The Cost Of iPad

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When the Apple announced the release of iPad, the device where users can enjoy using it for watching videos and reading, iSuppli started performing analysis on the iPad cost. However the analysis revealed that the total cost of the least expensive iPad constituents, including the 15 gigabytes of memory capacity, comprises only about 52 percent of the offered retail price. The upgraded iPad with 32 gigabytes of memory space is sold at US$599 but the cost is only US$289.10. Even the high-end model of the iPad only worth US$348.10 yet it is sold at a retail price of US$699.
From the iSuppli analysis, most of the iPad component costs were used to further enhance the device for more appealing usage. The iSuppli principal analyst, Andre Rassweiler stated that more than 40 percent of the cost are what users see with their eyes and touch using their fingers - the interface and touch screen display. Many research firms conducted a teardown analysis of the iPad to evaluate a rough profit margin. The analysis, however, does not include the intangible item such as the advertising, shipping, patent licensing, and software development costs.

The initial estimation made by iSuppli about the iPad cost of the least expensive model was only US$219.35. Nevertheless, further tearing down of the device exposed that the iPad contained more silicon chips than expected. There are three chips used by the Apple to control the touch screen feature and this is due to the sheer scale of the device. Rassweiler added that through the passage of time, the Apple will have leeway to merge every iPad component or incorporate them thus reducing the amount of silicon needed.
The flash memory chips were also a huge contribution towards the iPad cost. A 16 gigabytes memory chip costs US$29.50; 32 gigabytes chip costs US$59 while the 64 gigabytes memory chips worth US$118. The Apple designed the main chip, A4 while Samsung Electronics will build the chip attached with a memory chip for Apple. Apple will pay US$26.80 for every chip produced.


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