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New iPod nano costs just $45.10 to make

updated 11:10 pm EDT, Mon September 27, 2010

iPod nano seen costing 45 US to build

Apple's sixth generation iPod nano costs just a third of its selling price to make, iSuppli estimated in a cost breakdown today. The bill of materials and manufacturing for an 8GB iPod nano reach only $45.10. The device is the second least expensive iPod to make so far, being beaten only by the fourth generation $40.80 nano.

In spite of the touchscreen's seeming cost additions, it's not the most expensive part and should cost $11.50. The 8GB of Toshiba flash memory and 64MB of Samsung RAM are the most expensive at $14.40. An ARM processor at the core, made by Samsung but possibly designed by Apple, should cost about $4.95, and the combination of the Cypress touchscreen controller, Cirrus Logic audio DSP, STMicro accelerometer, Silicon Labs FM radio tuner and Intersil video controller cost just $3.49. The enclosure, power and pack-in components make up the rest of the parts.

Cypress' presence is unique as it has never had a place in an Apple touchscreen device; Broadcom and TI have usually handled iPad, iPhone and iPod touch players. Palm (now HP) was one of Cypress' biggest customers until now, supplying the Pre Plus and Pixi Plus with larger touch layers.

STMicro's accelerometer is purportedly one of the smallest ever seen, at just 2mm (0.08in) across, and plays a strong role in Apple's ability to preserve its Nike+iPod functionality despite the iPod nano being half as large as before.

iSuppli's estimates don't include marketing, research, retail and many of the other costs associated with producing the iPod, making the raw manufacturing cost only a partial picture of Apple's decision to price the MP3 player at $149. It typically prefers a gross margin percentage in the mid-30s, which is higher than the industry average.




by MacNN Staff

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Comments

  1. Paul Huang

    Joined: Dec 1969

    -2

    Of course, when the worker's monthly wage is...

    Under US$300.

  1. TheBum

    Joined: Dec 1969

    +4

    Pointless

    I've never seen the point in these breakdowns. They leave out a lot of expenses: marketing, distribution, support, etc.

  1. leamanc

    Joined: Dec 1969

    +2

    Good for them. Seriously.

    As others have mentioned, the material and components cost does not take into account R&D, advertising, marketing, etc.

    But I just got a 16 GB green nano and I love it. I thought that $179 was a totally fair price for how nice the thing really is. Would I love it even more at $99? Sure, but I'm not feeling ripped off at all. It's a really awesome device and worth every penny, IMO. If that markup helps Apple pump some R&D dollars into their next great invention, then that's even better.

  1. dliup

    Joined: Dec 1969

    +3

    iSuppli estimates

    iSuppli estimates costs $0.00 to make. Because it's full of hot air.

    (Well, since we don't need to include manufacturing, R&D, software, their services must be free!)

  1. legalproblems

    Joined: Dec 1969

    0

    'Just' another compilation

    Sorry but for me, the word 'just' in the headline turns an informational article into a link-bait opinion piece.

    The article would be a lot more interesting and informative if, instead of 'just' compiling other articles, you were to go the extra mile and find the total cost to market. That is the burning question a journalist ought to be after and your readers want to know.

    FYI: A piece of gum costs less than a cent to make. Five are sold for a dollar. I would also love to know where the other 95 cents goes...

  1. wrenchy

    Joined: Dec 1969

    -4

    As the Apple Fans say,


    you get what you pay for. A $45.10 piece of junk.

  1. testudo

    Joined: Dec 1969

    +2

    Re: Pointless

    I've never seen the point in these breakdowns. They leave out a lot of expenses: marketing, distribution, support, etc.

    Then why do you bother reading them or commenting on them?

    If anything, the pointlessness of the breakdowns comes from MacNN's insistence on publishing them.

    iSuppli does not release these numbers as some type of "Ha! You suckers! You're getting ripped off!" article/posting. There are people who actually care what makes up any device (including computers, MP3 players, Tivos, etc). They push them out for all sorts of devices made by all sorts of companies. Did you complain when they released the parts list/cost sheet for the Zune HD? Oh, probably not.

    If your company, for example, is in the business of repairing iPods, you'd like to know beforehand what parts are in the damn thing, wouldn't you? As you would like to know if you had to fix a broken MacBookPro screen.

  1. Alfiejr

    Joined: Dec 1969

    -2

    Do It Right, iSuppli

    if iSuppli wants to be taken as authoritative, they need a full analysis, not just parts and labor. this isn't a simple car repair job. there is the capital investment recovery (the factory), overhead, and profit for the Chinese manufacturer. and there is the R&D, overhead, distribution (incl. Apple retail stores), and marketing (lots of it) for Apple.

    geeks make lousy economists.

  1. testudo

    Joined: Dec 1969

    +1

    Re: Do It Right, iSuppli

    if iSuppli wants to be taken as authoritative, they need a full analysis, not just parts and labor.

    Um, they don't include labor. It's a parts breakdown. Pay attention.

    this isn't a simple car repair job.

    Yes it is. iSuppli is informing their customers what parts are in the iPod. Repair shops could care less what Apple spends on getting the product to market.

    there is the capital investment recovery (the factory),

    Apple doesn't pay any of this, so why include it anyway? They contract out to Foxconn and the likes so they don't have to have investments in factories, labor, etc. They pay someone else to deal with that.

    overhead, and profit for the Chinese manufacturer. and there is the R&D, overhead, distribution (incl. Apple retail stores), and marketing (lots of it) for Apple.

    And what does any of that matter to anyone but Apple and analysts trying to figure out how much margin apple is making? Such a report is more than useless to most anyone, and that information can be got from Apple anyway so why bother doing it also?

    However, a parts breakdown is useful for many a companies who may be in the business of repairing iPods and other devices. Knowing the parts means you can place orders (if possible) on replacement parts. You can also know how much something will cost when estimating a repair job.

    This also comes into play in determining whether you don't want to get in the business. For example, the parts costs for a Shuffle, plus the difficulty in servicing it, would probably make it far less tempting for people to offer to repair those. However, a Nano, touch, etc, have a higher price up-front and people would be willing to spend the money to repair it rather than just plunk down another $300 for a new one.

    Again, the grand cost breakdowns iSuppli provides are parts lists for nano parts, mainly for repair shops and the lot. The

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