SAN FRANCISCO—Samsung Electronics Co. Ltd.'s Galaxy Note 10.1 media tablet could deliver higher profit margins than Apple Inc.'s market-leading iPad—if Samsung can maintain its target selling prices—according to a preliminary teardown analysis of the tablet conducted by IHS iSuppli.
According to the teardown analysis, the HSPA+ version of the Galaxy Note 10.1 carries bill of materials (BOM) costs of about $283. Adding in basic manufacturing costs, the tablet costs about $293 to make, according to IHS. Samsung is selling this version of the tablet for about $640, IHS said.
"With the Galaxy Note 10.1, Samsung continues to seek the magic formula for a media tablet that can rival the iPad’s market penetration,” said Andrew Rassweiler, senior director of teardown services at IHS, in a statement. “And where some other tablets introduced in recent times generated small or no hardware profit, 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 Wi-Fi-only version of the Galaxy Note 10.1, which retails for $499 in the U.S., carries an estimated BOM cost of about $260, according to IHS. A similarly equipped third-generation new iPad with Wi-Fi and 16GBytes of NAND flash memory carried a $316 at the time of release and a retail price of $499, the firm said.
IHS noted that tablet vendors have had trouble maintaining the opening sales price over time.
"The hardware profit margin for the Galaxy Note 10.1 only holds true if Samsung is able to maintain its initial price. And therein lies the rub: no Apple rival has yet demonstrated the capability to actually sell in volume at $499, instead falling back on price cuts in order to drive volume,” said Rhoda Alexander, director of tablet and monitor research for IHS.
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