Data provided by iNet BFA
Loading...
See More

Tablet wars: Apple, Microsoft winning

Nov 06 2012 08:38 AP
iPad Mini

The iPad Mini is shown in San Jose, California. (Marcio Jose Sanchez, AP)

Related Articles

Apple expected to debut 'mini' iPad

Judge: Samsung did not copy iPad

Sales of 'smart devices' soar globally

Sony wants to take on Samsung

Pricey cheap tablets

Yahoo lays out revival strategy

 

Los Angeles - Microsoft and Apple are garnering the highest profit margins for their tablets, followed by Google and then Amazon, according to research firm IHS.

Microsoft's first self-made tablet, the Surface, costs about $267 in parts and labor when excluding its optional keyboard cover. It went on sale October 26 priced at $499, for a profit margin of around 46%. Surface comes with a 10.6-inch screen measured diagonally, and can access the Internet only through Wi-Fi. The price is for its base model with 32 gigabytes of memory.

With a similar configuration, the Surface bakes in slightly more profit for Microsoft than Apple. did when it released its third-generation iPad in March.

Apple's third-generation Wi-Fi-only iPad with 32GB of memory and a 9.7-inch screen cost an estimated $333 and retailed for $599, for a 44% profit margin. The 16GB base model cost $316 and was priced at $499, for a profit margin of 37%.

A preliminary analysis of the fourth-generation iPad, which comes with a faster processor and went on sale Friday, costs about $305 in parts and labor for the 32GB Wi-Fi-only model, for a 49% margin, estimates IHS analyst Andrew Rassweiler. The 16GB base model costs about $295 and sells for $499, he says.

IHS' analysis excludes costs for marketing, sales or operating system-software, which Microsoft has been touting with its device. The research firm obtains the devices independently and breaks them apart to estimate the cost of the components.

The analysis suggests Microsoft is imputing a cost for its latest operating system, the slimmed-down Windows RT, which debuted last month. It also needs to price its flagship tablet high enough so that manufacturing partners like Dell and Lenovo can compete even after paying Microsoft for the operating system.

Apple is maintaining premium pricing as the market leader.

Among smaller-sized tablets, the iPad Mini that went on sale on Friday boasts a 7.9-inch screen measured diagonally and costs $198 for parts and labor. This 16GB model has a retail price tag of $329, for a profit margin of 40%.

The 7-inch offering from Google, the Nexus 7, costs $159 for its 8GB model and sells for $199, according to IHS. That's a profit margin of 20%. Google makes a little more on its 16GB model, which costs about $167 to make but sells for $249, for a 33% margin.

Amazon.com spends about $174 to make its 7-inch Kindle Fire HD with 16GB of memory and sells it for $199, for a profit margin of 13%. That's better than the original Kindle Fire, a money-loser that, on launch, cost Amazon about $202 for every $199 it collected on a sale.

Google is aiming to both make a profit and broaden the reach of its Android operating system, while Amazon is looking to make up the profit gap when customers buy movies, books and magazines from its store.

"Amazon and Google want to put tablets in consumers' hands - even if it means doing so at a minimal hardware profit," Rassweiler said in a statement.

 
google  |  amazon  |  apple  |  microsoft  |  tablet
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
8 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're talking about:

Small Business

A cash flow crunch often occurs in small businesses trying to balance cash coming in with cash going out. Watch this video to help you improve.
 
 

OneRandMan learns how money really works

National Savings Month is not only this month, it is every month from your very first salary slip, an expert warns OneRandMan and all South Africans.

 
 

Start saving...

Time the key for retirement saving
Dummy's guide to saving
Save money with affordable account
All about endowments

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...