Like the iPhone, Apple stands to make a greater profit on the iPad when consumers choose models with more memory, according to an estimate released by iSuppli on Wednesday.
The $729 version of Apple's iPad is estimated to carry a bill of materials (BOM) and manufacturing cost of $287.15, making it the most profitable iPad model, according to iSuppli. The iPad is expected to go on sale as early as next month.
The firm did not have an iPad in hand when doing its analysis but based the virtual teardown on an in-house cost model that includes commodity components that are used across many devices.
Though the estimate does not account for non-hardware costs, as the price of different models increases, other costs will stay the same, according to Francis Sideco, an analyst at iSuppli. "Regardless of the configuration, software and licensing is going to stay the same. The only thing that's going to change are the hardware costs and primarily the memory," Sideco said in an interview.
That memory-based pricing scheme has become standard practice for Apple when pricing its iPhone and iPod, for example. For the iPad, the 32GB model will be the most profitable, costing only $29.50 more to produce than the 16GB versions, but the retail price gap is $100, iSuppli said. After the display, the NAND flash memory is expected to be the most expensive item. In the mid-range 3G model, the 32GB of NAND accounts for 21.4 percent of the total BOM, iSuppli said. … Read more