Light Reading
4G LTE connectivity, coupled with a new Retina display, camera and battery, will mean less money per iPad sold for Apple, according to UBM TechInsights

Apple Shaves Margins for LTE in New iPad

Sarah Reedy
LR Mobile News Analysis
Sarah Reedy, Senior Editor
3/12/2012
50%
50%

Apple Inc. (Nasdaq: AAPL)'s decision to include 4G Long Term Evolution (LTE) connectivity will cost the device maker ... US$8.40 per device sold, to be exact. (See Apple Intros First 4G LTE iPad.)

According to estimates from Light Reading sister company UBM TechInsights , the new 16GB iPad packs a total bill of materials (BOM) of $310, compared to the iPad 2's original BOM of $276.27. Both retail for $629, giving Apple a 51 percent profit margin on the new iPad, compared to a 57 percent margin it earned on the iPad 2 when it first launched.

At $21, the LTE baseband chip in the new iPad added $8.40 to the device cost, up from $12.60 on the original iPad 2. But the most expensive new component was the new Retina display, which cost Apple $70 per device, compared to $49.50 for the iPad 2. The new iPad's 5MP camera also added $7.50 per tablet, and battery costs to keep up with the LTE speeds rose from $22 to $30 on the LTE iPad.



Note that Apple lowered the cost of the iPad 2 by $100, but its BOM has also decreased from March 2011 to 2012 owing to the natural decline of silicon and Apple's volume gains. According to Allan Yogasingam, TechInsight's technical research manager, the fact that Apple has sold over 100 million units puts it in a better position to negotiate pricing on components with their suppliers.

"Their suppliers will feel more comfortable in lowering their own margins with the knowledge that Apple will be purchasing their components in mass quantities now and in the foreseeable future," he says.

At 51 percent, Apple is still making a healthy margin on the LTE iPad, and likely kept prices the same as the landscape for tablets has changed significantly since it introduced the iPad 2. With more competition, and with Android tablets at lower price points, it didn't have much of a choice in keeping its cost to consumers down. And, reports suggest that certain models of the 4G version are already on backorder, so it should make up for the lower profit margin with its typically high volumes. (See Amazon's Kindle Fire Sells for $55 Over Cost and Apple: the Numbers Behind the (Huge) Numbers.)

TechInsights will perform an actual teardown on the new iPad once it is commercially available on Friday. We'll update the specs at that time.

— Sarah Reedy, Senior Reporter, Light Reading Mobile

(3)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
joset01
50%
50%
joset01,
User Rank: Light Beer
12/5/2012 | 5:39:49 PM
re: Apple Shaves Margins for LTE in New iPad


Piper Jaffray is estimating more than 1 million of the new iPads pre-sold.

SReedy
50%
50%
SReedy,
User Rank: Blogger
12/5/2012 | 5:39:46 PM
re: Apple Shaves Margins for LTE in New iPad


Yeah, something tells me Apple will be juuuuuust fine with the lower margins.

gtchavan
50%
50%
gtchavan,
User Rank: Light Beer
12/5/2012 | 5:39:38 PM
re: Apple Shaves Margins for LTE in New iPad
I bet the margin of error of this estimation is larger than the estimated decline in the margins.
Flash Poll
Wagner’s Ring
Data Centers Drive Telcos Into the Future

8|28|14   |   2:20   |   (2) comments


Data centers are at the heart of key trends driving telecom -- network virtualization, the drive for increased agility, and the need to compete with OTT providers.
LRTV Custom TV
Why SPs Should Consider Cisco's EPN

8|27|14   |   5:40   |   (0) comments


Sultan Dawood from Cisco discusses Cisco's EPN, which enables SPs to build agile and programmable networks delivering new network virtualized services using Cisco's Evolved Services Platform (ESP).
LRTV Huawei Video Resource Center
Huawei’s Showcase @ Big Telecom Event 2014

8|26|14   |   2.56   |   (0) comments


SoftCOM is Huawei's framework for telecom business and network transformation. Haofei Liu, Solution Marketing Manager, Carrier Business Group, Huawei, showcases Huawei's SoftCOM architecture in this video.
LRTV Huawei Video Resource Center
Huawei @ BTE 2014: Director of Integrated Solutions on SoftCOM & NFV Monetization

8|26|14   |   4.43   |   (0) comments


Libin Dai, Director of Integrated Solutions, Carrier Business Group, discusses Huawei's SoftCOM and NFV monetization. Huawei believes that NFV monetization should be service-driven rather than network-driven, and that operators should have network transformation, service transformation and a compatible and collaborative ecosystem in place in order to deploy NFV.
LRTV Huawei Video Resource Center
Huawei @ BTE 2014: Director of US NFV Lab on CloudEdge & the Future of NFV

8|26|14   |   4.06   |   (0) comments


Sean Chen, Director of US NFV Lab at Huawei, discusses Huawei's new approach to NFV in open collaboration. Huawei believes that through Proof of Concept tests, it could help operators learn and communicate with the industry more effectively. Sean believes that successful implementation of NFV should have its values reaching to end users and discusses how Huawei's ...
LRTV Huawei Video Resource Center
Huawei's Highlights @ Big Telecom Event 2014

8|26|14   |   3.34   |   (0) comments


At the Big Telecom Event in Chicago Huawei showcases its high-level strategy, the SoftCOM architecture, which helps operators reduce the cost of ownership of their network infrastructure and generate additional revenue in the ICT service environment. Huawei showcases over 30 pilot programs from across the globe, focusing on the industry-leading commercial ...
LRTV Custom TV
VeEX – Live from the Show

8|21|14   |   5:58   |   (0) comments


An overview of VeEX Test and Measurement solutions including TX300S multi-service test set with VeExpress cloud-based management system, UX400 universal modular platform supporting 100G testing, and the redesigned RXT modular platform.
LRTV Custom TV
Transitioning CE 2.0 Networks Into the SDN & NFV Era With Telco Systems

8|19|14   |   5:19   |   (0) comments


Telco Systems' Ariel Efrati (CEO) and Moshe Shimon (VP of Product Management) discuss virtualization and how the company's new Open Metro Edge solution utilizes the SDN and NFV concepts to accelerate and orchestrate service delivery through its innovative product portfolio and software applications.
LRTV Custom TV
NFV Myths: Is NFV Still Several Years Away?

8|11|14   |   1:13   |   (0) comments


Some say that NFV (network functions virtualization) is still several years away from being implemented on mobile operator networks. This isn't the case. Operators can get started on their paths to NFV now, as this short video from Skyfire shows.
LRTV Custom TV
A New Security Paradigm in SDN/NFV

7|28|14   |   02:54   |   (0) comments


Paul Shaneck, Global Director Network Solutions for Symantec, discusses the evolving virtualized network, explaining how Symantec is leading the security discussion as it relates to SDN and NFV, and helping to ensure the network is protected and compliant.
LRTV Documentaries
Sprint's Network Evolution

7|24|14   |   14:59   |   (0) comments


Sprint's Jay Bluhm gives a keynote speech at the Big Telecom Event (BTE) about Sprint's network and services evolution strategy, including Spark.
LRTV Documentaries
BTE Keynote: The Software-Defined Operator

7|24|14   |   18:43   |   (1) comment


Deutsche Telekom's Axel Clauberg explains the concept of the software-defined operator to the Big Telecom Event (BTE) crowd.
Upcoming Live Events!!
September 16, 2014, Santa Clara, CA
September 16, 2014, Santa Clara, CA
September 23, 2014, Denver, CO
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
A survey conducted by Vasona Networks suggests that 72% of mobile users expect good performance all the time, and they'll blame the network operator when it's not up to par.
Today's Cartoon
Hot Topics
Rogers, Shaw Take Aim at Netflix
Mari Silbey, Independent Technology Editor, 8/26/2014
Utilities to Pump $11.2B Into Smart Grid – Study
Jason Meyers, Senior Editor, Utility Communications/IoT, 8/26/2014
Verizon Launches QR Code Security Solution
Carol Wilson, Editor-at-large, 8/26/2014
Nokia's Maps Land on Samsung Devices
Sarah Reedy, Senior Editor, 8/29/2014
Verizon to Launch HD VoLTE in 'Coming Weeks'
Sarah Reedy, Senior Editor, 8/26/2014
Like Us on Facebook
Twitter Feed