Teardown finds iPad mini cost at least $188 to build

By , Nov 4, 2012

The iPad mini went on sale around the world on Friday, and though the official numbers aren’t in yet, it appears to be selling rather well. This in spite of its lack of a Retina display, and its higher-than-average price tag.

In fact, Apple’s had to defend the mini’s pricing a couple of times now, claiming that its profit margins on the device are lower than on any of its other products. And according to a new teardown, that seems to be the case…

AllThingsD points to a new report from IHS, formerly iSuppli, which found that the BOM (bill of materials) for the 16GB Wi-Fi iPad mini amounts to $188. That means each tablet costs Apple at least that much to build.

So with Apple selling the 16GB mini for $329, that leaves a potential profit of $141 per slate. But we know it’s even less than that because the $188 doesn’t include any of the costs for things like manufacturing and shipping.

Now let’s take a look at other iOS devices. The iPhone 5 costs Apple about the same amount to make, but sells for $650. And the third generation iPad with Retina display cost $316 to build, and it sells [well, sold] for $499.

Given this information, you can see that Apple clearly isn’t making as much money off of the mini as it does off its other mobile products. You can also see why the tablet’s rumored $199 -$250 price tag was impossible.

This also helps explain why Apple didn’t go with a Retina display in the iPad mini this time around. Even using the older 1024 x 768 panel, IHS found the display assembly to be the most expensive part of the slate at $80.

It’ll be interesting to see how the mini’s story plays out. Obviously, Apple is hoping to make up for its lower margins here with higher volumes. But will it continue to sell as well as it has during pre-orders and opening weekend?

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  • http://twitter.com/myorangeisstuck wahaha

    We finally cleared the mystery of non retina display.

    • FabianPVD

      Personally, I think the Mini is fine without retina anyway. In reality, the Mini is a different form factor of what the iPad is, to me it is to deliver the iPad experience in a smaller form even if it doesn’t have the latest specs, yet it still does well.

      No complaints here about the Mini!

      • MagicDrumSticks

        Of course you’re going to say its ok. But deep down inside, we both know that we were pissed off when they didn’t include the retina.

      • FabianPVD

        It WAS surprising to find out there wasn’t retina, because all the new Apple products are being built with it, but I wanted the Mini for the very reason of it’s name, it’s a Mini.

      • iUser2012

        Personal opinions matter but when it comes to tablets I agree with late Steve Jobs. iPad Mini is a shrunk iPad 2 introduced to compete with 7-inch tablets. Nothing so special about it, other than being shrunk. Wait for next spring and you might see an iPad Mini with A5X processor called still iPad Mini and the current one you are paying a lot will not even exist in Apple’s list. That’s what happened to iPad 3 and iPad Mini might have same faith who knows.

      • http://www.facebook.com/Sejo87 Sejad Jr Sejdic

        If anything why aren’t you guys pissed off that it doesn’t have at east A5X chip or even A6 chip.

      • iUser2012

        Personally I do not care what it has as I am not going to buy it.

        I find Apple’s current marketing strategies “cheap”. Removing iPad 3 as if never existed to make room for a refurbished one as if it is new and call it even 4th generation does not sound alright to me. That’s my point. Other than that I am not a fan of Apple at all. I use any brand that suits my needs.

      • Gorgonphone

        why didnt they shrink the ipad3?

      • iUser2012

        that would be new iPad Mini, which might be introduced next year with A5X processor :-)

      • http://twitter.com/klau1001 KLau

        I DO know that you are going to say different things if the next generation is iPad Mini with retina display

      • FabianPVD

        Nah what you THINK you know is that everyone is the same about Apple products. If I cared about retina I would’ve bought the iPad 3 or “4”. Frankly they’re not what I want.

      • http://twitter.com/klau1001 KLau

        Let’s see what you will say next year

      • http://www.facebook.com/xxLIUZHENYUxx Liu Zhenyu

        No

      • Gorgonphone

        no it is not .. i played with one for 1 hour yesterday and it is slow and low res you immediately notice jagged type and rough graphics.. i will never go non retina

      • glorin chiourea

        slow??????????? don’t lie man

      • Gorgonphone

        ipad mini is like an ipad 2 scaled down.. what it should be jis a scaled down ipad3 FACT

      • FabianPVD

        It’s not slow. People that just want to be picky about the Mini are just going to hate on it. It’s no big deal, people can appreciate the good technology or just whine about it as if it’s the end of the world.

      • http://www.facebook.com/people/Matthew-Childs/1067107105 Matthew Childs

        dude you are a liar, str8 up! i own a mini and it’s anything but slow. it’s not as fast as my iPad 3 however it isn’t slow. it’s faster than my iPad 2 was and the screen is also better than my iPad 2 was. i don’t get why people feel the need to lie. just say it isn’t something you want and move on.

      • Gorgonphone

        umm its is damn slow.. I am an ipad3 and iphone 4s owner and the ‘new” ipad mini is slower than both of them in all aspects so to me it is slow.. and the screen is not even half as good as the screen on my old ipod touch 4G..lolol you got the ipad mini to soon and apple sold 0you the crappie first gn version thats all. i choose not to buy that version..

      • FabianPVD

        We’re all not you. Some of us don’t need one little thing to be impressed by a product. iPad Mini is my first iPad. I’ve used the rest and quite frankly the size just isn’t what I want. Mini gets the job done.

      • seyss

        so when the iPad Mini 2 comes out with the frankly amazing Retina Display you’re just gonna ignore it right?

      • FabianPVD

        Yep, because I have what suffices for what I need. I don’t need retina, and not picky like most people. It has the size I want, it works like it should, it’s a great product.

      • Gorgonphone

        no its not fine at all its a damn strain on the eyes.. apple was very greedy to release this thing with such a low res screen..

      • FabianPVD

        Just because it strains your eyes doesn’t mean it strains everybody elses. So…

  • http://www.facebook.com/profile.php?id=100000254498753 Mark Seah

    this excludes costs of testing and certifying product…unknown to consumers…applies to any manufacturer

    • iUser2012

      True but that does not account 75% of the original cost.

      Shrunk iPad 2 is extremely overpriced. If you are not one of those, who buy any new product with fruit logo without thinking, you may choose among various alternatives or still go for this one.

      Personally I wouldn’t pay that much, but money is yours spend accordingly.

  • http://www.facebook.com/profile.php?id=100003172597133 Ecc Thanh

    I will sure spend my $200 to buy parts and put it together to get my very own Mini iPad LOL

  • http://twitter.com/WilliamTDaymes William Tiger Daymes

    It should be mentioned the ipad mini has a semi-retina – it has got a higher DPI than the ipad 2 because its smaller but got the same resolution so its not as “bad” as the display from the ipad 2

    • Gorgonphone

      but it does not even look as good as the old semi retina ipod touch 4g sooooo..

    • http://twitter.com/klau1001 KLau

      Let me tell you that the so-called “semi-retina” display is just the larger version of the iPhnoe 3G one — they got exactly the same dpi.

  • http://twitter.com/IamYardvybz Daniel Hall

    This is just stupid becuz its not like we can build it ourself… so im happy with the ipad mini cost… if u cant afford it buy the other cheap tablets and stop bitching

    • http://twitter.com/khoobler Kyle Hoobler

      You don’t know what I can and can’t make.

  • http://twitter.com/IamYardvybz Daniel Hall

    its a marketing decision for the iPad mini 2 or S Retina for next year… y’all don’t know APPLE by now?

    • FabianPVD

      You can expect a more expensive Mini then. And then people can complain about the price even more.

      • http://twitter.com/nAcolz Acolz

        No, the current iPad Mini will get cheaper and the iPad Mini Retina will be at the same price points.

      • http://twitter.com/IamYardvybz Daniel Hall

        same price like always

      • http://twitter.com/klau1001 KLau

        iPad2 was upgraded to iPad3 with price unchanged though

  • http://twitter.com/IamYardvybz Daniel Hall

    So whats the cost of the other tablets after teardown then DWL

  • MagicDrumSticks

    :)

  • Lawrence

    They could have still sold it at $199, which includes a profit margin of $11 and make money off the applications rather than make money from from the hardware. They’d sell a ton more and have a huge increase in application sales…

    • ic0dex

      Well why don’t you add labor and marketing to that $11 profit and let us know then how much apple will make of the iPad mini.

    • http://www.facebook.com/people/Matthew-Childs/1067107105 Matthew Childs

      factor in R&D, the paychecks of all departments involved, shipping, packaging, advertising and all of the other costs associated and that $11 quickly goes into the negative. true cost per unit after all costs are added up are closer to $250 or more per unit. too many people are cheap and only use free apps. it’s not a good business model to sell ANY product at a loss in hopes of recouping the money off something else. do yourself a favor…take a business class and learn how these things work AND don’t ever open your own business or become management in one that wants to stay open.

  • ic0dex

    IMO, Apple over priced the iPad Mini on purpose for research and profit so some how they can add a Retina to the device so the iPad Mini could use the iPads Retina Apps without the developer re-sizing the apps. I think the second generation iPad Mini is going to be out of this world. Imagine the iPad Mini with and A6X chip and a Retina display for the same price of $329. But then again will people buy the 4th Gen. iPad if the iPad Mini is built like that… What will you buy?

    • iUser2012

      I am happy with iPad 3. I wouldn’t buy current iPad 3.5 or improved mini. Processor, or front camera does not add a lot for tablet use unless you would like to play GPU looting games.

    • http://www.facebook.com/profile.php?id=44203201 Zakarij Wallace

      In that scenario I would buy the mini. The full size tablet is too big for what I would want to use it for in my life. That’s why I don’t own an iPad.

  • Gorgonphone

    fact tis apple ripped us all off they should have shrunk the ipad3 into the mini and not the ipad 2 FACT

  • seyss

    U$188 to make.. but it costed much more in research, development, maintenance, support, etc.

  • http://twitter.com/khoobler Kyle Hoobler

    Those scam artists. App,e ONLY makes $200 off each device. And productions with their Chinese sweatshops. So let’s add in that, they make $199.99 in profit.

  • Melvco

    There’s some great discussion going on here so I wanted to add in my two cents:

    1. I saw someone suggest the idea that Apple sell the iPad mini for $199 and make money off of applications and other content. This is a good idea, in fact this is actually the business model that Amazon uses that allows it to sell its Kindle Fires so cheaply, but it’s a fairly well-known fact that Apple barely breaks even on its App Store (cost/revenue ratio). So I just don’t think it makes near enough to bet on content sales alone.

    2. I also read some talk about how Apple should have at least included an A5X chip in the mini. But the A5X was a big processor, size-wise — way too big to try and fit in the mini’s tiny frame. And the X stands for the extra graphics needed to power the iPad’s 10-inch Retina display, so it’s honestly not really needed in the 7.9-inch tablet. In fact, benchmarks put its performance on par with the third-gen iPad anyway.

    3. And do I wish the iPad mini had a Retina display? You bet. I also wish I had a million dollars. The fact is, though, that the mini is still a great tablet. Compare it side by side with a Nexus 7 or Kindle Fire and it’s not hard to see you really get what you pay for. It has a much higher build quality than the other 2 devices, and because of its larger display size, dependable OS, and of course the App Store, the user experience is miles ahead of them.

    And if you happen to find the user experience on one of those, or another tablet, as good as or better than the iPad mini, then good for you. That’s why there’s choice in the marketplace and why tablets like the Nexus 7 are selling well right now.

  • https://twitter.com/CAST2000 Luis Castro

    Could have sold it at $250 while still making profits and selling even more. It is in there best interest to sell as many as possible in this segment of the market, since they are not the first (7 inch tablets) and establish a dominant position in this category which would continue to entice developers make best possible tablet apps . There are already claims that after Apple announce the iPad Mini, Amazon and Asus had a tremendous sales spike of their tablets.

  • MJ

    apple should make ipad mini cheaper and improve its lack of retina display and put with A6X chip. I prefer iphone than this. to expensive

  • http://twitter.com/klau1001 KLau

    Anyway, I bet the next generation will be iPad Mini with retina display and A6 core at the same price

  • CollegiateLad

    In other news, tear down of the Kindle revealed that it cost $.50 to build.

  • iamnotfan

    But

    Google’s Nexus 7 costs $159.25 to build 16gb version
    and sells for $249

  • http://www.facebook.com/yuvraj.wadhwani Yuvraj Wadhwani

    i believe Apple has something planned with the Lightning dock, would explain the rush to update their devices with that. :)

  • http://www.eraser.org B. Braun

    188$ for the parts, yes. But who’s gonna assamble it and who’s gonna give you an operating System?
    The only thing that is not ok is the DRAM upgrade prices. 100$ for 16GB Memory, come on Apple, thats not fair.

  • http://www.igeeksblog.com/ Jignesh Padhiyar

    That puts a lot of doubts to rest as to Apple’s profit motives. But considering how Google and Amazon are doing with theirs, the whole thing looks quite decent enough for Apple: they sell millions of their devices and still make millions in profits while the likes of Google and Amazon are just breaking even.