, an SOC that is three generations behind the A6X! The iPad 3, with a A5X was comparable to the Tegra 3 used in the Nexus 7 so an older SoC is likely to be worse than the Nexus! Considering the Nexus is months old and the mini is so recent, this is just a prime example of how much Apple likes to overprice products, while they may, many a times, offer sub-par components as compare to other devices that actually cost lesser!
          Anonymous1a
          Reply 1 Vote

          • The link is correct; the article has iPhone 4S results, which has the same

            ... A5 SoC, but with lower frequency.

            So to get iPad mini (iPad 2) results, you have to add 20% to results of iPhone 4S and see how dramatically faster iPad mini is comparing to **any** small tablet.
            DDERSSS
            Reply Vote

          • Pure speculation

            Until there is actually hard evidence backing this, your calculations are ONLY pure speculation. From a hardware standpoint, every 7" tablet out there TRUMPS the iPad Mini. See this article:

            http://www.zdnet.com/android-tablets-beat-out-apple-ipad-minis-graphics-7000006939/
            pcon
            Reply 1 Vote

          • It is not "pure speculation", the A5 SoC is used, and its specifications ..

            ... are known. There could be no other result.

            As to graphics, I explained it in the comments to the article you linked.
            DDERSSS
            Reply Vote

    • Redundant

      The cost of employees and healthcare are usually grouped under labor. And I'm pretty sure shipping falls under distribution.

      When I worked for an automotive supplier, materials typically accounted for about 85% of the costs. Everything you listed fit into what was left. I imagine Ford pays more for labor and thus that number would be skewed down somewhat though.

      Of course actual labor costs will be much less since Apple makes it's products in China. Shipping will run more, but not nearly as much as is saved on labor.

      You're right that there is more to the cost than just the materials. I wouldn't say it costs them less than $200 to make one of these things. I think it's much closer to that than the $329 it sells for though.

      I'm glad the article points out the memory price issue as well. I've long laughed at how Apple charges $100 for $20 worth of memory. And people eat it up at that price.
      Tim Schooler
      Reply Vote

      • And Google and Amazon do the same thing

        And you lap that up! D'oh!
        GoPower
        Reply 1 Vote

      • not so redundant

        the cost for the storage memory in a tablet isn't a parity thing. The larger sized NAND is not simply twice that of it's lower partner. It's not just simply a matter of adding the same chip 3 more times. They are different chips altogether. When you get to the 64GB sizes, the chips themselves are well above parity. In a $100.00 price bump from 16GB to 64GB, there is very little profit gained.

        laptops are a little differen - especially single slotted Apple types and tablet DRAM. the 2G - 4G is relatively the same. But from 4GB to 8GBs, you'll pay some extra to hit the high side.
        smarty301
        Reply Vote

    • or

      Email, unlimited shared photo streams, photo streams, icloud storage, etc. All without ads or tracking.
      _NonZealot
      Reply 1 Vote

    • Compared to teardown costs for comparable Kindle and Android tablets

      It is way higher! You be the judge..
      champions_league
      Reply Vote

  • Oh man...

    Its almost as if they're trying to make money out of this. How dare they!!
    merente
    Reply 1 Vote

    • Ethics is the issue

      Being for-profit often means going beyond ethical boundaries.

      Since your post was glib and vague, so is my response to you.

      How dare I! ;-)
      HypnoToad72
      Reply Vote

  • what is it...

    what is it when you factor in more costs than that? R&D, designers, even shipping charges to get things around... etc...
    doh123
    Reply 1 Vote
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