Apple and Microsoft are meanwhile seeking to make good money on the devices themselves.
Microsoft, with its first own-brand tablet, Surface, is pursuing a path taken by Apple, seeking a large profit on the device itself and encouraging owners to use its "ecosystem" of services. According to IHS iSuppli, the Surface is even more profitable than the full-sized iPad, with materials and manufacturing for the 32GB version with the Touch Cover keyboard totalling $284. Surface retails for $599, making for a profit margin of 53 per cent.
"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," said Mr Rassweiler.
The materials and manufacturing for the Wifi only, 16GB iPad mini, Apple's response to smaller, cheaper tablets form Amazon and Google, meanwhile cost $198, according to the analysis. Given it retails for $329, the teardown shows Apple sticking to its longstanding strategy of pursuing high profit margins, this time around 40 per cent.
"With the iPad mini, Apple is sticking to the premium-brand strategy it has always used for its media tablet and smartphone products," said Mr Rassweiler.
Stronger competition from cheaper hardware is beginning to have an impact, however. Figures this week showed that Apple's dominance of the tablet market has been eroded in recent months, with its market share plummeting from two thirds in the second quarter to half in the third. Overall the tablet market grew almost 50 per cent year-on-year.
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