Apple's control over the iPad's hardware and software gives it "design efficiencies" other tablet manufacturers can't match, says Wayne Lam, an analyst at iSuppli.
“These efficiencies become obvious in areas like the memory and the battery, where Apple maintains advantages in cost, space savings and performance compared with every competitor in the business.”
Other tablet makers employ operating systems from third-party firms—such as Google Inc., which provides the Android software used in most competitive products on the market today. Many of these tablet makers also outsource the blueprints of their products to third parties, employing reference designs and design services from contract manufacturers.
This contrasts with the model employed by Apple, which uses its own operating system and maintains tight control of its design, components and contract manufacturers.
Lam argues that comparing the amount of RAM between the iPad and other manufacturers misses a key point: because Apple writes the software specifically for hardware they have custom built, it doesn't need as much horsepower as competing tablets.
In the current-generation iPad 2, the density of synchronous dynamic random access memory (SDRAM) is 512 megabytes—half that of the 1 gigabtye used in competitive designs... Likewise, the original iPad contained half as much SDRAM as comparable competitive devices with single-core applications processors.
“The iPad’s efficient memory usage stems from the fundamental difference in the architecture of the operating system,” Lam said. “Apple’s iOS handles multitasking differently than other tablet operating systems, allowing it to reduce the amount of memory required to support the microprocessor.”
It also helps that Apple has the cash to secure favorable terms from suppliers, like in 2010 when it spent $3.9 billion on LCD panels, most likely for the iPad.
Apple currently has the second highest market capitalization in the world, second only to ExxonMobil. Like XOM, Apple has grown its profits by controlling the entire pipeline, from conception to delivery.
ExxonMobil handles exploration, drilling, pumping, refining, and delivery of petroleum products, and captures profits at every step. ExxonMobil eliminates inefficiencies in the market by having one company handle everything instead of having four different companies combining forces to deliver a product -- like Google and the Android hardware manufacturers do.
Apple designs the software (iOS), the hardware (A4 and A5 chips), controls the sales channel (Apple Retail and Online Stores), and decides the fate of how buyers use the iPad via the App Store. The company streamlines pricing and the experience to such a degree that no other company can even come close.