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Thursday, April 08, 2010
Apple's iPad Costs $259.60 to Manufacture

Apple's latest gadget, the iPad, costs Apple just $259.6, or about half the retail price, according to an independent estimate released Wednesday.

With more than 40 percent of its Bill of Materials (BOM) dedicated to the display, touch screen and other user interface components, Apple's iPad represents a radical departure in electronic design compared to conventional products, according to a teardown conducted by iSuppli Corp. The combined costs of user-interface-related components in the iPad amounts to $109.50, representing 43.7 percent of total BOM of the 16Gbyte, non-3G version of the iPad torn down by iSuppli.

"While the iPad has the potential to change the game in the computing, wireless and consumer worlds, it already has changed the game of how many electronic products are - and will be - designed," said Andrew Rassweiler, director and principal analyst and teardown services manager for iSuppli. "The iPad?s design represents a new paradigm in terms of electronics cost structure and electronic content. Conventional notebook PCs are 'motherboard-centric,' with all the other functions in the system - such as the display, the keyboard and audio - peripheral to the central microprocessor and the main Printed Circuit Board (PCB) at the core. With the iPad, this is reversed. Everything is human-machine-interface-centric, with the PCB and Integrated Circuits (ICs) all there to facilitate the display of content as well as user inputs."

Based on its physical teardown, iSuppli estimates the BOM of the low-end 16Gbyte, non-3G iPad at $250.60. When manufacturing expenses are added, the cost rises to $259.60.

This cost is higher than iSuppli?s virtual teardown estimate issued in February of a $219.35 BOM and $229.35 manufacturing cost. Cost for the display, the battery, the user interface chips and the power management Integrated Circuits (ICs) all exceeded iSuppli's initial estimates, driving up the total BOM.

A lot of the cost is that sleek touch screen. Each iPad contains an estimated $109.50 worth of components that provide the user interface, or about 44 percent of the total cost of the parts. For instance, just the glass display, which measures 9.7-inch diagonally, costs $65.

Second in cost in the low-end, 16-gigabyte version is the memory, which runs about $30. Then comes the battery for $21.

Apple began selling the iPad on Saturday starting at $499. Versions with more memory run $599 and $699, and the company plans to start selling models with cellular wireless capability later this month, starting at $629. The versions now out offer only Wi-Fi wireless connections.

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