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If there's one aspect of the next-generation iPad mini that's been most speculated about, it's the Retina display. Google two days ago introduced the new Nexus 7, a seven-inch tablet with a resolution of 1920×1080 pix, which according to Google makes it the tablet with the finest display with a dot density of 323 ppi. According to many, Apple's adequate response should be an iPad mini with a Retina display, which would raise the bar even further to 326 ppi, just as current iPhones have.

However, the release of the iPad mini with Retina display is questionable, especially because of the possible cost of production, which would further reduce Apple's profit below the level of the average margin, unless the Californian giant wants to increase the price. When we look at the production cost of iPads, which he regularly calculates iSuppli.com, we get to some interesting numbers:

  • iPad 2 16GB Wi-Fi - $245 (50,9% markup)
  • iPad 3rd gen. 16GB Wi-Fi - $316 (36,7% margin)
  • iPad mini 16GB Wi-Fi - $188 (42,9% margin)

From these data, we find out other numbers: thanks to the Retina display and other improvements, the production price rose by 29 percent; the price of identical hardware (iPad2-iPad mini) fell by 23% over 1,5 years. If we were to apply this hardware discount to the 3rd generation iPad components, assuming they will be used in the iPad mini 2, then the manufacturing cost would be around $243. That would mean a margin of only 26 percent for Apple.

And what about the analysts? According to Digitimes.com would the implementation of the Retina display increase the production price by more than $12, others expect a price increase of up to 30%, which coincides with the difference in the production price of the iPad 2 and the iPad 3rd generation. If Apple wanted to maintain the current average margin, which is 36,9 percent, it would have to keep the production price below $208, so the price increase should be below 10 percent.

Unfortunately, no analyst either iSuppli cannot say exactly what prices Apple can negotiate for individual components. All we know is that it can be obtained at a significantly lower price than its competitors (maybe except for Samsung, which manufactures a large part of the components itself). Whether or not the iPad mini 2 will have a Retina display may depend on whether Apple can build the tablet for the above amount. Google managed something similar with the new Nexus 7 for less than $229, so it might not be an impossible task for Apple.

Sources: Softpedia.com, iSuppli.com
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