LOS ANGELES (AP) — Microsoft and Apple are garnering the highest profit margins for their tablets, followed by Google and then Amazon, according to research firm IHS.
Microsoft Corp.'s first self-made tablet, the Surface, costs about $267 in parts and labor when excluding its optional keyboard cover. It went on sale Oct. 26 priced at $499, for a profit margin of around 46 percent. Surface comes with a 10.6-inch screen measured diagonally, and can access the Internet only through Wi-Fi. The price is for its base model with 32 gigabytes of memory.
With a similar configuration, the Surface bakes in slightly more profit for Microsoft than Apple Inc. did when it released its third-generation iPad in March.
Apple's third-generation Wi-Fi-only iPad with 32GB of memory and a 9.7-inch screen cost an estimated $333 and retailed for $599, for a 44 percent profit margin. The 16GB base model cost $316 and was priced at $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 Friday, costs about $305 in parts and labor for the 32GB Wi-Fi-only model, for a 49 percent margin, estimates IHS analyst Andrew Rassweiler. The 16GB base model costs about $295 and sells for $499, he says.
IHS' analysis excludes costs for marketing, sales or operating system-software, which Microsoft has been touting with its device. 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 and Lenovo can compete even after paying Microsoft for the operating system.
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