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The Profit Margin on the iPod nano

Posted by Zonk on from the white-gold dept.

Ant writes "BusinessWeek Online reports that researcher iSuppli took a look inside the iPod Nano to find out how much Apple is making off it, and who supplies its parts. From the article: 'Apple has sold some 16 million iPods in the first nine months of fiscal 2005, and 21 million since its inception. Thus far in fiscal 2005, the iPod has brought in $2.6 billion in revenue, accounting for about 25% of Apple's total.'"

9 of 246 comments (clear)

  1. Apple paving the way to thin consumer devices by xtal · · Score: 5, Interesting

    I hope the extreme reception the Nano got (mine is on the way) is a wake up call to Palm et. al they better get back to their roots and make some THIN and LIGHT devices you can actually easily take with you.

    No input on the Nano is crummy, but it's form factor makes it much more likely I will take it someplace.

    --
    ..don't panic
    1. Re:Apple paving the way to thin consumer devices by AGMW · · Score: 5, Interesting
      No input on the Nano is crummy, but it's form factor makes it much more likely I will take it someplace.

      My wife just got a 6GB iPod Mini and it's terrific. Also picked up one of them iTrip doohickies too, and it's excellent for using in the car. Shame it's illegal in the UK really!

      Now what with more and more (top end) car manufacturers building Bluetooth into their cars for Hands-Free Mobile use, using the Stereo, why not have a "bTrip" (er - "iTooth"?) that connects automatically to the car Stereo as well. That'd sure be neat!

      Build the BlueTooth into the iPod/iNano/iVimto and you presumably don't need the USB connector anymore either! Maybe permit swapping songs with other iPeople on the train etc, or even listen in to whatever other people are playing?

      --
      Eclectic beats from Leeds, UK
      handmadehands.co.uk
  2. There might be more to it than the cost of parts by jockm · · Score: 4, Interesting

    It would be nice if they factored in the cost of design, development, and manufacturing into that cost. I have worked on consumer electronics projects in the past, and the rule of thumb was adding $1 to the Bill-Of-Materials adds $4 to the retail price. Still it doesn't surprise me that the profit margin is high.

    --

    What do you know I wrote a novel
  3. Apple Brand by mysqlrocks · · Score: 5, Interesting

    Even if Apple didn't turn a profit on the iPod the benefit to the Apple brand from the iPod has been huge. People will be more likely to by other Apple products because Apple is "cool" again.

    --
    Bradley Holt
  4. Necessary to be an innovator by Karma_fucker_sucker · · Score: 4, Interesting
    Historically, Steve [Jobs] won't accept anything less than 20% gross margin on any product," says Creative Strategies analyst Tim Bajarin.

    To pay for the R&D, marketing, etc ... I'm surpised that Jobs doesn't demand a higher return.

    I'm wondering if Apple will go the way of Sony. Innovating firms have a tendency to be eaten up by firms who copy and then sell for a lower price. The only way to stop copiers is to create a closed format - basically kill competition before it happens - or to keep innovating to stay ahead of the copiers - easier said than done.

    --
    Evil people don't think they're evil. - George Lucas, Making of Ep III
    1. Re:Necessary to be an innovator by Ingolfke · · Score: 4, Interesting

      Innovating firms have a tendency to be eaten up by firms who copy and then sell for a lower price.

      -cough- Dell -cough-

  5. Re:Too bad that's so simplified by TeamSPAM · · Score: 5, Interesting

    I would agree with the parent. The only hardware that seems to be sold at a loss are gaming consoles and cell phones. The console makers do it because they assume they will make up the loss on game sales. The cell phone makers aren't selling at a loss, it is the providers that base the loss on the length of the contract. And the providers only seem to be giving the crappy phones away. The good cell phones will still cost around $200. Profit on the hardware is why Apple won't offically release a version of OS X for generic x86 hardware. There's not enough money in it for them if the hardware sales are missing from the equation.

    --
    Brought to you by Team SPAM! where we believe: "Information in the noise!"
  6. Re:The part of the article that applies by Alex+P+Keaton+in+da · · Score: 4, Interesting

    It doesn't say what the wholesale price is... Who is making the profit, the reseller/retailer of Apple. If Apple is wholesaling them for $110, their profit is different than if they are wholesaling them for $150...

    --
    And All I Ask is a Tall Ship And a Star to Steer Her By
  7. Re:Engineering costs? by sammy+baby · · Score: 4, Interesting

    True, but if your fixed costs are high enough, your gross profit margin won't be able to cover it, so they still factor in.

    (I mean, let's not kid around, there's no way in hell Apple is gonna fail to make its fixed costs back on this one. They'll probably do it in the first week.)