Tech Industry

Apple's 128GB iPad: Here's how much the bump really costs

Apple just announced its most expensive iPad yet. And as usual, what you're paying is far, far more than what it costs Apple to make.


Apple's long been at the top of the heap when it comes to making money on one key aspect of its portable devices: storage.

That trend continued with this morning's announcement of a 128GB model of the iPad, a device that costs just a steak dinner short of a full-blown Mac notebook.

The new models ring in at $799 for the Wi-Fi only, or $929 for the version with 4G LTE connectivity. That's $100 more than the 64GB model, which is $100 more than the 32GB model, which is -- you guessed it -- $100 more than the 16GB iPad. The end result is that Apple can make a healthy profit on those buying the top-of-the-line model, with nearly all of it coming from the storage.

The timing on the new model is no accident. NAND flash, which is what Apple uses in the iPad, costs far, far less than what it did a year ago, says IHS' Andrew Rassweiler.

"Apple's cost per GB in NAND flash is currently around $0.55/GB. Last year it was closer to $0.90/GB," Rassweiler said in an e-mail to CNET. "So it's clear that pricing has eroded to the point that Apple can afford to offer 2X memory configurations while maintaining the kind of incremental profit margins they were making on the memory upgrades a year ago."

That means Apple's spending about $35.20 more for an upgrade that it's charging buyers $100 for, Rassweiler says. And that's on top of what people are already spending over the two other storage upgrades from the base model.

The new model comes as analysts arewatching Apple's margins closer than ever, with fears that the iPhone, iPad, and Mac maker is losing its touch when it comes to maintaining high margins on its products. That's been especially true with iPads, with Apple's newer, less-expensive iPad Mini bringing in less profit per device than its bigger brother.

So will this new, high-end iPad fix that? Not necessarily. In announcing the product this morning, Apple was keen to note that this device is good for "enterprises, educators and artists," as opposed to the standard consumer. That's a lucrative group to sell to, but far removed from the millions snapping up the entry-level model.