While only Apple knows the exact cost to build the video iPod, a market research firm has dissected the device and came up with estimated bill of materials of $151. With a retail price of $299 for the 30 GByte version and $399 for the 60 GByte model, it looks like Apple is raking in a huge profit, but there is much than meets the eye.
iSuppli did a “teardown” and put a price tag on every component. Chris Crotty, Senior Analyst for Consumer Electronics with iSuppli, said that the $151 is the total Bill-of-Materials (BOM) cost or simply just the hardware costs. The BOM takes into account an estimated discount rate for each component and typically large companies like Apple can negotiate a substantial discount because of their buying power. Crotty points to their recent teardown of the iPod Nano where they estimated Apple received a 30 to 40 percent discount on Samsung’s flash memory.
Andrew Rassweiler, Manager and Senior Analyst of iSuppli’s Teardown Service, has managed well over a hundred teardowns of electronic gear. He told us that, unlike other gadgets, every new product from Apple seems to have a completely different sign approach and they are usually surprised when they open up the devices. “We thought the new iPod would be a Nano with hard-drive, but we were wrong. There are some common chips and the click wheel is the same, but everything else is different,” said Rassweiler.
its the component cost alone…There are other costs involved…in general most companies will have 30% or more profit margin and i think the ipod is no different. Certainly they are nowhere as bad as intel.
apple justfied this in an interview a couple of months back saying that while they made a huge margin on the players, they were, infact, incuring loses with music sales over iTunes. Hardly believealbe, but thats what they said.
If people dont like the pricing, then dont buy an apple.
And as a buyer, I will not care how well the company is doing. So, if they are trying to justify the price for buyers or prospective buyers, it is useless.
[Am i asking more]
