Apple iPad costs just $259.60 to build

Research firm iSuppli performed a tear down of the Apple iPad tablet and estimates the 16GB model, which sells for $499, contains about $259.60 worth of hardware. This is almost 20 percent more than iSuppli analysts predicted in February, as they expected the device would have fewer chips inside. The estimates don't include costs for intangible items such as software development, advertising, patent licensing, or shipping. The single most expensive part in the iPad is the touchscreen, which costs around $95.

Apple announced the iPad, which users can hold in their hands for reading and watching videos, on Jan. 27. ISuppli's analysis means that the components of the lowest-priced iPad, which includes 16 GB of memory, constitute 52% of its $499 retail price, on par with other Apple products including the iPhone 3GS.

A midpriced 32 GB version of the iPad that sells for $599 contains $289.10 worth of materials. A high-end 64 GB version, which retails for $699, contains components that cost $348.10, according to iSuppli.

Much of the iPad's component costs went toward making the device appealing to use, says iSuppli principal analyst Andrew Rassweiler, who supervised the "teardown" analysis of the product. More than 40% of the iPad's costs are devoted to powering its touchscreen display and other components of the computer's user interface—"what you see with your eyes and what you feel with your fingers," he says. The distinctive aluminum casing on the back of the device contributed about $10.50 to the cost of materials.

Source: BusinessWeek