Research firm iSuppli says Apple's lowest-end iPad, which retails for $499, costs $259.60 in materials and manufacturing.
The firm did a physical teardown of the Wi-Fi only iPad, which went on sale April 3. The device retails for $499 for the 16-gigabyte model; $599 for the 32 GB version; and $699 for the 64 GB model. An iPad that has both Wi-Fi and 3G cellular connectivity is due out later this month.
The bill of materials and manufacturing costs are higher than iSuppli’s "virtual teardown" done in February, shortly after the iPad was announced. Then the firm estimated $229.35 for materials and manufacturing.
"Cost for the display, the battery, the user interface chips and the power management Integrated Circuits all exceeded iSuppli’s initial estimates, driving up the total Bill of Materials," the company said in a news release. Teardown costs do not include other expenses, such as software, royalties, licensing fees and marketing, iSuppli noted.
"With more than 40 percent of its Bill of Materials dedicated to the display, touchscreen and other user interface components, Apple’s iPad represents a radical departure in electronic design compared to conventional products," the firm said.
The "single most expensive component in the iPad is the display, priced at $65," iSuppli said. "The display is a 9.7-inch diagonal, 262,000-color TFT-LCD with a resolution of 1024-by-768 pixels. It employs In-Plane Switching (IPS) technology, which supports a wider viewing angle and better picture."
“The display represents a customized implementation of an IPS panel, driving up its cost relative to a more commoditized netbook panel,” said Andrew Rassweiler, director and principal analyst and teardown services manager for iSuppli.
The screen in the tablet torn down by iSuppli was from LG Display. "However, iSuppli believes Apple has qualified two other suppliers for the display, with more possible in the future," the firm said.
The next most expensive component was the touch-screen assembly at a cost of $30, followed by the tablet's 16 gigabytes of flash memory, at a cost of $29.50, then the iPad's battery at $21.
"The 3.75-volt battery is a lithium polymer battery pack that employs value-added modular design that combines two cells into a single pack that is more easily replaceable than two individual cells wired in," iSuppli said.
The iPad's battery is not replaceable by the user, and Apple has said it will charge $107, including shipping, to replace it.
“While the iPad has the potential to change the game in the computing, wireless and consumer worlds, it already has changed the game of how many electronic products are — and will be – designed,” said Rassweiler.
“The iPad’s design represents a new paradigm in terms of electronics cost structure and electronic content. Conventional notebook PCs are ‘motherboard-centric,’ with all the other functions in the system — such as the display, the keyboard and audio — peripheral to the central microprocessor and the main Printed Circuit Board at the core.
"With the iPad, this is reversed. Everything is human-machine-interface-centric, with the Printed Circuit Board and Integrated Circuits all there to facilitate the display of content as well as user inputs.”