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Microsoft Surface: More profit per tablet than Apple's iPad?


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Microsoft's Surface with Windows RT tablet will bring in a higher profit-per-tablet sold than Apple's iPad, according to a teardown by IHS iSuppli.

The research firm offered a total bill of materials estimate on Monday, but has since released a more detailed breakdown of each component in Microsoft's tablet. The total cost to build the Surface, with $13 in manufacturing costs included, is $284, IHS claims.

“The Surface represents a key element in Microsoft’s strategy to transform itself from a software maker into a devices-and-services provider,” IHS analyst Andrew Rassweiler said in a statement. “Key to this strategy is offering hardware products that generate high profits on their own, similar to what Apple has achieved with its iPad line.

Here's the part-by-part breakdown from IHS:
  • 2GB of DDR3 RAM and 32GB of flash storage: $34
  • 10.6-inch, 1366-by-768 resolution display and touch screen: $101
  • Nvidia Tegra 3 processor: $21.50
  • 1-megapixel 720 camera (front and back): $5
  • Interface sensors and combo module: $20
  • Power management: $8
  • 31.5 watt hour Li-Polymer battery: $20
  • Mechanical, electro-mechanical and other components: $36
  • Box contents: $25
Strangely, IHS doesn't include Microsoft's Touch Cover in its breakdown chart, even though the teardown is for the $599 Surface with cover included.

Microsoft Touch Covers for the Surface tablet
Instead, IHS lists this piece of hardware separately, estimating that it costs between $16 and $18 to make. The Touch Cover, a screen protector that doubles as a slim, touch-sensitive keyboard, integrates a printed circuit board assembly with numerous chips of its own, including a microcontroller from Freescale and a touchscreen controller from Atmel.

With or without the Touch Cover, IHS says Microsoft's profit from the Surface is greater, in percentage, than Apple's margin on the basic 16GB iPad.

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