The Wall Street Journal is reporting that Apple had to cut its profit margin for the new iPad, in order to keep the price for the product the same with the predecessor’s. UBM TechInsights estimated on Thursday that the company’s new tablet costs about $310 to make, in the 16 GB 4G LTE version, that will retail for $629… but it’s not like Apple is losing money or something.
Just look at Amazon, that was actually losing money with the Kindle Fire, but they gained some through the services promoted by the slate. Apple’s gross profit margin is 51% for the new iPad, which is 5 points less than the iPad 2’s 56% margin. Reasons for the cost increase? Well, the Retina Display is surely expensive, UBM estimating that it costs about $70, compared to the $49.50 screen on the iPad 2. The 4G LTE chipsets also take the cost to $21, instead of $10, like the 3G chips.
The A5X CPU is also priced at $28, in comparison to $22 for the A5 on the iPad 2. I’m sure this 5 point decrease doesn’t mean much to you, but when you sell a dozen million of units, you’ll feel that you’re earning less then what you did by selling the iPad 2. Who’s gonna cry for Apple?