Apple's iPod nano earns the firm a massive margin

By on September 19, 2007, 11:34 AM
Market research firm iSuppli has issued a tear down analysis of the iPod nano, finding a completely new design that, despite the addition of a video screen, boasts the widest margins yet for the line. According to the report, all the parts inside cost Apple $58.85 for the $149 nano with 4 gigabytes of storage capacity, and $82.85 for the 8GB version priced at $199.

"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 analyst Chris Crotty says one way Apple has driven down costs has been to play various suppliers against one another. There are a few new suppliers, most notably US memory chip maker Micron. That doesn't mean, however, that Apple has ditched its usual suppliers of flash memory, including Toshiba, Hynix Semiconductor, and Samsung. Other component suppliers making their nano product line debut in the latest version include Dialog Semiconductor and Intersil, while Synaptics returns to the iPod after an absence.

While iSuppli's figures do not take into account non-hardware costs, including software development, intellectual property, packaging, final assembly, and distribution, the apparent drop in manufacturing costs certainly represent a real boon to Apple's bottom line, considering the nano is generally thought to be the best-selling member of the product line.

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