iPad mini teardown: Apple making lower profit on base model

The Apple iPad mini was recently launched in select places around the world, and it has been put through a battery of tests since. In a drop test, it fared well compared with the Nexus 7 and the third generation iPad. In a display test, it was outshone by the competition. The 7.9-inch tablet from Apple was given the teardown treatment by iFixit recently. iFixit finds that the 16GB, Wi-Fi only iPad mini, priced at $329, costs around $188 to build. A report by The Wall Street Journal, which acquired information via teardown analysts UBM TechInsights, now claims that the iPad mini offers lower profit margins than the 9.7-inch version (the fourth generation iPad) that was launched alongside it.

The report states that the teardown analysts estimate that Apple receives around 35 percent in gross margin for the device with Apple paying $214.75 for the components of the 16GB model. This cost is a lot higher than the $188 cost estimated by IHS iSuppli. In comparison, Apple gets a gross margin of 43 percent based on component costs of $284 for the fourth generation iPad. The new iPad is available at a starting price of $499.

iPad mini

iPad mini teardown shows that it costs $214.75 to manufacture


The report states, “Apple relied on many of the same semiconductor manufacturers for the iPad Mini as it did in the past for other iPad models, UBM said, including Broadcom Corp.'s touchscreen controller chips, as well as one delivering Wi-Fi capabilities. Apple also used that wireless chip in the iPhone 5, UBM said.  The firm estimates Apple's A5 processor, first unveiled in 2011 with the iPad 2, costs $27. UBM said the chip had been manufactured by Samsung Electronics Co. UBM said the processor's cost was a hair cheaper than the iPad 4's $30 processor and the iPad 3's $28.50 chip.”

UBM TechInsights add that the 64GB version of the iPad mini had a profit margin of 56 percent, and this is significantly higher than the lower capacity models. The report ends by stating that the cellular models, which will be released in the coming weeks, will have a higher profit margin as Apple adds $130 more to its cost.

The iPad mini has an aluminium and glass design 7.2mm thick, and weighs only 0.68 pounds. As per an official statement by Apple, the iPad mini has 35 percent more screen real estate than 7-inch tablets, and up to 67 percent more usable viewing area when browsing the web. The dual-core A5 chip on the iPad mini allows for responsive graphics and a multi-touch experience that Apple believes to be both, fast and fluid while still providing all-day battery life.

Both iPad mini and the fourth generation iPad with Retina display are available in 34 countries including the US, Australia, Canada, France, Germany, Hong Kong, Japan, South Korea and the UK, and will be available in many more countries later this year, including mainland China. However, there is no word on the date of availability in India yet. Apple claims that the demand for iPad mini exceeded the initial supply and while many of the pre-orders have been shipped to customers, some are scheduled to be shipped later this month.

Published Date: Nov 07, 2012 05:59 pm | Updated Date: Nov 07, 2012 05:59 pm