Report: Apple iPad Component Costs Higher Than Expected

iSuppli, which estimated the components cost for a 16 GB iPad at about $260, and the components for the high-end 64 GB iPad at about $348, suggested this week that much of the additional, unexpected cost comes from the technology behind the 9.7-inch touchscreen display.

According to iSuppli, the prices Apple has assigned to the 16 GB iPad and 64 GB iPad, $499 and $699 retail, respectively, are in line with the usual range of what Apple prices its products relative to their estimated teardown costs. iSuppli, which often publishes research around "teardowns," or the estimated component costs of major technology device releases, released its report on the iPad Wednesday.

iSuppli had previously estimated that the low-end iPad would contain about $219.35 of materials. According an iSuppli principal analyst, Andrew Rassweiler, more than 40 percent of the iPad's component cost is found in the touchscreen display and user interface. Specifically, Rassweiler told BusinessWeekthat iSuppli found more silicon chips and pricier components inside the iPad -- for use in the interface -- than it had anticipated.

Apple's iPad has been another triumph for the vendor since its April 3 debut, with most estimates thus far suggesting brisk, if not runaway, sales for the new tablet.

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Among launch problems, the only significant bruise for Apple has been Wi-Fi connectivity, which some customers say has been weak and, in some cases, virtually nonexistent. Apple itself has already acknowledged the problem, urging customers with Wi-Fi issues to reset their network settings among other quick-fixes.

The currently available iPad offers Wi-Fi connectivity, but 3G-enabled iPads are scheduled to arrive later this month.