Samsung Galaxy Note 10.1 More Profitable than New iPad, Reveals IHS
Market research firm IHS iSuppli’s latest comparison of the Apple, Inc. (NASDAQ:AAPL) new iPad and the Samsung Electronics Corp. (KRX:005930) Galaxy Note 10.1 suggests that the latter device is, in fact, more profitable than the former. While only the expenses related to manufacturing and hardware were taken into account, this new report from IHS makes for some interesting reading.
That said, there is a possibility that other key variables, such as licensing and marketing costs, could reduce the Galaxy Note 10.1’s profit margins. But for the sake of argument, simple mathematics leads to the clear conclusion that based on the bill of materials (BOM) and manufacturing costs alone, the Galaxy Note 10.1 is a very profitable device.
The High-Speed Packet Access or HSPA+ version of the Galaxy Note 10.1, for instance, costs just $283 for materials. With $10 manufacturing costs figured in, the total cost to build this tablet adds up to $293.
As the HSPA+ Galaxy Note 10.1 carries a price point of $640, this brings its profit margin to $347 per tablet. The Wi-Fi Galaxy Note 10.1 has a profit margin of over $200, considering its $260 BOM and $499 selling price.
The third-generation iPad tablet computer, which is commonly known as the new iPad, costs $316 to manufacture and is sold at $499, redounding to a profit margin of $183. While Apple may have very little to no profit margin on the new iPad, IHS analyst Rhoda Alexander believes Samsung may be hard-pressed to maintain such a high profit margin due to comparatively sluggish sales of non-Apple slates.
She stressed that if the Galaxy Note 10.1 doesn’t move many units, it may not be long before Samsung reduces the price of the S-Pen-equipped tablet.