Apple's iPad costs $229 to manufacture, according to iSuppli

Research firm iSuppli is making headlines again with a virtual teardown of the yet-to-be-released iPad. The 32GB 3G wireless iPad model contains a combined Bill of Materials (BOM) and manufacturing cost off $287.15, according to the report.

All six iPad models were given a cost analysis, with the lowest priced 16GB non-3G version totaling $229.35 and the 64GB 3G model topping the list at $346.15. As always, iSuppli's estimates are based on hardware and manufacturing costs alone, and do not include additional expenses, such as marketing, development, and licensing fees.

The top component eating up $80 is the display and touchscreen. Utilizing In-Plane Switching (IPS) technology, the display produces wider viewing angles than regular LCD screens. NAND flash, expected to be the second most expensive item in the BOM, ranges from $29.50 for the 16GB iPad to $118 for the 64GB model. Manufacturing costs are somewhere between $10 and $11.20.

Dr. Jagdish Rebello, senior director and principal analyst for iSuppli, noted, "At a BOM and manufacturing cost of $287.15, and a retail price of $729, the 32Gbyte/3G version is expected to generate the highest profit of any member of the iPad line on a percentage basis. The 32Gbyte versions of the iPad cost only $29.50 more to produce than the 16Gbyte versions, but their retail pricing is $100 higher. This shows that Apple believes the highest-volume opportunity for the iPad resides in the mid range of the product line."

The full teardown is as follows:

Apple iPad teardown by iSuppli

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It's very normal that the margin is so big, just think for a second, marketing aside (even if that's usually a huge chunk), calculate the salaries of the hundred or so staffers who have been working on this thing for the past year or so, and we're not talking small chinese salaries, these guys in the States make some very healthy cash, and you know already that there goes most of the profit. And then when you add marketing, which we all know Apple does a lot of, we're speaking tens of millions easily (and that's not a stretch, even movies usually have 1/4 of their money going to marketing), I'm pretty sure they won't see much profit on these until they sold a million or so.

Where they will make money, it's in the long run, when manufacturing prices go down, when the buzz is set, and that they'll have covered their initial cost already, then they'll probably see a pretty healthy profit.

What most people don't seem to realize, is most companies when they give you a salary, usually you cost them about 2-3 times as much, depending on the industry. They cover your insurance, the cost of your equipment and tools, the rent divided by the number of employees, the accountant that does your checks, the breaks, and the list goes on. Talk to your boss, you'll get a reality check pretty quick...

Too bad the iPad isn't controlled by a cell phone company that thinks that a 4x profit margin is necessary to keep people in the perfect anal rape position while they 'subsidize' it for us.

Oh, thank you cell phone company for using lube when you molest us.

If Apple priced this at $100, people would say it's too expensive. Everyone is absolutely convinced that every time Apple sells a product, they will sell it for far more than they need to. Let's be serious for a second: where else are you going to get a capacitive screen this big, along with software *actually designed* to be used on a touchscreen, for $500? Windows has made huge progress becoming "touch friendly", but it's still Windows. It's meant for a keyboard and mouse. Navigating the start menu with your finger isn't exactly a simple task, I've tried it before.

Say all you want about there not necessarily being a market for these; I'm sitting it out until I see how these things develop. I think the relevance of the iPad is yet to be determined. But the price, for once, is pretty close to right.

Printing somebody else's lies isn't any better than making up your own lies and printing them. This company that you quote has never been anywhere near an iPad. They are just guessing. Are they any good at guessing? I doubt it. Their core competancy is seems to be writing press releases and getting other people to pay attention to them.

I *despise* articles like these. Well, the data is of interest. It is the uninformed comments that make me want to pull out my hair.

In related news, iSuppli reports it costs $0.48 for Microsoft to produce a DVD of Windows 7.

This is a pure materials per unit look. Not a realistic cost to develop and manufacture. But look at how all the Apple haters come out to post mindless drivel.

Nothing at all surprising anymore around here.. It seems that Neowin exists now to do nothing but bash anything non-Microsoft. At one time, the reporting (and comments) here were fairly balanced, but now we have become infested with moronic teenagers who don't have the first clue what the hell they are talking about.

markjensen said,
I *despise* articles like these. Well, the data is of interest. It is the uninformed comments that make me want to pull out my hair.

In related news, iSuppli reports it costs $0.48 for Microsoft to produce a DVD of Windows 7.


This is a pure materials per unit look. Not a realistic cost to develop and manufacture. But look at how all the Apple haters come out to post mindless drivel.

I agree with you to a point ..

BOM lists due skew prices for the over all product. Also, Apple has had issues
lately with other products. Their new 27" iMacs are having graphic issues and
some are having LCD problems too.

Back to the other issue .. Apple products have always been over priced. In the
last few years they've been having more and more QC issues too

Edited by GenBlood, Feb 12 2010, 1:47am : update

GenBlood said,
... Also, Apple has had issues
lately with other products. Their new 27" iMacs are having graphic issues and
some are having LCD problems too.
Huh? I am not following. I don't see what that has to do with my comment, or the topic of the article.

Plus, all companies have had problems with various products , so nothing is setting Apple apart for criticism that does not apply to this "materials cost" analysis.

markjensen said,
Huh? I am not following. I don't see what that has to do with my comment, or the topic of the article.

Plus, all companies have had problems with various products , so nothing is setting Apple apart for criticism that does not apply to this "materials cost" analysis.

Mark, you're on of the consistent voices of reason on these boards. Don't go insane on behalf of the haters :P.

Back on topic, Apple, like any other company is out to make a profit. Believe it or not, there is R&D involved. They didn't take an iPod touch and put it through a size increasing ray and blow up the thing. The concept may be similar, but the innards are certainly different. It costs money to do this.

Personally, I don't see a compelling enough reason to buy an iPad on release, but I'm not going to hate on it for the sake of it.

markjensen said,
I *despise* articles like these. Well, the data is of interest. It is the uninformed comments that make me want to pull out my hair.
This is a pure materials per unit look. Not a realistic cost to develop and manufacture. But look at how all the Apple haters come out to post mindless drivel.

What's the price for R&D 64Gb flash (that they just buy from the real manufacturers) versus R&D for 16Gb flash?
I don't mind the base price being high, but price deltas are ridiculous.

RealFduch said,

What's the price for R&D 64Gb flash (that they just buy from the real manufacturers) versus R&D for 16Gb flash?
I don't mind the base price being high, but price deltas are ridiculous.

So...you can't grasp why more flash costs...more? Mmkay...

DAMN ... They can reduce the price by another $100 or so dollars and still make
money. I have no plans on getting on at this time. I might re think my decision
if they drop another $150 on all models.

The same people pin the material cost for Google's Nexus One at $174.15.

The Nexus One's retail price is $529.

That doesn't matter though, keep on talking about the Apple Tax.

Stetson said,
The same people pin the material cost for Google's Nexus One at $174.15.

The Nexus One's retail price is $529.

That doesn't matter though, keep on talking about the Apple Tax.

OMG! Google now applies the Apple Tax! Those *******!

Stetson said,
The same people pin the material cost for Google's Nexus One at $174.15.

The Nexus One's retail price is $529.

That doesn't matter though, keep on talking about the Apple Tax.

No kidding. Lets pretend for a moment that Microsoft hasn't accumulated its vast billions by selling products you can't even touch or see, other than on a little disk that does nothing by itself. It sold 1s and 0s, and made billions. What's the markup for that? Or are we really supposed to believe that it cost them $120 extra to print up a black box instead of a green one?

Edited by Serenity76, Feb 12 2010, 12:38am :

Wow, I guess to a lot of you R&D and Marketing cost $0. These are the exact same (uninformed) comments that come out of any sort of "actual manufacturer" cost analysis on Neowin. Whether it be a PS3, Nintendo Wii, XBox 360, Zune HD, whatever. Same nit-wits come and say "OMG they are selling it for sooo much!"

You think Apple employees work for free? Do you work for free? If you do, I'm taking applications.

Shadrack said,
Wow, I guess to a lot of you R&D and Marketing cost $0.

What's the price for R&D 64Gb flash (that they just buy) versus R&D for 16Gb flash?
Just answer.

Edited by RealFduch, Feb 12 2010, 10:13pm :

Obviously there's other costs that have to factor in.. but I still can't believe they put a $130 price increase for models with cellular radio.. one that costs them $25 to add.

profets said,
Obviously there's other costs that have to factor in.. but I still can't believe they put a $130 price increase for models with cellular radio.. one that costs them $25 to add.

That one added feature can add a lot of extra phone support requirements.

Shadrack said,

That one added feature can add a lot of extra phone support requirements.

phone support requirements? please.. all it does is add another internet connection to the device

profets said,
Obviously there's other costs that have to factor in.. but I still can't believe they put a $130 price increase for models with cellular radio.. one that costs them $25 to add.
While I disagree with everyone saying the WiFi one is overpriced (I think it's priced quite fairly, especially considering we're talking about Apple), I do agree with this. They won't sell these until the cell radio costs only a few extra dollars. I fully expect them to include the cell radio in all models a year from now.

I don't understand what you guys are complaining about. You expect apple to sell these for the manufacturing cost? They make it to sell for a profit.

Kerm said,
I don't understand what you guys are complaining about. You expect apple to sell these for the manufacturing cost? They make it to sell for a profit.

You must not have seen some other price comparisons then. Alot of items make a profit after being processed yes but consider this.

16GB without 3G = Profit $200
16GB with 3G = Profit $372

64GB without 3G = Profit $382.00
64GB with 3G = Profit $483.00

So answer me how a $25 change is a products design earns it the right to add $100 to their profit margin?

Im not shocked... Its apple they make money and thats all... They also mass produce this plastic stuff...

brent3000 said,

You must not have seen some other price comparisons then. Alot of items make a profit after being processed yes but consider this.

16GB without 3G = Profit $200
16GB with 3G = Profit $372

64GB without 3G = Profit $382.00
64GB with 3G = Profit $483.00

So answer me how a $25 change is a products design earns it the right to add $100 to their profit margin?

Im not shocked... Its apple they make money and thats all... They also mass produce this plastic stuff...

I'll play with you. Consider this.

Windows 7 Home Premium Full Retail - $179.99
Windows 7 Ultimate Full Retail - $275.49

Considering using one file (ei.cfg) on the install disk, I can switch whichever version I want, from Ultimate on down, and it costs them about $.10 to print off a copy...from your standpoint, Microsoft makes pure profit that only increases depending on what color box you decide to buy.

I'm not shocked... It's Microsoft, and they make money and thats all...

Fair enough?

Serenity76 said,

I'll play with you. Consider this.

Windows 7 Home Premium Full Retail - $179.99
Windows 7 Ultimate Full Retail - $275.49

Considering using one file (ei.cfg) on the install disk, I can switch whichever version I want, from Ultimate on down, and it costs them about $.10 to print off a copy...from your standpoint, Microsoft makes pure profit that only increases depending on what color box you decide to buy.

I'm not shocked... It's Microsoft, and they make money and thats all...

Fair enough?


No, it isn't. You don't know how much R&D money went into features that are different between Ultimate and Home Premium.
But we know the data for iPad: 64Gb - 16Gb = $25 + $0 in R&D.

RealFduch said,

No, it isn't. You don't know how much R&D money went into features that are different between Ultimate and Home Premium.
But we know the data for iPad: 64Gb - 16Gb = $25 + $0 in R&D.

Microsoft apologists on this site are so cute. Looks like you've taken a liking to me, frothing at the mouth over my posts here. Adorable.

Yep, you're right. Bitlocker (which works half-assed, if at all), XP Mode (product they purchased), network backup, joining a domain, and language packs...those are all definitely worth the $100+ it cost to 'develop' them. Or realistically, features they stripped out of and put artificial limitations on in order to make up crappier versions of the OS they developed. You're right, that's SOOO much better. At least this time around, they aren't scamming users with some bull**** like Ultimate Extras. But no, lets whine about Apple making a profit on physical hardware they designed and developed.

Yea, but where is the tax on the mac pro? When I went to create a hackintosh (I found them to be the same price if I made it myself or bought it directly from Apple) So I went and bought a mac mini ;)

.... Perhaps that's why all these other products are overpriced. I just always think it's funny how a lot of people think all of Apples products are overpriced. But that clearly isn't the case with ALL of their products. This and an iPod I do believe are

ivdubvr6i said,
Yea, but where is the tax on the mac pro? When I went to create a hackintosh (I found them to be the same price if I made it myself or bought it directly from Apple) So I went and bought a mac mini ;)

.... Perhaps that's why all these other products are overpriced. I just always think it's funny how a lot of people think all of Apples products are overpriced. But that clearly isn't the case with ALL of their products. This and an iPod I do believe are

Because for so many years, people (geeks) have been used to cobbling together PCs at cost from parts they selected, or buying some piece of **** laptop and using it until it falls apart a year or two later. Having a brand of computer with an actual -resale value- is a concept that is foreign to them, let alone paying a premium for it to begin with. Let them dink with their little cheap-ass netbooks and live in ignorance. Others know better.

ivdubvr6i said,
Yea, but where is the tax on the mac pro? When I went to create a hackintosh (I found them to be the same price if I made it myself or bought it directly from Apple) So I went and bought a mac mini ;)

.... Perhaps that's why all these other products are overpriced. I just always think it's funny how a lot of people think all of Apples products are overpriced. But that clearly isn't the case with ALL of their products. This and an iPod I do believe are

Well, you do have to consider economics of scale too... When building 1,000 computers, the cost to produce each would cost less than when you're building one...

Serenity76 said,

Because for so many years, people (geeks) have been used to cobbling together PCs at cost from parts they selected, or buying some piece of **** laptop and using it until it falls apart a year or two later. Having a brand of computer with an actual -resale value- is a concept that is foreign to them, let alone paying a premium for it to begin with. Let them dink with their little cheap-ass netbooks and live in ignorance. Others know better.


Sorry, but that's just rubbish. I don't care for the price. Apple just doesn't create notebooks with the power and features I want. Why would I pay more for something bad? To be able to sell it later? Don't make me laugh.

RealFduch said,

Sorry, but that's just rubbish. I don't care for the price. Apple just doesn't create notebooks with the power and features I want. Why would I pay more for something bad? To be able to sell it later? Don't make me laugh.

And what 'power and features' are you getting out of a cheap-ass gimmicky plastic baby laptop?

thealexweb said,
And this is different to Apple's current price margins how exactly?

or indeed any company that is in profit. News flash, BMW's don't cost £30,000 in parts, a bit of that is also profit.

REM2000 said,

or indeed any company that is in profit. News flash, BMW's don't cost £30,000 in parts, a bit of that is also profit.

Whoa! Nooo! Are you saying MS Office 2007 Retail are overpriced too? :O

Northgrove said,
Whoa! Nooo! Are you saying MS Office 2007 Retail are overpriced too? :O

Omg! I hear that MS Office 2007 only costs MS $3 in plastic and cardboard to produce. Looks like they're also applying the Apple Tax.

Northgrove said,
Whoa! Nooo! Are you saying MS Office 2007 Retail are overpriced too? :O

If you went with a material list like iSuppli, you would come up with costs of probably less than $10 for the box and discs. All the rest is obviously pure greedy profit!

Stetson said,

If you went with a material list like iSuppli, you would come up with costs of probably less than $10 for the box and discs. All the rest is obviously pure greedy profit!

I don't think all the Windows/Office developers want to eat dirt. There are a lot of people that do a lot of work programming for Microsoft. ;)

GreyWolf said,
I don't think all the Windows/Office developers want to eat dirt. There are a lot of people that do a lot of work programming for Microsoft. ;)
The point is that it's the same for Apple ;)

Simon said,
The point is that it's the same for Apple ;)

But they didn't put too much work into designing the iPad or the name even.

Billus said,

But they didn't put too much work into designing the iPad or the name even.

A lot of the software has been redone for the larger screen.

This is as expected. They should at least bring down the price for the most spec'd iPad seeing that the RnD costs would be the same regardless of which iPad version you have.

majortom1981 said,
Sometimes I wonder wh yapple and nintendo dont join up on a game console.Seems like a great fit.

Because Nintendo is about afordability and Apple isn't... They'd never even be able to settle on a retail price... LOL

majortom1981 said,
Sometimes I wonder wh yapple and nintendo dont join up on a game console.Seems like a great fit.

Because Mario would be upset.

And? Historically selling your products at cost isn't a great way to make money.
Also no mention of R&D, design, etc costs.

virtorio said,
And? Historically selling your products at cost isn't a great way to make money.
Also no mention of R&D, design, etc costs.

what RnD? Its just big iphone :)

virtorio said,
And? Historically selling your products at cost isn't a great way to make money.
Also no mention of R&D, design, etc costs.

Any other product that would be a valid point.With this product its just a iTouch with a bigger screen.Replace the chasis and the screen, put everything back together and BAM theres an ipad.

JaMDKinG said,

Any other product that would be a valid point.With this product its just a iTouch with a bigger screen.Replace the chasis and the screen, put everything back together and BAM theres an ipad.


The iPod Touch doesn't use an A4 SoC. Further, many of the built-in apps were redesigned and coded for the different resolution and the handling of the device--check Mail, Photos, iPod, Calendar, Contacts, and iBooks.

That coupled with the development of OS 4 (which is scheduled for release in a few months) doesn't exactly scream huge profit margins at least in comparison with other low-cost tablet/netbook manufacturers.

Edited by giga, Feb 11 2010, 10:25pm :

giga said,

The iPod Touch doesn't use an A4 SoC. Further, many of the built-in apps were redesigned and coded for the different resolution and the handling of the device--check Mail, Photos, iPod, Calendar, Contacts, and iBooks.

That coupled with the development of OS 4 (which is scheduled for release in a few months) doesn't exactly scream huge profit margins at least in comparison with other low-cost tablet/netbook manufacturers.

For reasons as strange as they may be (at least for me)
I have to agree with you on this.

One can argue it's just a custom ARM processor but you really want the books on how much R&D it took to mass produce a special item such as this.

humanz. said,

One can argue it's just a custom ARM processor but you really want the books on how much R&D it took to mass produce a special item such as this.

While it is based of the ARM processors they did do many things themselves to optimize it for their needs and to simplify the connections. Plus like you said, setting up to mass produce this. I always find it funny when people think they magically get made. It costs a lot of money to create assembly lines for these things. They need to make up their initial costs before they can lower it and make a profit. PS3 is a example of this, sure they could have sold it cheaper but they invested a lot of money in developing it so they had to price it high initially. In this case it may be a bigger iPod touch but there are many under the hood differences that make it very different. Plus remaking all the apps is a much bigger task that most here seem to believe. (like giga said)

Another thing to keep in mind is Apple acquiring PA Semi. That wasn't a cheap purchase and this is one way they can help recover the money used to acquire them. The only real point to take away from all this is it shows Apple has quite a bit of room to lower the price once it has recovered its R&D costs back. It's only going to get cheaper from here.

Edited by Xero, Feb 11 2010, 11:47pm :

Xero said,

While it is based of the ARM processors they did do many things themselves to optimize it for their needs and to simplify the connections. Plus like you said, setting up to mass produce this. I always find it funny when people think they magically get made. It costs a lot of money to create assembly lines for these things. They need to make up their initial costs before they can lower it and make a profit. PS3 is a example of this, sure they could have sold it cheaper but they invested a lot of money in developing it so they had to price it high initially. In this case it may be a bigger iPod touch but there are many under the hood differences that make it very different. Plus remaking all the apps is a much bigger task that most here seem to believe. (like giga said)

Another thing to keep in mind is Apple acquiring PA Semi. That wasn't a cheap purchase and this is one way they can help recover the money used to acquire them. The only real point to take away from all this is it shows Apple has quite a bit of room to lower the price once it has recovered its R&D costs back. It's only going to get cheaper from here.

Yeah, Sony still loses money on every PS3 sold so that completely explains the way they market, at initial cost when they released it they were still loosing money when they sold it for $600, I read reports it took $800-1000 to produce each one in 2006.

Although this isn't the case for Apple, you brought up a big point on Apple buying PA Semi, I read it somewhere in some other macrumors forum but I didn't take it seriously. Completely slipped my mind.

If Sony bought Nvidia would they have paid as much for RSX?

Chrono951 said,
Gotta love those profit margins

Indeed. Though this doesn't include expenses related to shelf space, marketing, R&D, etc... It is quite an impressive profit margin...

M_Lyons10 said,

Indeed. Though this doesn't include expenses related to shelf space, marketing, R&D, etc... It is quite an impressive profit margin...


And it assumes the OS is totally free.
All in all you could easily transform that 230 into a 350. This study is full of fail.

And how can it take $10 to manufacture something like this? There's obviously a huge hidden cost that isn't mentioned in that. China's got to be inexpensive, but I wouldn't believe that.