Tuesday, April 10, 2012

BOM proves Apple spared no costs developing iPad 3

That comparison isn't entirely valid...you're comparing the cost of building an "iPad 3" today to the cost of building an iPad 2 today.

The more valid comparison would be between an "iPad 3" today and an iPad 2 at its launch, as costs generally come down over time. Fortunately, iSuppli has a track record and that information is available.

So in the case of the display package (display plus touchscreen), it costs $127 on the new iPad. It also cost $127 on the iPad 2 when that device launched, but as costs have come down over time and the technology has aged, that same iPad 2 display/touchscreen now costs only $97.

Similar story with power management chips...they cost $10 on the new iPad and cost $10.20 on the iPad 2 when it launched last year. But now those iPad 2 chips can be had of $5.85.

Certainly some components have gone up in price even taking into account launch pricing...baseband, cameras, battery, etc, but the effect is smaller than what you're assuming comparing the new iPad to the current iPad 2.

Bottom line is, however, that there is still an increase in the BOM. For the 32 GB cellular-capable model, the iPad 2 was $323-$326 at launch last year, while the new iPad is $364. And of course these are all just estimates.

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