Apple May Be Losing Profit for New iPad Pricing
The Apple iPad 3rd Generation (iPad 3) has taken the world by storm. The latest release by Apple in their tablet family has been a huge success. Reports are already coming in that Apple needs to start moving the March 16th shipping dates for Pre-orders back to the 19th of March. Demand is certainly high, and there's no question it's mainly due to the pricing.
The new iPad (3rd generation) is now the same price as what the iPad 2 was during its' year long reign at the top. Starting at $499 US and working up to $829, one has to under just how Apple was able to pack so many goodies and keep the price the same.
In a new report on the Wall Street Journal, UBM TechInsights has it priced out that the new iPad costs Apple 51%. For example, they estimate that a 16GB Wi-Fi + 4G/LTE model retailing for $629 US would cost Apple $310 to manufacture. The iPad 2 was a 56% profit, making the 3rd generation iPad a 5% loss in profit margin from the iPad 2. The main factor for the difference in profit margin appears to be the 2048 x 1536 Retina display at a cost of $70 per iPad. The iPad 2 display cost around $49. Another slight factor is the A5X processor over the A5 in the iPad 2, with a difference of $6 against Apple's profits.
Will this affect Apple's next earnings release call in April? It all comes down to how many iPad 3rd generation tablets they can move by then.
Source - WSJ