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Inside the Third Gen iPod Nano
Posted by
Zonk
on Tue Sep 18, 2007 04:04 PM
from the peek-under-the-hood dept.
from the peek-under-the-hood dept.
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."
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Wait... (Score:4, Funny)
Re:Wait... (Score:5, Insightful)
Parent
Shock! Horror! MS Office costs 10c! (Score:5, Insightful)
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.
Parent
Re:Shock! Horror! MS Office costs 10c! (Score:4, Informative)
It's a little more complicated than the LEGO experience you seem to be describing...
Parent
Re: (Score:3, Insightful)
You've never actually done any product-level R&D, have you?
Wow, so for what iPod like products have you been on the R&D team?
It's a little more complicated than the LEGO experience you seem to be describing...
What I said was "I really doubt $90 of R&D per iPod goes into putting together $60 worth of electronics in a well put together package." I never said Apple just takes components and clicks them in place, just like I never said Red Hat just downloads source code and burns it to a CD.
Remember Apple needs to pay for marketing, product replacements, assembly costs, marketing, non-bulk shipping costs, and yes some R&D, and some
Re: (Score:3, Interesting)
maybe (Score:5, Insightful)
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.
Parent
Re:maybe (Score:5, Insightful)
Both parties believe they received the "better" bargain or they would not have traded. Of course a wise seller will offer a product at a price they feel will be the most profitable overall to sell at, balancing margin versus volume.
Nothing has an "intrinsic" value; only the value the seller and potential buyers would assign it. It will vary by person, time, and circumstance. Two people, one recently well fed at a nice restaurant and the other tired from working all day and skipping lunch would value a street venders hot-dog very differently.
Parent
Nonsense. (Score:3, Insightful)
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 situa
Re:Nonsense. (Score:4, Insightful)
Apparently GPs vocabulary was not the only thing that escaped you. GP gave two important reasons as to why the GGP's claim was nonsense. The economic transactions as you an I know them are not the same as those idealized in economic fantasy land (described by GGP). This is because the fantasy land assumption set is invalid in the real world. Namely 1) The actors are not rational 2) The actors do not possess complete and accurate information. If you extend this to rigid extremes then every 'situation' contradicts the axioms of fantasy land because you will never have perfect information. Ahh the blending of Heisenberg... As for GP's language. I do not think it was overly erudite.
Parent
Re: (Score:3, Insightful)
But are those other players "better"? Different people value different things, and people who buy iPods obviously value things that it offers. Things like good design, small size and good UI. Some people like products from Archos (for example) and for those people they make a better product than Apple does. Who is to say which product is universally superior to the other? Archos-supporeters might say that Archos has a
Re:maybe (Score:5, Interesting)
Parent
Call me back... (Score:5, Insightful)
Re: (Score:2)
Re: (Score:3, Insightful)
Re:Call me back... (Score:5, Insightful)
I don't think that this $59 is the marginal cost even, because the iSuppli numbers don't even include packaging, shipping, average warranty expense, retail mark-up and so on. In the past, they didn't even include the cost of the ear buds.
Parent
Re:Call me back... (Score:5, Interesting)
Parent
Re:Call me back... (Score:4, Insightful)
Companies hire iSupply to help them calculate how much a competitor's products cost, and if iSupply didn't know what they were doing, they'd be out of business by now.
It's not their fault that dumb readers make naive conclusions.
Parent
Re:Call me back... (Score:5, Insightful)
Parent
Don't Forget (Score:3, Insightful)
I usually stop reading when I see "iSuppli."
Re: (Score:3, Interesting)
I guess if they think it's true they should go into business building whatever it is for a fraction of the cost. Funny how none of them ever do.
Re: (Score:3, Interesting)
Some people seem to have that problem. I remember a discussion about the price of a Canon camera. Someone decided to do a little amateur analysis and asked for help. A manufacturing expert and a logistics manager happened to be reading the same forum and replied that his estimates were pretty far off the mark and his methodology was wrong. Naturally he got indignant instead of listening to two pe
Re: (Score:3, Informative)
Manufacturing Costs (Score:4, Informative)
Uninformed guess: (Score:5, Funny)
Marketing: $25 000 000
Logistics: $5 000 000
Steve's Salary: $1
Bringing a new iPod to market: $40 000 000+
Having your CEO cost less than your annual paperclip budget: priceless
Most things money can by; and if you have enough of it: you probably buy Apple.
Parent
Re: (Score:2)
I know his *salary* is nill, gotta keep the tax man at bay. But have to maintain his level of perks.
Re: (Score:3, Insightful)
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 necessit
Who cares? (Score:3, Interesting)
News Flash! (Score:5, Funny)
It is neat to see that the Nano has the same guts as the "classic" now, though.
Re: (Score:2, Informative)
Worthless Numbers (Score:5, Informative)
Yeah, but the price dropped too... (Score:5, Informative)
Re: (Score:2)
However this is totally irrelevant when one have no idea what the other players cost to make and sell for, and even that is rather unintresting.
Only thing I care for is what I get for the money I have to pay, and in that regard there are many players which offers more value for your money than Apple (and not only more value but also better players, or lower prices.)
The devil is, as always, in the details... (Score:2, Informative)
"ISuppli's estimates don't account for nonhardware costs, including software development, intellectual property, packaging, final assembly, and distribution."
and
"When you look at all these other costs, which you can't see from a teardown, then you begin to see why Apple's gross margin tends to be in the 30%-to-35% range historically."
Just to save folks a trip and an excuse...
As is usual in such things, the cost of the hardware itself is not the majority of the cost of the device.
Cost of parts, not cost of development (Score:2, Insightful)
Real cost (Score:2, Insightful)
Profit margins are irrelevant (Score:5, Insightful)
Summary changed quotes to make them false (Score:5, Informative)
Business Week:
I have one. (Score:5, Informative)
Including it's shortcomings we are happy with it overall. Being able to personalize the player by engraving the back actually was a selling point. It takes a dumb electronic device and turns it in to a sentimental keepsake.
Re: (Score:3, Informative)
Re:I have one. (Score:5, Interesting)
This is a little tidbit of info, that I thought some of you might find interesting. Coverflow was originally coded [arstechnica.com] by a chap with the username of 'Catfish' over at the Ars Technica Macintoshian Achaia forums, as a little project to play around with OpenGL. It was basically a standalone application that allowed you to browse your music collection with visual album covers, and would then launch iTunes and play that album (no individual song choices back then). People loved it, because once again it felt like you were thumbing through your stacks of CD's (or Vinyl). Development was brisk at times, and at times it seemed like nothing was happening, but the concept was awesome.
Then 'Catfish' just up and disappeared for a couple of months, and when iTunes with 'Coverflow' integration was released, he returned amid astonished guffaws from the rest of us.
Not only did Apple love the concept, they bought the name to it as well.
With the amount of Coverflow integration going into Apple's products, I really hope that he was well compensated for his little learning experience.
That's all I got.
Parent
Re:I have one. (Score:4, Insightful)
Bah, this is slashdot. We know you don't have a wife and that 'shoes' was a typo for porn!
Parent
More Bullshit Profit Analysis, Only For Apple (Score:3, Funny)
The cost-of-parts teardowns of Apple gear are tiresome. They don't take into account the cost of software development or product design, let alone warranty fulfillment and legal and localization, shipping, retail sales, demo units, so much else goes into a product like this other than just a bag of parts. Most of the work that brought us the new iPod nano happened inside heads at Apple. And being a publicly-traded company, you can plainly see what Apple's profits are, and they are always 25-30%. That includes really high-profit sales of software such as Final Cut Pro, and really low-profit sales such as personal computers. Yeah Dell wants that margin but they're not willing to work for it, they gave up all the high-profit software parts of their business to Microsoft. But when you combine Microsoft and Dell's profits on a PC purchased from Dell it matches up to Apple's profit on a Mac.
Why do the vast majority of all music players ever made suck so much if all you have to do to make an iPod is buy $85 in parts and hire someone to put it together? Why didn't the iPod nano with video come from Microsoft six months ago as Zune 2 while Apple was doing the iPhone? $85 is less than what Microsoft pay per unit to fix each Xbox.
And calling Apple a monopoly in music players conveniently ignores not only that there are hundreds of brands of music players but that every large manufacturer other than Apple is part of an anti-consumer cartel led by Microsoft, a convicted abusive monopolist. All the other music player manufacturers have tied one of their hands behind their backs and chained the other one to Microsoft. They are a failed monopoly that left one honest competitor with a exponentially better product.
The FUD that is going around today is just amazing. For the same US$149 as an iPod nano with video, you can buy a remaindered overstock Zune, one year old, sitting in a box with the battery aging, and from a two year old design, and requiring you to BUY another Microsoft product (Windows) just to make it work, and man that thing is HUGE.
iSuppli constantly wrong (Score:3, Funny)
Re: (Score:3, Informative)
Re:Gross margin borders on gouging (Score:5, Funny)
Parent
Re: (Score:3, Informative)
Re: AC power mp3 player? (Score:3, Insightful)
Just let the battery die. (Score:3, Funny)
Re: (Score:3, Informative)
Electric razors don't usually have the same kinds of batteries as MP3 players, and they also have a much higher power requirement.
Some MP3 players need more power than others. But they pretty much all have Li-Ion batteries rather than the NiCad or NiMH batteries that you find on most consumer electrics.
Another option is an AAA- or AA-powered MP3 player (yes, there are some) with one of those in-the-case battery replacements that provide 1.5 or 3v through a dummy battery and