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?