The Apple iPad 2, while thinner, lighter and faster, doesn't cost Apple much more to make. Notable pricey components, however, are the touch-screen, processor and battery.
The Apple iPad
2 may be a leaner, meaner and faster-processing machine than its predecessor,
but these marked improvements come at only a modestly higher price to Apple,
according to a March 13 report from research firm IHS iSuppli.
GSM/HSPA (High-Speed Packet Access) version of the iPad 2-the model available
from AT&T-has a BOM (bill of materials) of $326.60, which jumps to $336.60
when manufacturing costs are included, reports the firm, while the 32GB CDMA (Code
Division Multiple Access) model, with 3G connectivity from Verizon Wireless,
comes in at $323.25, or $333.25 with manufacturing costs. By comparison, the
first-generation, 32GB 3G iPad had a BOM of $320.
obvious changes to iPad like the enclosure and the battery, and the less
obvious changes in the touch-screen, the iPad 2's components and design are
remarkably similar if not the same as those of the iPad 1," Andrew Rassweiler, IHS
iSuppli's senior director, principal analyst and teardown services manager, said
in a statement.
Apple has used
the same components and suppliers for the NAND flash, the multi-touch
controllers and touch-screen drivers, for both the new and old iPads, as well
as the same core chip in the wireless section as is in the iPhone 4, said the report.
the other components-including the apps processor and the
Bluetooth/frequency/global positioning system/wireless local area network
chips," it added, "have the same suppliers and are essentially new
revisions of the chips found in the previous iPad and other iPhones."
The iPad 2's
highest-cost item-$127 for each carrier's model-is the display and touch-screen, up
from the $95 that IHS iSuppli estimated for the original iPad, considering
pricing in April 2010. Most of that cost is attributable to the 9.7-inch touch-screen.
reason for the increase comes in large part from manufacturing challenges that
the touch-screen manufacturers have experienced since beginning
production," states the report. "Production yields, though they have
been improving, have been very low throughout 2010, and drove prices to be much
higher than initially expected."
the touch-screen specifications have also driven up the iPad 2's price point,
the report adds, along with "more expensive glue to improve the
efficiency/performance in the bonding, thinner Gorilla cover glass, and a more
detailed inspection process requiring additional equipment for optical and
touch-screen and display comes the iPad 2's memory, at $65.70 in both cases, and
then mechanical and electromechanical bits-glass, metal and plastic enclosures,
connectors, etc.-at $35 for the AT&T version and $35.50 for the Verizon
model. More notable, however, is the tablet's new battery, the fourth most
expensive item on the list at $25 for each model. The batteries are thinner
than their predecessors, have three cells instead of two and cost $4 more-a
price it seems was well worth it.
never takes a standard approach with batteries and challenges its vendors to create
unique solutions to accommodate their desired form factor," states the
report. "Although other manufacturers are using similar flat-pack
batteries, these incredibly thin batteries, and special battery-management
circuitry just for Apple batteries, provide an exceptional result."
battery life, size and weight of the iPad 2, as well as Apple's iPhones and
iPods, reports IHS iSuppli, come thanks to the company's power-management
another must-see on the iPad 2 teardown tour is the tablet's A5 processor.
While it adds just $14 to the BOM, that's a 75 percent increase from the iPad's
Samsung-built A4 processor. As Apple increases production over the course of
the year, however, IHS iSuppli expects that price to drop.
further explained, "Apple owns the intellectual property and, as such,
whoever builds the A5 processor for them is doing so as more of a foundry
service-like a contract manufacturer-which gives Apple a huge competitive cost
edge on the piece price of these processors."
contributors to the BOM include the iPad 2's connectivity chips, tallying
$18.70 for the AT&T model and $16.35 for the Verizon version; the user
interface, at $11.90; and the power-management components, at $10.20.
Surprisingly, pricier than its front and back cameras, at $4.30, are the accessories
and literature inside the iPad 2's box, along with the box itself, which comes
in at 20 cents shy of $6.
Michelle Maisto has been covering the enterprise mobility space for a decade, beginning with Knowledge Management, Field Force Automation and eCRM, and most recently as the editor-in-chief of Mobile Enterprise magazine. She earned an MFA in nonfiction writing from Columbia University, and in her spare time obsesses about food. Her first book, The Gastronomy of Marriage, if forthcoming from Random House in September 2009.