updated 09:15 am EST, Thu February 24, 2005
iPod shuffle margins
IDC has released an analysis on Apple's iPod shuffle margins, saying that Apple's on each of its iPod shuffle it sells , according to IDG News Service. The market research firm said that "Apple makes a healthy 35 per cent to 40 per cent profit on each player sold, and stands to make even more from iTunes music purchases and expected drops in flash memory pricing." Currently, IDC says that iPod shuffle's flash memory, made by Samsung, is the most expensive component, costing $37.50 for each 512MB shuffle--or about two thirds of the estimated total $59 cost of the player. The product retails for $99, thus the product margins are about $40 or about 40 percent; however, its overall margins are reduced by its wholesale cost to both its own retail stores and resellers.
"Apple is making very, very good margins on the shuffle," Sylvester said. "We based our cost analysis on fourth quarter production prices, which would have been when they sourced (the components). At some point they'll switch to cheaper flash and the margins will improve."
IDC said that the flash memory component of the 512MB shuffle will fall to $31.25 during the current quarter. IDC said that the second most expensive component is SigmaTel's music decoder chip, which supports MP3 and Windows Media Audio files (as well as AAC and Audible music formats) and includes a digital-to-analogue converter, a controller for the USB2.0 interface, SDRAM (synchronous dynamic RAM) memory for buffering, and the headphone driver amplifier. The report says that chips also includes analogue-to-digital converter for voice recording, a driver for an LCD (liquid crystal display) and an FM tuner, but that these are not currently leveraged by the shuffle.