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Apple forced to cut profit margins with new iPad, analyst says

Dan Graziano
March 9th, 2012 at 5:00 PM

In an effort to keep the iPad’s price the same, Apple may have had to cut profit margins compared to previous models, The Wall Street Journal reported. UBM TechInsights on Thursday estimated the company’s newest iPad cost about $310 to manufacture the 16GB, 4G LTE model, which retails for $629. Based on those estimates, Apple’s gross profit margin is 51%, 5 points less than the iPad 2’s 56% margin at the tablet’s launch. The cost increase is largely due to the new iPad’s Retina display, which UBM estimates to cost Apple about $70 compared to the $49.50 display found on the iPad 2. The 4G LTE chips also add $21 compared to $10 for 3G chips, and the A5X processor chip is estimated to costs $28, compared to $22 for the previous-generation A5.


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