Samsung's Galaxy Note 10.1 is More Profitable Than iPad

Samsung makes $56 more selling each new $499.99 Wi-Fi-only Galaxy Note 10.1 tablet than Apple gets by selling the iPad for the same price. That's because Samsung's cost for materials is just about $260, while Apple's costs were $316 when its iPad with Wi-Fi and 16GB was first released, according to an IHS teardown report released Friday. Andrew Rassweiler, senior director of teardown services at IHS, said some recent tablets have made little or no hardware profit. But the Galaxy Note 10.1 "could turn a decent per-unit margin for Samsung and stands to be a money maker -- if the company can extend the recent success of the Samsung Galaxy Note smartphone to its tablet line." The new tablet, announced August 16, runs Android 4.0 and features a digital stylus. IHS said that the Google Nexus 7, released in July, and the Amazon Kindle Fire, released in 2011, generated little or no hardware profit, relying instead on online content and services to make money. Both sold initially for $199. No Apple iPad rival has yet been able to sell large numbers of tablets at $499, with competitors resorting to price cuts to drive sales, said Rhoda Alexander, director of tablet research at IHS. Samsung can rely on its own internal supplies for a large percentage of the tablet components, unlike Apple, IHS said. Samsung supplies both the flash and DRAM memory, the core processor, battery, and other components in the Galaxy Note 10.1.

The processor is a 1.4 GHz quad-core Samsung Exynos, the same found in the Galaxy S III handset, which IHS estimated costs $18.80. The display and touchscreen make up the priciest parts, as with other devices, at an estimated cost of $100 of the $260 total. Samsung also sells an HSPA+ wireless version of the Galaxy Note 10.1 for about $640 in various countries; IHS estimated the materials in that model cost $283. Samsung has promised an LTE version of the tablet later in 2012.