Apple’s Profit for $300 iPad Mini May Be Low

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It was reported that the breakdown of expected component and manufacturing costs of Apple’s so-called iPad Mini will range from $195 to $254. The said components are needed to manufacture different models of the 7-inch tablet, and it is projected that the company will sell their upcoming device at lower-than-usual margin rates.

Leaked Retail Prices and Margin Rate

KGI Securities’s Ming-Chi Kuo stated in a note to investors that the estimated bill of materials for the iPad Mini, including the manufacturing costs, will range from $195 for the 16 GB Wi-Fi model to $254.50 for the 64 GB 4G LTE unit.

If these prices will be compared on the rumored price point revealed by a German retailer, Apple will see gross profit margins of 35 percent to 58 percent. This is definitely lower than the company’s other iDevices.

In relation to this, Apple’s third-generation iPad—which is also considered as a low profit margin product—brings in 37 percent to 51 percent margin rate. The iPhone 5, on the other hand, is estimated to garner a whooping 68 percent to 72 percent margin rate.

Apple’s aggressive pricing structure for their iPad Mini could puzzle competitors’ attempt to encroach the company’s mobile device market share. As reported previously, rivals are taking advantage of the gap between the iPhone and 9.7-inch iPad, which the Cupertino-based company is yet to fill.

The iPad Mini’s Bill of Materials

According to Kuo, the iPad Mini’s screen is seen as the most expensive of the device at $56.50. The component covers the display, touch sensor, cover glass and other hardware. It is also said to employ the GF DITO of “GF2” technology, which allows the 7-inch tablet to be 18 percent thinner that regular iPad.

It is followed by the logic board that is priced at $54 for the Wi-Fi only version and $80 for the 4G LTE-compatible unit. The analyst also expects the company to use Qualcomm’s MDM9615M baseband chip, which is tagged at $24.

There were also claims that the tablet will sport a “tweaked version” of Apple’s A5X SoC that also powered the new iPad. However, the iPad Mini’s chip will be designed using the 32 nm process, as well as access 512 MB of RAM.

Also included on the list of the device’s purported components are the casing ($33), 5-megapixel rear-facing camera ($16.50), battery ($12), and labor costs ($7).


It is expected that Apple will take the wraps off of its iPad Mini at a special event tomorrow. The company is also said to introduce the product lineup, including the 13-inch MacBook Pro with Retina Display.

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