February 1st, 2010, 11:45PM in Technology by Marc LequimeView Comments
The home screen for the iPad.
Right. So before you think anything’s up, let me emphasize a point – just because a device sells for $499, doesn’t mean they earn $499. In fact, cut development costs, I’d have been surprised if Apple earned $80, not $200. Devices are usually expensive and as such do not generate massive income, however a lot of devices make up for this with other products included – this can range from software to monitors etc. that the other companies pay them to include.
But no, it’s vastly different to some other strategies – some companies barely scrape $5 per product sold and make up for it with bundled software promotion. Not Apple, as they’ve managed to cut costs down to the point where it earns them a shade more than what you’d expect. The entry-level $499 model generates $208 in profit, meanwhile top-range $829 model doubles that, raking in $446 per individual unit sold.
From GigaOM:
Marshall estimates that the cost of making the 16GB Wi-Fi model of the iPad runs around $270.50, plus $20 for warranty costs for a total of $290.50. Most of that cost accounts for the 9.7-inch touchscreen display, which Marshall guesses costs around $100. Apple sees considerable savings on its own in-house A4 chips, which run around $15 per unit. With a cost of $290.50 and a selling price of $499, Apple stands to see a profit margin of 42.9 percent with each sale.On other models that margin ranges from 48 to 55.1 percent, giving the iPad line as a whole an overall profit-generating power of about 50 percent, a number which assumes that the Wi-Fi models will sell considerably more than the 3G-capable devices, a reasonable assumption.
And, likely; they’re gonna love the income rate of these things.
[GigaOM]
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