Nov. 5, 2012 at 2:20 PM ET
If you were among those who snapped up an iPad Mini when it was released Friday, and paid $329 for the least-expensive model, you may not be happy to hear that an independent teardown of the little iPad shows the 16GB, Wi-Fi-only version may cost just $198 to make.
IHS iSuppli, known for its hardware teardowns as well as its frequent reports on the high-tech manufacturing sector, told NBC News that the base model of the iPad Mini "carries a bill of materials of $188, according to a preliminary estimate." When the $10 manufacturing expense is added in, "the total cost to manufacture the iPad Mini rises to $198."
The cost of markup for the Mini may sound quite high, but it makes sense when compared to another recent family member, the iPhone 5.
Sure, a subsidized version of the 16GB phone cost $199 with a two-year wireless contract. But the full cost for the baseline model, if you buy it unlocked or out of contract, is $649. Compare that to the IHS teardown cost: According to the firm, it has a bill of materials of $199, and the charges only rise to $207 when manufacturing costs are added in.
Both Google and Amazon are selling tablets comparable to the iPad Mini, but their teardown costs are much closer to their actual sale prices. Google's Nexus 7 with 16GB costs $199 to buy, but has a total cost of $166.75. Amazon's chief executive officer Jeff Bezos said recently that the online retailer sells its $199 Kindle Fire HD with 16GB "at cost," with profit coming instead from sales of online content.
With Apple as the tablet leader, Google and Amazon have more work to do to try to catch up, and playing the "loss leader" card may be part of the strategy. Apple also leads in the number of apps available for the iPad, with more than 275,000.
Still, the margin numbers are striking. Many have questioned Apple's high pricing of the iPad Mini, and the teardown information may be enough to keep some would-be buyers away from Apple's latest baby.