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HP Touchpad costs $328 to make
ANALYST OUTFIT Isuppli has found that HP's 32GB Touchpad tablet costs $328 to make.
Isuppli tore down a Touchpad to find that the device's bill of materials (BOM) comes to $318, with a further $10 added for manufacturing costs. At a total of $132.50 the display and touchscreen parts make up the most expensive assembly, which is 41.7 per cent of the BOM.
Andrew Rassweiler, senior director of teardown services at Isuppli said, "The TouchPad in some ways does closely resemble the original iPad, with its use of the same LG display Apple used in the first-generation iPad, and by initially offering a product that only employs Wi-Fi as its exclusive wireless connection,"
The next most expensive part is the NAND flash memory, which makes up 14.1 per cent of the BOM, costing $45. The mechanical/electromechanical system is the next on the list at $30, 9.4 per cent of the BOM. The HP 32GB Touchpad sells for $599.
Apple slaps a $400 premium on its 32GB Ipad 2, which sells for $729, whereas HP's mark-up is a more moderate $271. Apple's $400 gross margin on the 32GB Ipad 2 includes a $130 premium for 3G technology. The gross margin for the 32GB Touchpad works out to 45.2 per cent, compared to Apple's 54.9 per cent mark-up on the 32GB Ipad 2.
The Ipad 2 does cost less to make than the Touchpad. When you take $19 off the $337 BOM for the 3G part to make it equivalent to the Touchpad, it is $10 less at $318.
Isuppli found that the BOM of the HP Touchpad with 16GB of storage is $306, compared to its retail price of $499. Including the $10 manufacturing cost, this works out to a mark-up of $193, a gross margin of 38.7 per cent.
Both versions of the HP Touchpad are due to tip up in the UK on 15 July running HP's WebOS operating system. For a closer look at the HP Touchpad tablet you can watch our video demo. µ
Tags: Hardware
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@cost
I see where you are coming from and understand that it may cost more. I was just pointing out that they were simply only comparing BOM vs. BOM, and not all costs that go into it. Most companies have seperate divisions or fund set aside in their budget to consider things like advertising, which won't directly affect the specific product all the time. They might use 25% of their maketing budget for the one product, but they won't gain or lose more money because of it
I am not sure why everyone these days seems to think that developing an OS is free. I can assure you that both Apple and HP have made a significant investment in this area as well. Gross margin? Not exactly.
@ Cost
The article is entitled 'HP Touchpad costs $328 to make' not Bill of Material
and more importantly it goes on to compare it with the Apple.
The article in my opinion is about value, and what you get for your money. It's slanted to make the reader go Wow, that's what it costs to make one of those! I'm simply pointing out it costs a hell of a lot more to put one in the hand of the consumer, something most people don't understand.
When I bought my iMAC a few years back it came with 1 gb ram. They wanted $800 for 3 more gb. I bought 2 2gb ram for $78. If you don't think Apple is over priced that is your choice.
@Dan
Those expenses don't make up a Bill of Material (BOM), except overhead is usually based on a percentage and is built in the the unit cost on a BOM. The other costs are not considered when manufacturing and are handled differently (like with direct labor and indirect labor). This article is comparing BOM vs. BOM only.
The non-3G iPad 2 costs $599, so why did you use the grossly marked-up 3G version as a comparison point?
Tablets from all manufacturers have gross markups for 3G (presumably there must be large licensing/patent fees to include this, seeing the physical hardware costs) and higher capacity flash (as you can see adding 16GB of flash, for a $12 higher BOM, somehow comes to an extra $100 at retail). This is presumably because Apple is such a massive purchaser of flash that it effectively controls the market - it is a monopsony.
Obvious left out expenses:
Shipping
Packaging
Advertising
% of waste (you never get 100% of the items to work)
Not to mention manufacturing overhead (labor, tooling, design, engineering, patents ...)
and of course a profit