Analyst tears down new video iPod

Apple's revamped video iPod may produce high margins for the company, according to a tear-down of the device performed by analyst Craig Berger of Wedbush Morgan Securities. The tear-down revealed potential gross margins between 45 and 50 percent on Apple's revamped iPod video, with consideration for continued hard drive price drops, according to AppleInsider. "Apple should see strong gross margins on these devices in the mid-40 percent range, per our [bill-of-material] cost estimates," said Berger. "Apple is not scaling the capacity of the iPods that fast, and with the hard drives used in the iPods getting cheaper as time goes on, Apple can lower the price point on its 30GB iPod while still maintaining gross margins."

The analyst also predicted that PortalPlayer would keep its socket in the new video iPod, which he confirmed upon dissecting one.

"We do see both the PortalPlayer MP3 processor and the Broadcom video processor chip inside this device, consistent with our prior expectations that this device would remain a discreet two-chip solution for the time being," said Berger.

Apple made few hardware changes beyond its previous video iPod, according to Berger, but did update the power management chips in its new video iPods and suspects that the Cupertino-based company is still likely working to launch its "true" video iPod by early 2007.

"The lack of hardware changes implies that this device is a short-term, stop-gap device intended to buy Apple more time until it is ready to launch its true iPod Video later this year or early next year," said Berger. "In the forthcoming 'true' video iPod, PortalPlayer and Broadcom could maintain their supplier status."

Filed under: iPod