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The $329 iPad mini costs $198 to make, study says

November 05, 2012|By Salvador Rodriguez
  • An estimate by an analytics firm says the materials for the iPad mini add up to $188.
An estimate by an analytics firm says the materials for the iPad mini add… (Apple )

Unlike its rivals that are selling their tablets at or near cost, Apple is reportedly selling its iPad mini for a lot more than it costs to make.

The material for Apple's new line of 7.9-inch screen tablets adds up to $188, IHS, an analytics firm, estimates. When you add in a manufacturing expense, the total comes to $198.

That's a margin of $141 between the estimated cost and the $329 price tag on the 16 GB iPad mini. That margin increases as storage goes up. Apple sells 32 GB models for $429 and 64 GB models for $529, even though the cost of material only increases slightly, IHS estimates.

But while Apple is making a vast profit on each iPad mini unit sold, Amazon and Google are breaking even or barely pulling a profit.

Amazon CEO Jeff Bezos has said publicly that his company is selling the $199 16 GB 7-inch Kindle Fire HD at cost. IHS also tore down that device and said it estimates its materials cost $165. Once you add in manufacturing costs, the price goes up to $174, according to IHS.

Google too sells its tablet close to its cost. IHS estimates the material for the $199 16 GB Nexus 7 costs $159.25. The price goes up to $166.75 when you add in the cost of manufacturing.

Of course, Amazon and Google has to keep the price as low as possible if they want to take a bite out of Apple's dominance of the tablet market.

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