iSuppli: 3rd generation iPod Nano has cheapest hardware yet

iSuppli Corporation has conducted its usual dissection of the latest product from Apple, concluding this time that the 3rd generation nano is more of a revolution than an evolution of the previous model. The majority of the components in the new compact music player are simply nonexistent in the old nano, and new suppliers have been brought to the table. "The changes in components have resulted in significant cost reductions in the nano design, allowing Apple to offer a product that is less expensive to build and that has enhanced features compared to its predecessor," said Andrew Rassweiler, senior analyst and teardown services manager for iSuppli.

iSuppli's Teardown Analysis team determined that the Bill of Materials (BOM) comes to $58.85 for the 4GB version (retail price of $149) and $82.85 for the 8GB version (retail price of $199). In other words, Apple is selling the devices for more than double their hardware worth, which is exceptional even by Apple's standards. The BOM of the new 4GB nano is 18.5% lower than the $72.24 direct materials cost of the previous version of the nano released in late 2006. The new product has the lowest BOM of any member of the nano line analyzed by iSuppli. However, these values are estimates and do not include costs for manufacturing, software, intellectual property, accessories, packaging or research and development costs.

News source: iSuppli

Report a problem with article
Previous Story

Google's Stock Price Hits New High

Next Story

The Cleaner 5.0.0.130

41 Comments

View more comments

I know the cost of manufacturing etc was included, but dont forget to remember 'retail' costs on top of those too. Wages, rent etc all need to come from the difference between store's warehouse costings and markup costings.

It'd be nice to see what value the ipods have inhouse before store markups are added though.

seamer said,
I know the cost of manufacturing etc was included, but dont forget to remember 'retail' costs on top of those too. Wages, rent etc all need to come from the difference between store's warehouse costings and markup costings.

It'd be nice to see what value the ipods have inhouse before store markups are added though.

That still doesn't explain why it's nearly 20% cheaper to make, yet the same price as the previous model.

Kushan said,

That still doesn't explain why it's nearly 20% cheaper to make, yet the same price as the previous model.

Because they did that breakdown of the 2nd gen iPod nano a year ago? If they were to see how much a 2g iPod nano were to cost Apple today, I don't expect any drastic changes in cost. Besides, none of the BOM ever include R&D costs, marketing, technical support, or "frills" stuff that makes a good product a GOOD product.

dagamer34 said,

Because they did that breakdown of the 2nd gen iPod nano a year ago? If they were to see how much a 2g iPod nano were to cost Apple today, I don't expect any drastic changes in cost. Besides, none of the BOM ever include R&D costs, marketing, technical support, or "frills" stuff that makes a good product a GOOD product.

Yes and investments made by outside sources have absolutely zero bearing on money coming in to Apple.

dagamer34 said,

Because they did that breakdown of the 2nd gen iPod nano a year ago? If they were to see how much a 2g iPod nano were to cost Apple today, I don't expect any drastic changes in cost. Besides, none of the BOM ever include R&D costs, marketing, technical support, or "frills" stuff that makes a good product a GOOD product.

So you're saying that Apple spent 20% more on R&D, marketing and technical support for this generation of Nano than the previous generation? That they just happened to even up thier costs with the previous generation's profit margin?
OR is it possible that Apple is making more money because they know people are dumb enough to pay the price they ask?

dagamer34 said,
Because they did that breakdown of the 2nd gen iPod nano a year ago? If they were to see how much a 2g iPod nano were to cost Apple today, I don't expect any drastic changes in cost. Besides, none of the BOM ever include R&D costs, marketing, technical support, or "frills" stuff that makes a good product a GOOD product.

I would have thought all or the majority of the R&D costs would have been recovered in the preivous models. Yes the new model is smaller and the casing are all different but essientials an IPOD nano is an IPOD nano.

Torment said,

I would have thought all or the majority of the R&D costs would have been recovered in the preivous models. Yes the new model is smaller and the casing are all different but essientials an IPOD nano is an IPOD nano.

absolutley, the R&D costs on the ipod are going to be miniscule, and already made back by all the other ipods

JrDZ13 said,
Halo 3 has a 90% profit rate, even after R&D. Return on investment is more complicated than "think rip-off".

software is also not really comparable to hardware, as you relaly are just paying for packagin, once R&D is got back in software you are looking at almost pure profit

Just like Windows sheep like wasting processor cycles running antivirus software?

There's a cost to best-of-breed. Apple doesn't care to sell products to everyone. Just to people who have taste.

LTD said,
Just like Windows sheep like wasting processor cycles running antivirus software?

There's a cost to best-of-breed. Apple doesn't care to sell products to everyone. Just to people who have taste.


haha well you can spend twice as much doign it too.

p.s. anyone that thinks AV is a waste of processor is a waste of oxygen

LTD said,
Just like Windows sheep like wasting processor cycles running antivirus software?

There's a cost to best-of-breed. Apple doesn't care to sell products to everyone. Just to people who have taste.

LMAO...Thats the sheep mentality that Apple relies on!

Dont be taken in by the clever marketing, owning an Apple product does not automatically mean you have taste! Quite far from it!

excalpius said,
Exactly. Why is this front page "news" anyway? Honestly?
Because its Windows users that put the iPod in the mainstream.

I can understand some sort of price difference between production costs and actual retail value but more than double the price is just crazy. I wonder if people can buy directly from the OEM.

Tikitiki said,
I can understand some sort of price difference between production costs and actual retail value but more than double the price is just crazy. I wonder if people can buy directly from the OEM.

Apple IS the OEM.

Kushan said,

Apple IS the OEM.

Um, exactly. What part of Original Equipment Manufacturer do you not understand, Tikitiki? :P

of course the hardware is the cheapest.

apple are in the business of making money... if you can make a cheaper product, then it makes perfect business sense.

of course, the product should still work

The cost of R&D may be 'miniscule' in comparison to what a company is worth, but when the return of investment per unit expressed as a profit? Even if the cost was only us$5,000,000 thats still -alot- of product to sell just to recoup R&D before you even consider hardware costs, assembly costs, support, software and sales costs.

if they sell 5 000 000 ipods, which is extremely conservative, guess what thats $1 each now they have actually sold over 100 million from what i have read, even if it cost them 100 million for R&D thats only $1 /unit in R&D

do the math, you are looking at a few cents / unit in R&D

so wheres that extra $100 odd dollars coming from ????

Dear Friend,

I'm paul from chinese shop online team ,if you want to get small order online , you can take a moment to have a look to our website www.ChineseShopOnline.com and you will easily have a glance to our wide
collection of items, to have a more precise idea of what we do. This website is geat for ebay power seller or other reseller .
Looking forward to your early reply,hope we can start the business with
you.If you have any query,pls do not hesitate to tell me.

Best Regards
paul
------------------
www.ChineseShopOnline.com
Email:info@chineseshoponline.com

Commenting is disabled on this article.