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Technology

Microsoft Surface, Apple’s iPad mini, other tablets get the teardown treatment

By Hayley Tsukayama,November 06, 2012

View Photo Gallery - : Tablet mania: The battle of the seven-inch tablets: Apple unveiled…

There are a lot of new tablets on the market this holiday season, but which one represents the most profit for its manufacturer?

IHS took a stab at the question by estimating how much the hardware costs are for the iPad mini, Amazon Kindle Fire HD and Microsoft Surface. The analysis doesn’t include other costs per tablet, but gives a strong baseline to work from when figuring out profit margins on devices.

Apple has made a business model of making money off its hardware up-front even before the revenue from selling content rolls in through its iTunes store — the opposite approach of companies such as Amazon and Google.

But according to the teardowns posted by that analysis firm, Apple is not the profit leader when it comes to the latest tablet hardware.

It’s Microsoft.

The tablet autopsies conducted by IHS shows that Microsoft pays $284 to make its baseline tablet, which retails for $599. Apple, meanwhile, pays $198 for the components in the $329 iPad mini.

The reports show that Microsoft has taken its pivot to the Apple model of making end-to-end devices to heart. Microsoft still makes money by selling its software to partners, but has signaled that it’s planning to make more hardware for its own software in the future as well.

There are even rumors, resurfaced Tuesday by The Verge, that the company will make a 7-inch tablet of its own that builds off the brand of its other major hardware success, the XBox. That would tie together Microsoft’s operating system, hardware and gaming universe in a complete package that would give the technology titan complete control over profits.

Speaking of profits, the IHS analysis also suggests Amazon is edging closer to true profitability on its Kindle Fire HD tablet. The company appears to be spending $174 for each tablet, which retail for $199. When the tablet was initially announced, analysts expected that Amazon would be losing around $2 for each tablet.