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Inside the Third Gen iPod Nano
ahess247 writes "When the leaked photos of the 3rd-gen iPod nano first hit the Web it quickly took the nickname 'little fatty,' but fat could be better used to describe Apple's profits on the project. BusinessWeek reports that a teardown analysis by iSuppli finds that it costs Apple only $58.85 to build the 4-gig iPod nano, and $82.85 for the 8GB version. The analysis also reveals some of Apple's suppliers, about which it is usually very tight-lipped. Synaptics is back as the supplier of the click-wheel technology, beating out Cypress Semiconductor which had it previously. Also of note: The same Samsung CPU chip that powers the video and audio in the nano is being used in the iPod Classic as well."
When you have a better analysis of what it costs to develop the software, the amortized cost of engineering and other non-hardware costs (marketing, managing, distribution, etc) so that we can see a margin. Those numbers (58.84$) are totally irrelevant and only serve to misinform. Sure, you could buy the pieces that price, but for what it's worth...
Of Code And Men
You mean that the total cost of building a product is just the sum of its components, excluding research/development, manufacturing costs, shipping costs, and marketing costs? Shocking!
You mean an Apple product is overpriced?
That's one way to look at it, in the context of the whole marketplace. Another way to look at it is that they've priced it according to the amount people have told them they're willing to pay. So if it were cheaper, it would be underpriced for that particular offering from Apple.
The theory of relativity doesn't work right in Arkansas.
Am I supposed to be shocked that there's a significant markup beyond the price to assemble the product? Don't, for example, the retailers need to make a profit (and yes, Apple is one of those retailers, which is why they have a store)?
If you are going to stir us up why not include the costs and markups of other products as comparison? Do you have any idea what the markup is on clothing for example (easily 1000% or more, depending on the label)?
Isn't capitalism about charging what the market will bear? If the price is too high it won't sell, and if you prefer to pay less but still want an ipod there are plenty of options (Apple's refurbished store sells last year's model with warranty for about 60-70% of the price)
And no, I don't own an iPod and have no particular allegience to Apple.
The summary is not correct. The article is talking about the cost of the parts, not the cost of producing the iPod. There can be much more to the cost of development than just the cost of the parts. For example, what is the cost of developing software? Obviously it's much more than the cost of the physical medium.
When YOU can build one for $58.85, then this becomes relevant. I couldn't build one for $5885.00 without hiring somebody else to do it for me.
except for Apple ownership. Each person needs to decide if the retail price represents a good value to them personally. If it doesn't, don't buy it. It doesn't matter if it costs Apple 1 cent to manufacture the product. Thus is the nature of freedom. They can ask whatever they want, and you can pay it or not. FYI, the same thing applies to your salary.
There's also the retailer's cut. Retailers taking 60% of the final price is not unheard of.
I usually stop reading when I see "iSuppli."
Like parent says, when you buy any electronic gizzmo you're not just paying for the parts. You're paying R&D costs, distribution costs, profit for share holders and the stores etc.
It is quite common for electronic products to sell for apperox 5x the cost of the raw components.
Engineering is the art of compromise.
You're not offering offer a fair analysis of an economic situation if you reason about it axiomatically, from an impoverished set of axioms that assume that the parties to every exchange are perfectly rational, that what they value doesn't change by the act of purchasing, and that they possess perfect information. All you're doing is demonstrating that you have an unempirical adherence to the axiom that trade only happens because both parties wanted the trade to happen, and that whenever you see some situation that contradicts it, you will reject the existence or straightforward description of the situation.
You can always preserve your belief in a given claim by refusing to believe the things that would contradict it.
Are you adequate?
Bah! Why didn't I preview!! Shows! Shows! She likes to watch shows not shoes! What is a TV shoe any way?
Bah, this is slashdot. We know you don't have a wife and that 'shoes' was a typo for porn!
The fact that Apple can still sell millions of these at at such a large return indicates not that Apple is greedy
Apple may be greedy, but the fact iPods sell for so much is a quality of the market, not Apple. Apple has a great product and people are willing to pay more for it and its related items (iPods, iTunes, iPod-related devices made by 3rd parties, etc, all of which a user buys into). An iPod is a luxury item and it is being sold for what the market will bear.
Gasoline, however, has become a necessity, and the gouging oil companies need to ease off. This will allow more people to suck up the last of the gasoline and the world will then be powered by people dancing to their latest iTunes hits. QED.
It may not be the answer you'd like, but I'd say that if such an MP3 player does indeed exist, it would probably more or less have to be some kind of PC anyway (otherwise, there'd be no point in even making a "large" one, if one could suffice with a portable MP3 player constantly hooked up to the power jack). So if you're going to get one anyway, why not just resign yourself and use a retired PC? It's not as if it would be more expensive than buying any sort of dedicated, AC-hooked MP3 player anyway.