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Apple iPad Air 2 doesn't fall far from the tree

Posted: 29 Oct 2014 ?? ?Print Version ?Bookmark and Share

Keywords:iPad? iPhone? A8X? 28nm?

The new iPad Air 2 holds a nearly identical hardware cost as its predecessor given that its design and feature set are incrementally different from the original iPad Air, according to the Teardown Analysis Service at IHS Inc.

The 16GB Wi-Fi-only version of the Apple iPad Air 2 sports a bill of materials (BOM) of $270, based on a preliminary estimate. When the $5 manufacturing cost is added, the cost rises to $275.

This compares to the $269 BOM for the 16GB version of the original Apple iPad Air, based on a finalised estimate from IHS in November 2013.

Although the profit margin appears to be the same for Apple at the low end of the iPad Air 2 line, the product produces lower gross margins for Apple at the high end with 64GB and 128GB worth of NAND flash. This is because the 64GB and 128GB models of iPad Air 2 are selling at the same price point as the original iPad Air 32GB and 64GB models. The additional cost of memory trims the estimated margins slightly.

"The Air 2 delivers a series of refinements compared to the original Air but features nothing earthshaking," said Andrew Rassweiler, senior director, cost benchmarking services for IHS. "With largely identical display specifications and minor improvements in most other areas, Apple continues to offer evolutionary upgrades to the iPad line-up. It's interesting to note that by offering the consumer a 128GB model for the same price as last year's 64GB iPad Air, Apple actually has taken down our estimated margins a bit on both the 64GB and 128GB models. The increased memory configurations to 64GB and 128GB are some of the key upgrades here."

BOM of iPad Air 2

The table attached presents the preliminary BOM and manufacturing cost estimate of the iPad Air 2, based on a physical teardown of the tablet.

Immobile display

The resolution and diagonal size of the Air 2 display has not changed from the first Air model. The Air 2 also has the same number of light-emitting diode (LED) backlights to illuminate the display as the original Air, at a count of 36.

Because pricing for electronics decreases over time, and because there has not been a major upgrade to the display specifications, the display panel and touch screen are less expensive than they were when the original Air was introduced one year ago.

For the Air 2, the display costs $77, while the touch screen comes in at $38. Based on pricing from November 2013, the original Air's display amounted to $90, and the touch screen was $43.


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