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iPad 2 estimated to cost no more than $326, less than Xoom

updated 10:00 pm EDT, Sun March 13, 2011

iSuppli and UBM estimate iPad 2 at 326 tops

Analysts have provided somewhat conflicting cost breakdowns for the iPad 2 that nonetheless both put the Motorola Xoom in a poor light. iSuppli said Apple's tablet should cost $323.35 in raw parts for a 32GB, Verizon (EVDO) version or $326.60 for its AT&T (HSPA) equivalent. The HSPA version needs chipsets with Bluetooth, GPS and Wi-Fi separate from the Intel/Infineon cellular chip where the EVDO version uses an all-in-one Qualcomm chipset, much like in the Verizon iPhone.

Rivalling analyst group UBM TechInsights put the cost of a 3G version lower, at $270, though it didn't say what capacity.

iSuppli had the most detailed cost analysis and believed the display along with its touch layer was the most expensive part, at $127. It was made by LG Display with glass from TPK or Wintek. Although Apple has been enjoying economies of scale and contracting out to companies like Samsung, poor LCD yields have reportedly driven prices up versus last year.

Necessary wireless companion chips for the HSPA 3G iPad cost $18.70 when sourced from Skyworks and TriQuint, while the Verizon model's cost $16.35 from Avago, Murata and Skyworks again, iSuppli added. The combination of the 32GB of flash memory, RAM and ROM was $65.70.

Both iSuppli and UBM were in agreement that the processor, despite being faster than the Xoom's NVIDIA Tegra 2, was likely price competitive at $14 or $15. UBM allowed for it to cost $20 and also conducted a detailed look at the processor that cast doubt on beliefs that Apple had switched to TSMC. It still believed the A5 was being made by Samsung on a 45 nanometer process but may have had cost hikes: it had a relatively large chip die due to the second core and was using new Samsung 46nm LPDDR2 (low-power double data rate 2) RAM that may have given it a performance edge.

UBM's IO Snoops division also backed early beliefs that Apple had implemented dynamic clock speeds. Tests have shown it outperforming the Xoom at about 900MHz, but it could ramp up or down depending on the conditions. Many processors from AMD and Intel already change their clock speeds depending on their access to AC power or the intensity of the task, but the practice is still relatively rare in mobile hardware.

Either research team believed the tablet was less expensive to make than the Xoom. UBM believed the Xoom cost $288 to make, while iSuppli had already priced it at $359.92. Its higher resolution but lower quality screen, as well as the 1GB of RAM, put its price higher. An original 32GB, 3G iPad was slightly less expensive to make in iSuppli's view, at about $320.

None of the costs included assembly, research, sales, shipping or other factors that would cut into the actual profit margin.

The breakdowns, if accurate, would suggest Apple had not only managed to outperform the Xoom and other Tegra 2-based Android 3.0 tablets but would have managed so while keeping its own costs almost entirely the same. It might also suggest that Motorola and Verizon were padding the cost of a Xoom by charging $70 more for a 3G version, although the higher price may ultimately be a way of hiding the costs of the 'free' 4G upgrade, which involves a new LTE module and shipping both to and from Motorola.

by MacNN Staff



  1. kvocal

    Joined: Dec 1969


    Analysts are not very smart

    Analysts are not very smart. The fact they do not take in to consideration the development cost of both Apple and Motorola in their estimates show why they are so often wrong in their Analysis.

  1. Paradise Pete

    Joined: Dec 1969


    Sunk costs

    The development is a sunk cost. For large volumes the overwhelmingly important number is unit cost.

  1. Geoduck

    Joined: Dec 1969


    My Favourite Line

    Referring to the Xoom.

    "Its higher resolution but lower quality screen..."

    There's more to a display than resolution.

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