updated 07:45 pm EDT, Mon November 1, 2010
iSupply finds Galaxy Tab overpriced versus iPad
Samsung may be charging a premium on the Galaxy Tab despite it actually costing less to make than an iPad, iSuppli estimated today in a cost breakdown. Although the Galaxy Tab is within $30 of a 3G iPad in stores, it only costs about $205.22 in raw parts where Apple's larger 16GB tablet costs $59 more to produce. Analysts indirectly accused Samsung of making an upsized Galaxy S phone but charging a tablet premium.
"Instead of matching up with the iPad on a feature-by-feature basis, the Galaxy Tab really is larger version of Samsung's Galaxy S smart phone," principal analyst Andrew Rassweiler said. "While the design approach makes the Galaxy less expensive to produce than the iPad 3G, it also makes for a product that lacks the same usability. The Galaxy Tab's screen resolution, size and technology are not at the same level as the iPad. This is a critical difference, given the fact that the display is a key differentiating factor for the iPad."
Most of the cost savings came from the seven-inch screen, where the lower color accuracy, resolution and size brought the cost down to about $57. When new, the iPad's LG Display-made IPS panel and touchscreen cost about $95. Apple has billed the screen as an essential ingredient as it helps show photos and videos in full quality and renders the screen easier to read through wide viewing angles.
Flash memory is the next most expensive component. iSuppli estimates that it costs $51 for the combination of 16GB of main flash memory, unusually from SanDisk and not Samsung, with the 1.75GB of separate memory to hold the firmware and other core content. Samsung's 1GHz Hummingbird processor is actually one of the less expensive parts at $8.84, while the cameras, often used to justify the relatively close pricing with the iPad, cost just $7.95 combined.
Other notable parts include the raw shell and connectors ($15.22), touchscreen and gyroscope controllers ($13.87), Samsung battery ($10.60) and Infineon 3G chipset ($10.07). iSuppli also factors in short-range wireless from Broadcom ($8.96) as well as the necessary power and in-the-box materials.
It's uncertain how much actual profit Samsung generates from the Galaxy Tab. The estimates haven't included marketing, research or other factors that could possibly lead to tighter margins. However, the wide gap between the tablet and the iPad has suggested that Samsung has either had high development costs or has been willing to pad the price. Apple has repeatedly stated that it's willing to be aggressive on iPad sales and keep margins low, in part to head off competition from Android devices like the Galaxy Tab that might try to undercut Apple on price.