When it comes to the iPad, bigger might not always be better. In terms of profitability for Apple, it definitely is not. The baseline model of the iPad Mini is something of a cash machine when you factor in parts and materials. Turns out, the average iPad mini costs Apple $198 in parts and labor costs.
“Based on the ratio of cost to retail price, [we have] concluded the iPad mini is slightly more profitable on a percentage basis than the comparably equipped version of the New iPad when it was released in March 2012,” said Andrew Rassweiler of IHS. “With the iPad mini, Apple is sticking to the premium-brand strategy it has always used for its media tablet and smartphone products.”
That’s for the baseline WiFi version of the iPad Mini, to boot! The more RAM you add to your iPad mini, the more money it makes for Apple. RAM on its own is incredibly cheap, but when you’re trapped in an Apple case you can’t open or upgrade, the screws get dug in deep. Said Rassweiler:
“Because Apple provides consumers no option to expand the iPad mini’s storage capacity with any sort of removable memory card, the only way users can upgrade the amount of flash available on the product is to buy the higher-end 32GByte and 64GByte models. These higher-end models – with or without 4G wireless capabilities – are priced at $100 intervals, at $429 and $529 However, the incremental cost of the additional NAND flash memory to Apple is only $9.60 for the additional 16GBytes of memory and $19.20 for an additional 32GBytes of memory. This means that compared to the 16GByte model, the 32GByte version of the iPad mini generates about $90 in additional profit for Apple for every unit sold. Therefore, for the 64GByte model, Apple’s profit is about $171 higher than the 16GByte version.”