Microsoft Surface Tablet vs latest iPad vs Google Nexus 7; which one makes their manufacturers the most money?

November 7, 2012
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Microsoft Surface
The tablet market has exploded over the last year. What began as a niche market with expensive tablets has evolved into companies making tablets that people on budgets can afford. We went from $700 tablets to $300 seemingly overnight. The kicker is that the $300 tablets are still amazing pieces of technology. With such low prices, it brings one to wonder which tablet actually makes their manufacturer the most money. So let’s take a look at the flagship devices from various mobile operating systems. The iPad, the Nexus 7, and the Microsoft Surface.

According to IHS, the Nexus 7 costs $152 to build. That’s pretty cheap compared to the others. However, the Nexus 7 also sells for less than the others. With the $199 model and the $249 model, the Nexus 7 brings in anywhere from a $45 to $100 profit.

IHS puts the cost of the iPad from $316 to $408 depending on which model you buy. For the 16GB WiFi model, the price is around $500. So the profit made from that is just under $200. For the 64GB WiFi and 4G model, they make about $300.

When we first wrote about the Microsoft Surface, it was estimated that the cost was $271. However, back then we believed the tablet would go in the $300-$400 range. We were mistaken, as the Microsoft Surface currently goes for around $700 for the 32GB model. IHS has a new estimate that the Microsoft Surface costs $284 in total. That means that the Surface makes over $400 per sale.

So the Microsoft Surface makes the most money per tablet?

According to current prices on Google and IHS, yes. Each company does go at it from different angles, though. Google and their Nexus tablets aim more for Google cloud services like Google Music and Google Drive. The cost of those to the consumer helps make up for the really cheap prices.

The Microsoft Surface tablet and the iPad are direct competitors. Same price range, same relative tablet features and specs. Where Microsoft wins is the cost of materials. While the Microsoft Surface costs $280 to make, the lowest range of iPad costs $300, with the most expensive model putting Apple back $400 a piece.

So the question really is, which company has the best strategy? iPad and Microsoft Surface tablets go for luxury value. Google goes for the more financially frugal among us, but gives us limited storage to push their other services. Who does it best? Let us know what you think in the comments.

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