Microsoft Surface RT Could Bring in More Profits than Apple iPad

For each unit of Microsoft’s Surface tablet sold, calculations show that the company could make more profits than Apple makes on each unit of iPad it manages to sell. Here’s the story the numbers tell us:

According to iSuppli estimates, the 32GB Microsoft Surface RT tablet costs about $284 to manufacture. Its retail price is $599, which is a markup by 111%, giving Microsoft a gross margin of 52%, and a profit of $312 on each unit sold. On the other hand, the 16GB Apple iPad Mini costs about $188 to manufacture and retails at $329. This price is a markup of 75%, a gross margin of 43%, and Apple makes a profit of $141 on each iPad Mini sold.

Going by these numbers, looks like Microsoft could rake in more profits through Surface RT tablets than Apple makes by selling iPad Minis. However, it’s not just hardware costs that play a role in marking the price of a device – there’s R&D, software development, marketing and many other associated costs as well. Given that Apple has sold over 100 million iPads and over 200 million iPhones till date, it can spread the costs across its other offerings. Microsoft unfortunately cannot do the same for its latest range of tablets, while hoping to sell 3 million units.

Among the various parts that go into making a Surface RT tablet, the touchscreen component of the tablet is the most expensive, costing over $100. The Flash and DRAM memory make up the next highest parts of the tablet, as well as the Nvidia Tegra 3 processor. Even at these numbers, we wonder if Microsoft will still manage to make as much profits from the Surface RT as Apple hopes to make from the iPad Mini. nits.

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