RSSTeardown Reveals 41.6% Markup for New iPod Nano
By Scott M. Fulton, III | Published September 19, 2007, 12:48 PM
While the top-of-the-line 8 GB Apple iPod nano still retails for $199, the completely revised new model costs Apple about $7 less to build than the previous edition, based on a preliminary teardown analysis by iSuppli. With a bill-of-materials at $82.85 per unit, according to iSuppli's estimate, Apple enjoys a nearly 42% markup in retail price.
Of course, that's not the company's wholesale margins for its resellers, though a great many units are sold through Apple Store outlets and through Apple.com - where it can feel the full benefit.
Though iSuppli has yet to reveal the full report, the company's announcement this morning is that its reverse engineers discovered a very, very different system on the inside than the previous generation. Gone are parts from NXP Semiconductors and Cypress Semiconductor (which provided the display for the previous model), and in their place are parts from, among others, Synaptics (which makes a triumphant return), Dialog, Intersil, and for the first time, Micron Technology.
That latter discovery came as a shock, especially because "Micron" appeared emblazoned on the nano's NAND flash memory. Samsung was believed to have scored a major coup with the previous generation nano, by providing its NAND flash along with core semiconductors at a bundled discount. But this time, while Samsung remains the supplier of the key SoC chip (estimated Apple cost: $8.60 per unit), Houston-based Micron gets the prize by supplying the most expensive part: 8 GB of flash at an estimated $48 cost per unit, or 4 GB at $24.
In a statement this morning, iSuppli senior analyst Chris Crotty said he estimates total iPod nano shipments this year (including the previous models) to reach 23 million, and to keep climbing to 27.9 million throughout next year.
iSuppli information regarding which parts are included in electronics is of value to me as a stock investor.
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|I don't understand the reaction here....
If you think the price is too high, then (a) don't buy it. On the other hand, if you feel that lots of people are buying it anyway, and that therefore Apple is making a good profit, then buy their stock!
b****ing that Apple is making too much profit is stupid.
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|The 42% are totally justified, reasons are:
- no FM radio
- no Voice Recorder
- smaller screen
- no DivX video
- no UMS (can't be used as flash drive)
- must use iTune and be shackled with it.
It seems like these non-features are very attractive for a lot of people who are willing to pay to not having a feature.
Only a fool would pay less for more features by buying a non-iPod player.
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|lolwut?
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|they're not selling electronics, they're selling candy. anyone with a sweet tooth will have to have it.
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|Amen Brother
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|Markup:
a. the amount added by a seller to the cost of a commodity to cover expenses and profit in fixing the selling price.
b. the difference between the cost price and the selling price, computed as a percentage of either the selling price or the cost price.
How many units at that price do you think will have Apple break even? At 41% markup (which is exactly what it is) - they'll be making pretty high profits despite R&D and Marketing/Distributions costs in no time.
That means if 1 million people buy them, Apple would still show more profits in their books vs. their competitors who are either selling closer to cost price or buying parts for more money.
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|Fact Correction: Micron Technology is based in Boise, Idaho, not Houston.
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|Damn straight. Used to work for 'em. Management was....interesting.
But that was back in the late 90's. I'm *sure* it is better now. It couldn't hardly be much worse. :p
Co-workers were great, pay was decent. Supervisors were completely incompetent. But I suspect that is actually the case in most businesses.
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|Business as usual, nothing to see here people.
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|Why is iSuppli wasting time and money on this crap? Everyone know Apple's products are overpriced, and have far less features than it's competitors. But it's marketings blow the competitors into the water. The so call estimate cost is bull, it's a lot less. Customers can get this price without buying bulk.
And this is from their senior analyst? They might need to replace him.
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|Who cares? If you think that the iPod is overpriced then DON'T BUY IT! That will drive the price way down or kill the product.
iSuppli can sit there and crunch numbers until the cow comes home, but what good does it do? Other than to make a few ignorant people angry. Oh wait - that's their intent - rile the sheep and cause dissent. I forgot about the aim of most media.
It's called a FREE MARKET ECONOMY folks - and if you don't like the price - don't buy the merchandise. There are plenty of other fish out there that are a lot cheaper and probably provide JUST as nice an usability experience.
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|Thats true. Thought, i think theres lot of people who do care, one way or the other, for what ever reason. I personally dont care, as iWhatever arent exactly the sort of products i want spend my money on. I really dont understand whats up with these "iStuff" anyways. Apple stuff usually reminds me of the words "cheap white plastic".
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|Amen. If the price is too high, don't throw hot air at it, throw your money elsewhere.
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|Normally, I would agree 100%... BUT...
The sheep that do pay the big bucks for the iPod because of it's "coolness" factor need to be woken up to the facts about WHAT they are buying and the crap that the Apple does to it's customers.
Case in point... My daughter (who's 10) wants an iPod for XMas... When I asked WHY she wanted one, the only answer she could give was because other kids in her school have them and she's a social reject because she doesn't have one. Other people I talk to about wanting iPods basically say the same thing. Not once have I heard because of it's features, convenience or anything else. I applaud iSuppli for bringing this to the public's eye (not that it will go that far, but still).
In response to the post, it's not as always as simple as "if you don't like the price, don't pay it". A lot of the time, it's trying to open someone's eyes to the fact that the cool factor doesn't always figure into the price tag.
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|That doesn't take any consideration for R&D, marketing, and support costs. those folks don't work for free and tv/magazine ads aren't freebies either, so saying it's all markup is a stretch.
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|what support?
"oh the hard reset didn't work? take it back to pos. oh they told you to go through us? thats a shame."
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|Overpriced crap, as all their other hard/soft-ware.
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|What's your definition of "overpriced" and why do you claim it's crap?
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|"What's your definition of "overpriced"..."
iPods are higher priced than most (if not all) of their competitors...
"and why do you claim it's crap?"
Because it has the least amount of features compared to most (if not all) of the competitors.
Edit:
BAM!
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|He has a point. I still use a 2GB Creative MuVo I bought over 2 years ago. At the time, a 2GB iPod cost considerably more and had far less features, and today nothing has changed. You can find plenty of alternatives that have more storage space, more features, and cost less than an iPod. I don't plan on buying an iPod anytime soon, but if YOU want one, then by all means go ahead and buy it, just don't pretend it's not over priced and lacking in features. I don't have anything against the iPod, but idiot fanboys piss me off when they act like their s**t don't stink because they got a shiny iPod. Meanwhile Steve Jobs is laughing all the way to the bank.
Oh and to those of you whining about R&D and advertising not being calculated into the cost, get over it. The iPod is on what, 8th or 9th generation now? I'd say R&D is more or less out of the equation at this point. And about advertising, well they choose to do that. You'd think by this point the iPod would be as ubiquitous as everyone thinks it is, they wouldn't need to advertise it so much anymore. A profit is a profit, whether you CHOOSE to spend it on more advertising in an attempt to create even more profit or not.
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|You really should have followed that one up with a...
"BAM!"
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|Why does iSuppli even bother--when the prices apple pays are likely negotiated differently per each component, and each generation refresh? This is all very closely guarded information under NDA between Apple and suppliers, and therefore isuppli might as well make numbers up. Even if Apple had a competitor that had the same marketshare as Apple, it's 100% likely that competitor would be paying different rates...
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