Apple Inc earned gross margins of 49 to 58 percent for U.S. iPhone sales between April 2010 and the end of March 2012…Apple had gross margins of 23 to 32 percent on U.S. iPad sales, the filing said.
That means Apple makes as much money on one iPhone as it does on two iPads (considering they cost roughly the same amount).
Who likes phone subsidies? Apple likes phone subsidies!
Also, when considering the 7-inch iPad costs, a lower margin in the 20 percent range means Apple can bring its prices pretty close to $200.