iPad parts cost $219, iSuppli posits, strengthening case for price-drop

The iPad isn't yet for sale, but the mid-grade, 3G-equipped iPad is Apple's most profitable model, researchers found.

The revelation that Apple's iPad tablet could cost as little as $229 to make lends more credibility to rumors about a future price drop.

You can't even buy one yet, but already the world is abuzz about changes to the iPad's price and how it's sold.

Despite the speculative nature of much of the chatter, Monday's iPad news, that executives at Apple are open to a price drop should things not go well for the tablet, just got a big vote of validation.

The sleuths at market research and tear-down specialist iSuppli on Wednesday released results of a virtual tear down of the iPad, and the findings suggest Apple has a lot of headroom on the iPad's price.

The iPad, which will range in retail price from $499 to $829, depending on storage capacity and whether 3G connectivity is included, costs between $229 and $346 to build, iSuppli found. The bulk of an iPad's cost? That 9.7-inch LCD touchscreen display, which weighs in at $80. The three flash memory chip options (16, 32, or 64 GB) cost Apple just $29, $59, and $118 respectively.

Before you go decrying the "Apple Tax" and tearing your hair out with screams of highway robbery, the usual caveats apply: iSuppli reminds that its estimates "account only for hardware and manufacturing costs and do not include other expenses such as software, royalties and licensing fees."

Still, a device that costs $287 to make, as the mid-grade, 3G-equipped iPad does, selling for $729? Seems like there's definitely room for a reduction.

For comparison sake, iSuppli appraised the newest $79 Apple iPod Shuffle at $21 and the $359 Amazon Kindle at $185.

The full virtual tear down report is here.

We're starting to sound like a broken record, but this analysis makes waiting for a price drop seem like even more of a smart move.


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