Wed, Nov 07, 2012 - Page 15 News List

Microsoft, Apple tablets most profitable: analysts


The Apple logo is seen on Sept. 11 at the Yerba Buena Center for Arts in San Francisco, California.

Photo: AFP

Microsoft Corp and Apple Inc are garnering the highest profit margins for their tablets, followed by Google Inc and then Inc, according to research firm IHS.

Microsoft’s first self-made tablet, the Surface, costs about US$267 in parts and labor when excluding its optional keyboard cover. The gadget, with a 26.9cm screen, went on sale on Oct. 26 priced at US$499 for a profit margin of about 46 percent. The price is for its base model with 32 gigabytes (GB) of memory.

With a similar configuration, the Surface rakes in slightly more profit for Microsoft than Apple did when it released its third-generation iPad in March.

Apple’s third-generation Wi-Fi-only iPad with 32GB of memory and a 24.6cm screen cost an estimated US$333 and retailed for US$599 for a 44 percent profit margin. The 16GB base model cost US$316 and was priced at US$499 for a profit margin of 37 percent.

A preliminary analysis of the fourth-generation iPad, which comes with a faster processor and went on sale on Friday, costs about US$305 in parts and labor for the 32GB Wi-Fi-only model, for a 49 percent margin, IHS analyst Andrew Rassweiler said. The 16GB base model costs about US$295 and sells for US$499, he said.

IHS’ analysis excludes costs for marketing, sales or operating system software. The research firm obtains the devices independently and breaks them apart to estimate the cost of the components.

The analysis suggests Microsoft is imputing a cost for its latest operating system, the slimmed-down Windows RT, which debuted last month. It also needs to price its flagship tablet high enough so that manufacturing partners like Dell Inc and Lenovo Group Ltd (聯想) can compete even after paying Microsoft for the operating system.

Apple is maintaining premium pricing as the market leader.

Among smaller-sized tablets, the iPad Mini that went on sale on Friday boasts a 20.1cm screen — measured diagonally — and costs US$198 for parts and labor. This 16GB model has a retail price tag of US$329 for a profit margin of 40 percent.

The 17.8cm offering from Google Inc, the Nexus 7, costs US$159 for its 8GB model and sells for US$199, IHS said. That is a profit margin of 20 percent. Google makes a little more on its 16GB model, which costs about US$167 to make, but sells for US$249 for a 33 percent margin.

Amazon spends about US$174 to make its 17.8cm Kindle Fire HD with 16GB of memory and sells it for US$199, for a profit margin of 13 percent. That is better than the original Kindle Fire, a money-loser that, on launch, cost Amazon about US$202 for every US$199 it collected on a sale.

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