Saturday, March 10, 2012

Apple's 'new iPad' profit margin 5 percent lower than on iPad 2

A virtual teardown of the "new iPad" shows that Apple is making significantly less on each one of its magical tablets. That said, we seriously doubt the change will do much to impact Apple's bottom line.

You need to these estimates, especially those done virtually, without a physical device teardown, with a grain of salt, but they still give a decent idea of how Apple or another manufacturer is doing. In this case, market research firm UBM TechInsights said that the total cost of components in the 16GB 4G LTE model is about $310, not including the cost of labor and shipping.

[Cynics will add that the cost of labor is minimal based on the relative slave wages paid Foxconn employees]

That means that Apple makes a profit of about 51 percent on the 16GB 4G LTE "new iPad" model (priced at $629). Apple had about a 56 percent profit margin on the iPad 2, so it's losing about $31.50 per iPad sold vs. the older model.

Among the notable components in the "new iPad" are the new retina display, which UBM pegged at around $70, and the LTE chipset, which the company estimated to cost $21. The LCD panel on the iPad 2 and its 3G radio compare at about $50 and $10, respectively.

Those differences add up to about the $31.50 difference in price, but since Apple also added a better processor and more RAM, the company apparently managed to shave costs in other areas.

We're sure the Apple Board of Directors, CEO Tim Cook, COO Phil Schiller, and Apple stockholders aren't too concerned, though. Not only did Apple stock continue to rise, closing at $545.17 on Friday, based on the hammering the Apple Store website took on Wednesday when pre-orders began, the "new iPad" is likely to set "new records" for the company.

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