iPad Mini; The Monetary Performance So Far

There were various price presumptions before the launch of iPad Mini. While some thought new tablet to compete with Amazon Kindle Fire HD, thus to be priced at $199, others guessed the device to be available for $299. When the device was finally introduced, Apple Inc. priced it at $329.

Research firm IHS carried the teardown analysis of the iPad Mini and made a cost estimation of all the components used in the tablet. It reveals that chip and battery, display, and other parts of the base model of iPad Mini cost around $188 to Apple.

 

If we calculate the cost of the components, it is 57 percent of the retail price, which means that Apple is getting a gross margin of 43 percent on the iPad Mini.

 

What is Taking up the Margin Part?

 

The iPad Mini is coming with GF2 technology, which reduces the thickness of the display. Since, the technology is in early stage, there might be some glitches. There are chances of Apple getting higher margins once it overcomes problem areas.

 

What Adds Up to the Margin?

 

It is the iPad Mini models with higher memory, which are generating higher profits for Apple. The company is selling Wi-Fi only 32GB and 64GB models at price of $429 and $529 respectively. The price of flash memory is significantly low. Adding flash memory of 32GB and 64GB is costing Apple $8 to $24, but it is making profit of $90 and $162 per unit. So, higher the sales of 32GB and 64GB versions of iPad Mini, better the profit margins of Apple.

 

What are Other Tablet Makers Getting?

 

IHS has also looked at the Surface tablet priced at $499 for the base model. As per the estimation, the cost of components in the 32GB model is $271. Microsoft is also selling Touch Cover at $120, which might be costing $16 to the company and is adding significantly to profit share.

 

Amazon is however focusing more on increasing its customer base instead of profit percent. The base model of Kindle Fire HD is priced at $199 however, the total cost of the components is said to be $165.

 

Apple iPad Mini is a recent launch but its aggressive cannibalization might add 3 million tablets to Apple's kitty at the end of the last quarter of 2012. Price is one of the major criteria for people preferring iPad Mini over the iPad. Another research firm IDC in its just-released 2013 predictions has revealed that devices with 8 inch or smaller screens will capture 60 percent of the tablet market, which indicates higher profit margin for Apple iPad Mini.

 

This post comes to you from Copper Mobile, one of the top iPhone developers and iPad application development companies providing enterprise app development solutions.