With iPad 2 set to go on sale Friday, analysts that take such devices apart to study their innards are gearing up for a working weekend. But one firm is already making an educated guess about Apple’s component costs, which it believes are still a shade lower than those for rival Motorola Inc.’s new Xoom.
UBM TechInsights, in a preliminary estimate, suggests that Apple pays about $270 to buy the chips, displays and other ingredients to build an iPad 2 with 32 gigabytes of data-storage capacity. That compares with its current $245 estimate for the original iPad.
The increase is not surprising. Apple’s favorably reviewed iPad 2 adds a dual-core processor, two cameras, a different battery, additional sensors and packs it all into a smaller case, which tends to add to costs.
UBM is guessing that, as in the latest iPhone and the Xoom, Qualcomm will supply a multi-mode communications chip that can work on the dissimilar cellular networks of AT&T and Verizon. Infineon’s wireless unit, now a part of Intel, supplied the communication chips in the first iPad.
“Qualcomm keeps racking up these design wins in tablets,” notes Allan Yogasingam, a UBM technical marketing manager.
Many people will be focusing on the comparison with Xoom. The Motorola device is widely considered the strongest competitor to the iPad, but has been slammed for its price tag. The Xoom starts at $799 without a cellular plan, compared to $729 for a comparable iPad with 3G connections, and Apple offers a lower entry point for its product line with a $499 model with less storage capacity and Wi-Fi only.
UBM’s data provides further evidence that it won’t be easy for Motorola to undercut Apple. The gap in materials costs have narrowed, but the firm’s $278 estimate for Xoom components still puts it at eight dollars higher than the iPad. UBM’s estimate assumes that Apple’s huge purchasing volume allows it to get more favorable deals than rivals for buying components.
Still, Apple’s profit margins might compress a bit, assuming UBM’s estimate is close to the mark. The company plans to keep the same price points for its latest iPad, while the research firm’s estimates point to a $33 increase per device in components on a 32-gigabyte iPad 2.
Apple, meanwhile, on Thursday gave a few more details about the iPad 2 rollout. The device will be available Friday at 5 p.m. local time at the company’s 236 U.S. retail stores as well as at Best Buy, Target, Walmart, stores run by AT&T and Verizon and other select resellers. Early birds who don’t want to stand in line can place orders on Apple’s online store beginning at 1 a.m. Pacific time, the company said.