In a teardown analysis of 64GB and 128GB iPad Air 2 models, analyst firm IHS concludes that Apple is seeing margins slightly squeezed compared with original iPad Air 32GB and 64GB devices due to a mixture of higher memory costs and similar price points.

“The Air 2 delivers a series of refinements compared to the original Air but features nothing earth-shaking,” said Andrew Rassweiler, senior director at IHS’ cost benchmarking services.

“With largely identical display specifications and minor improvements in most other areas, Apple continues to offer evolutionary upgrades to the iPad lineup. It’s interesting to note that by offering the consumer a 128GB model for the same price as last year’s 64GB iPad Air, Apple actually has taken down our estimated margins a bit on both the 64GB and 128GB models. The increased memory configurations to 64GB and 128GB are some of the key upgrades here.”

The 16-gigabyte (GB) WiFi-only version of the Apple iPad Air 2 sports a bill of materials (BOM) of $270, based on a preliminary estimate from IHS. When the $5 manufacturing cost is added, the cost rises to $275.

This compares to the $269 BOM for the 16GB version of the original Apple iPad Air, based on a finalised estimate from IHS in November 2013.

Although the profit margin appears to be the same for Apple at the low end of the iPad Air 2 line, reckons IHS, the product produces lower gross margins for Apple at the high end with 64GB and 128GB worth of NAND flash. This is because the 64GB and 128GB models of iPad Air 2 are selling at the same price point as the original iPad Air 32GB and 64GB models. The additional cost of memory trims the estimated margins slightly.