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iSuppli Estimates Showcase Apple’s Leeway for iPad Pricing

by Travis Harvey | February 11, 2010

Fueled by analysts with Credit Suisse who cited meetings with some Apple executives indicated that Apple could aggressively lower the price on its upcoming iPad if sales weren’t matching their projections. Days later, iSuppli has released the cost estimates for each of the six versions of the iPad set to ship in March and April.  Despite it’s seemingly low entry point, their estimates show Apple still has some room to budge on the iPad’s pricing.

As expected, the IPS display and touchscreen remain the iPad’s most expensive component ($80) of the iPad except on the 64GB model whose storage accounts for $118 (or 34%) of total manufacturing costs.  According to these estimates, the 32GB 3G iPad will pull in the greatest profit margin at 60% of its selling price.  All three WiFi-only models bring in a lower margin lower than any of the 3G-equipped iPads.

A piece from Reuters on January 28th called the $130 3G price premium “ridiculous” as the radio component costs are relatively inexpensive.  Such an unnecessarily high pricing difference between the two models indicates the three iPad variations with 3G will end up subsidizing their lower-priced WiFi-only counterparts.  The day of the iPad announcement, Valleywag was told that a few who had been working with the iPad were surprised upon Jobs’ proclamation that pricing would start at $499.  Not because it was cheaper than expected, through, but because they had been told it’d start at $399.  Apparently nobody’s come forward quite yet but it certainly adds fuel to the price cut fire.

isuppli

Similar manufacturing costs could be found on Apple’s first generation iPhone where the total manufacturing costs, including hardware, totaled $265.83 for the 8GB model.  The 8GB iPhone started at $599, lining up similarly with the mid-range 32GB iPad.  Only 68 days after its release, Apple slashed prices by 1/3, lowering it to $399 for the holiday season.  Apple felt the backlash from its early adopters, but an aggressive price cut towards the end of this year isn’t impossible.

If you were considering it, is any of this pricing speculation making you rethink your decision?  Share your reservations in the comments.

[Via iSuppli]