Ipod Nanos, despite the low storage capacity, have taken off quite well, and have fit the mp3 price market quite well, with average retail being around $199. The actual cost of these little guys to manufacturer is estimated to be at around $100, with $70
of hardware. Although it seems the article in question is sort of looking down on the price, as if it could be sold cheaper, much like with the Intel cost of CPUs vs pricing I don't see this as a bad thing at all. When you take into consideration R&D, dead on arrival and initial deployment costs, there's a lot more that goes into the final product than just static costs. More than half of the hardware cost of the Nano alone is the storage, which is manufactured by Samsung. Flash is much cheaper than ever, but is still pricey. Nano may be expensive, but all high-end portable media players are. The Zen, for instances, is a fantastic device – with a fantastic price.