Those who are wondering what it costs Microsoft to build its first tablet now have an answer, and it’s one that leaves the company with a hefty margin.
Although Microsoft has been making accessories and items like the Xbox for years, it still raised eyebrows by introducing the Surface RT tablet, which competes directly with its licensees. This device, which runs the new Windows RT, is being closely watched to see how it is going to affect both Microsoft and the tablet market as a whole.
The version of the Surface RT that sells for $600 has 32GB of internal storage and a combination cover/keyboard. According to market-researcher IHS (formerly known as iSupply), the bill of materials (BOM) is $271, and there’s a $13 manufacturing cost, bringing the total to $284.
The 32GB version without the keyboard has a BOM of $255.
For comparison, the estimated BOM for its top competitor, the fourth-generation iPad with 32GB of internal storage, is $293. This model is sold without a keyboard.
Andrew Rassweiler, who is the head of teardown services at IHS, said:
“The Surface represents a key element in Microsoft’s strategy to transform itself from a software maker into a devices and services provider. Key to this strategy is offering hardware products that generate high profits on their own, similar to what Apple has achieved with its iPad line. From a hardware perspective Microsoft has succeeded with the Surface, offering an impressive tablet that is more profitable, on a percentage basis, than even the lucrative iPad based on current retail pricing.”