Analyst reckons $499 iPad costs Apple $300 to make
Big mark up means big profits
It been said that the value of an item is whatever you can persuade someone to pay for it.
In that regard the manufacturing cost of a pair of Nike trainers or a can of Coke is meaningless, even if you throw in marketing and distribution costs.
So while the component cost of a iPad might not be particularly significant, in the current news climate it's interesting.
According to BroadPoint AmTech analyst Brian Marshall, the various parts of the iPad cost $270.50, including flash memory and the aluminum case at about $25 each, and the Apple A4 processor at $15. He reckons manufacturing adds another $10, with warranty service charges up to $20.
That puts the total cost to Apple of around $300 for the entry level 16GB wi-fi iPad (cost to you $499), although that obviously doesn't take into account distribution, research and development or other support costs.
Marshall says making the 32GB version (retail $599) adds $25.50 to the cost, while the 64GB model (retail $699) adds $76.50 compared to the 16GB model, making them even more profitable.
The bottom line for the analyst is that he thinks Apple could sell around 7 million units - up from an initial prediction of 2.2 million - and so will make a lot more money. So he's raised his prediction for Apple's share price to a target price of $264. It's currently at $197.88.
TUAW