New iPod Shuffle Contains $22 Worth of Parts

[MacRumors]

http://www.macrumors.com/images/macrumorsthreadlogo.gif (http://www.macrumors.com/2009/04/13/new-ipod-shuffle-contains-22-worth-of-parts/)

BusinessWeek reports (http://www.businessweek.com/technology/content/apr2009/tc20090410_507831.htm) on a teardown of the new iPod shuffle by research firm iSuppli, revealing that Apple's diminutive player contains approximately $22 worth of parts.All told, the cost of the shuffle's components, the headphones, and the packaging it ships in comes to $21.77, according to iSuppli's estimates. That's about 28% of the device's retail price. The smaller the component cost as a percentage of price, the higher the potential profit. This suggests the per-unit profit margin on the shuffle is higher than on other iPod models. The component cost for the first iPod touch released in 2007, for instance, amounted to about $147, or about 49% of its $299 retail price. The component cost of the third-generation iPod nano, also released in 2007, amounted to about 40% of its retail price.According to iSuppli's analysis, over half the cost comes from two Samsung components, the main controller chip and the 4GB of flash memory at approximately $6 each. The battery, capacitors, and resistors in the new iPod shuffle were also discovered to be remarkably small by industry standards.The device contains a tiny lithium ion battery that costs $1.20, and that Rassweiler describes as "the smallest we've ever seen." And for a company that doesn't ignore the tiniest of details, the most mundane of components are the most advanced available. The device's so-called passive components - capacitors and resistors - are unusually small. Known by their numeric label 01005, which in electronics shorthand describes their dimensions in millionths of a meter, they're about the size of a grain of salt and cost fractions of a penny each. But they're half the size of what had previously been considered the smallest device of their type, those labeled 0201.iSuppli's calculations consider only the actual parts of the device and do not include research and development, manufacturing, distribution, and patent royalty costs.

Article Link: New iPod Shuffle Contains $22 Worth of Parts (http://www.macrumors.com/2009/04/13/new-ipod-shuffle-contains-22-worth-of-parts/)

[PlaceofDis]

.iSuppli's calculations consider only the actual parts of the device and do not include research and development, manufacturing, distribution, and patent royalty costs.

which, are probably some of the larger costs that are being recouped with its profit margin.

[stephengiem]

i hope this interesting research study and man-hours will lead to the price reduction of ipods in the future.

[YanniDepp]

which, are probably some of the larger costs that are being recouped with its profit margin.

Exactly what I was going to say. There's a hell of a lot more money involved in making these than the raw material costs.

Don't forget the costs for heating and lighting the Apple Stores, and paying their employees.

[ThunderSkunk]

Way to stay in business, Apple!

[Small White Car]

Why are we still linking to these stupid things? First of all, they're obvious. (Who really thought the tiny parts in the Shuffle could cost much more than that?) Second, they're pointless. (They ignore all the other costs involved with creating products like this, including iTunes which costs money to make but is given out for free.)

And finally, so what? Apple makes a profit related to charging more than their production costs. Amazing! Everyone sells software (costing anywhere from dozens of dollars to thousands of dollars) on DVDs that cost only pennies to make. When is iSuppli going to amaze us all with that report?

[Pika]

I could build my own with old PC components for much more less:

http://www.redneckcarparts.com/sitebuildercontent/sitebuilderpictures/redneck_pc.jpg

[Cromulent]

Exactly what I was going to say. There's a hell of a lot more money involved in making these than the raw material costs.

Don't forget the costs for heating and lighting the Apple Stores, and paying their employees.

Even taking that into account one would assume that they are still making a 50%+ profit on each iPod. Which, truth be told, is not actually all that much.

In retail 100%+ profits are common.

[polaris20]

It costs $22 in raw parts, and it sells for $79. And? Apple's a company, not a charity. They need to make money for R&D, advertising, etc.

If you find $79 is unfair for a unit that costs them $22, then it's really quite simple. Don't buy it.

[nerdish]

So what if the parts cost $22, i could go out and buy these components myself, it doesnt mean i'd be able to make a Shuffle!

[That-Is-Bull]

Does that include the headphones that come with the Shuffle?

[Cromulent]

Does that include the headphones that come with the Shuffle?

Yes.

[WildCowboy]

Why are we still linking to these stupid things?

I actually found the discussion of the parts more interesting than the numbers...there's cool stuff in there. :)

[Roessnakhan]

Consumer cost > Production costs? Surely you jest.

[mdntcallr]

$22 doesnt include distribution, marketing and R&D.

these things cost alot more to get to market than they are in just parts.

[Small White Car]

I actually found the discussion of the parts more interesting than the numbers...there's cool stuff in there. :)

I'd actually agree with that.

Perhaps I'm being unfair to iSuppli. I'm not mad at the info, I get upset with the stupid articles that spread around the 'net in its wake. But that's not really iSuppli's fault, I suppose.

My point for Macrumors (whose reporting on the subjust is top-notch, let me be sure to say) is that this seems like Page 2 information, no?

[BG-Mac]

No surprise here. I'd happily pay the $90 again for the new shuffle. Best gym iPod EVER! :D

[rockinrocker]

I don't think anyone's implying these numbers are surprising or unusual....

[That-Is-Bull]

Yes.

Second sentence of the article. I feel stupid. Should've read more than just Engadget's post.

[flopticalcube]

I like this quote:
And for a company that doesn't ignore the tiniest of details, the most mundane of components are the most advanced available.

:D Go, Apple!

[iSlicer]

Be nice if the negative commenters would think about the cost of software development, hardware development, research, rent, salaries, etc... and how they effect the overall price of any product. Oh, and I am sure they are "allowed" to take some profit after they have factored in all of the costs. Far out, please don't try and run a business guys, or I may have to call and say your prices are too high.

[MrCrowbar]

I could build my own with old PC components for much more less:

http://www.redneckcarparts.com/sitebuildercontent/sitebuilderpictures/redneck_pc.jpg

Kudos to you for not buying into the Hype. ;)

[AAPLaday]

So apple charges more for these players than it costs to make, god-forbid any company out there follow this approach and actually turn in a profit! :rolleyes:

[mogzieee]

Welcome to the business & retail world.

[ajones46]

What about all the time apple spent researching and developing the product without even making a penny? There's high risk involved and a lot of money spent that might not even pay off. Look at prescription drugs: it costs hundreds of millions of dollars to create a new drug that will make even more hundreds of millions of dollars, when the active ingredient for a single pill costs fractions of a penny.... it's threeconomics people.

[supremedesigner]

Remind me of McDonald french fries which only cost like 22 cent to make and sell over $3 bucks. lol

[madmaxmedia]

Why is everyone so defensive? The article isn't critical of Apple or the Shuffle, they state that the Shuffle margin is actually likely less than other iPods.

iSuppli always does these breakdowns for major electronics devices. It goes without saying they are strictly estimating cost of goods sold, which excludes fixed costs such as development, marketing, etc.

[audioteknika]

Page 2, please ?!

Hey.. your tacky-losy Christian Audigier T-Shirt contains $1 worth of Cotton !
Still... it sells for $150 !

Macrumors is pretty boring lately.. iPhone news, more iPhone news.. iPhone.. and .. iPhone !
Can't wait to see only a minor announcement @ WWDC !!!

[Mattie Num Nums]

Exactly what I was going to say. There's a hell of a lot more money involved in making these than the raw material costs.

Don't forget the costs for heating and lighting the Apple Stores, and paying their employees.

... and the fact that there Italian Granite Floors are made from a mine purchased by Apple just for that.

[xnu]

mmmmmm, $22 of Apple goodness, well worth $79 in my estimation.

[InTheUnion]

Surely the income they make from all of the Shuffles they sell can't be that high compared to nanos, for example. So they have to raise the price to make the amount of profit that they make worth it to carry on producing it. So either they raise profit margins or there is no iPod shuffle. Sadly that's the way Apple and most companies are.

[the vj]

Actually to make a business reliable you need at least 50% proffit if not more.

iSuppli is ok in making the aproximate pricing, now, apple make their proffit in being massive production.

Is not only what Apple has to pay in advertisement, locations, salaries and all that. A huge chunk is spent in reseraching, for example: how many ipods where created as a final product just for testing? is like crashing several lamborgini murcielagos just for crash test.

Apple proffit is in the volume, that is why the iPhone is such good source of income because there are millions out there, more than Apple computers.

For example, Philips just closed the WOWvx 3D display department, they were making 400% in proffit per screen, I mean, the retail price was $8000 (for resellers) for a 42" LCD screen with a lenticular film on it.

They closed the department because they made no proffit. So, a % is not good if there is not a mass consuption, that is whya huge amount of the proffit goes to advertisment.

[Stargaze]

as they state there is alot more cost involved than just $22 in parts many of you have stated that as well


I still find it interesting that apple is pushing the envelope on making things smaller and powerful and i do find the research companies like iSuppli do as it provides us with great information and converstaion.

:D

[HLdan]

I've noticed this forum is very good for putting Apple down as if they are a horrible company but they will buy Apple's products. I agree with a previous poster, the negative commenters need to run a business of their own then they would see how important it is to make as much profit as possible otherwise your just doing a public service.
I don't care how much profit ANY company makes on the product I'm buying as long as it fits my needs and I am willing to pay the asking price.
If it cost Apple $1 to make an iPod or even a Macbook Pro I would still buy them because their profit margin and my computing needs have nothing to do with each other.
Look how many brick and mortar stores (Circuit City, CompUSA) have gone out of business for lack of profits.

[Small White Car]

Why is everyone so defensive? The article isn't critical of Apple or the Shuffle

I believe we're all remembering the negative comments and blogs that followed other reports like this. The early ones caused lots of angst for some people.

You're right, at this point I think most people understand and the defensive statements far outweigh the complaints.

But most of us are thinking back to the times when the opposite was true.

[Diaresi]

I don't really care about the profits a company make on a product, if a product is worth the price they charge for it I buy it. If not I won't.

All things considered, this new Shuffle is worth the price.

(So is a Unibody MacBook (NOT the Pro) and all other iPods)

[BongoBanger]

Hmph.

That's about $21 more than it's worth.

Seriously, what the hell were they thinking with this one?

[HLdan]

Page 2, please ?!

Hey.. your tacky-losy Christian Audigier T-Shirt contains $1 worth of Cotton !
Still... it sells for $150 !

Macrumors is pretty boring lately.. iPhone news, more iPhone news.. iPhone.. and .. iPhone !
Can't wait to see only a minor announcement @ WWDC !!!

I'm really hoping your joking. It's not MR's fault for posting boring news, they don't make the news. The companies make the news, MR just delivers. Don't shoot the messenger. ;)

[freebooter]

I find this very interesting.

To think that some of the smallest publicly known electronic components are in an inexpensive consumer device makes me wonder. What's available to the high-end, super-secret devices used by black agencies of the major powers?

I may just get one, despite the earphone controller. Then again, maybe not. I had the last model and rarely used it. I like to see what I'm going to listen to, and I like to have fine control over rewind, etc. The Nano (3G) is small enough for all my uses.

[Lesser Evets]

$22 in parts does not mean it costs Apple $22. They have labor and packaging and marketing and development and the guy delivering the donuts and rent and paperwork and etc etc etc.

Remind me of McDonald french fries which only cost like 22 cent to make and sell over $3 bucks. lol

Those $3 fries. They really cause poverty in America.

[madmaxmedia]

Yeah, I do remember those kinds of threads in the past.

It was just kinda funny here, because there wasn't even 1 negative comment in the thread. Just a bunch of people saying "What do you mean Apple can't make money?!?" :)

I believe we're all remembering the negative comments and blogs that followed other reports like this. The early ones caused lots of angst for some people.

You're right, at this point I think most people understand and the defensive statements far outweigh the complaints.

But most of us are thinking back to the times when the opposite was true.

[dwd3885]

Who cares? This product sucks anyway

[bplein]

If broken down into its chemical constituents, the human body might not cost more than $22 (it's something like 80% water, don't forget).

Besides, component costs and prices shouldn't have much if anything to do with each other. Prices are based on supply and demand, not costs.

[cppguy]

Engineering costs money, too. I develop software, which costs $0 to manufacture, and we're selling it for a lot more than that.

[polaris20]

This just in: it does not cost Starbuck's anywhere near the $4 asking price of a cup of coffee. They are indeed making a huge profit. I know, shocking. Even Dunkin Doughnuts makes a huge profit off of a $1.29 cup.

What is with these corporations wanting to make money?

[Project]

In other news, a full retail copy of Windows costs about 30 cents

[lkrupp]

Why is everyone so defensive? The article isn't critical of Apple or the Shuffle, they state that the Shuffle margin is actually likely less than other iPods.

iSuppli always does these breakdowns for major electronics devices. It goes without saying they are strictly estimating cost of goods sold, which excludes fixed costs such as development, marketing, etc.

People are just trying to head off the usual trolls who whine about how greedy Apple is, how Apple is a monopoly, and how all this technology should be free or that the price should be determined by what they are willing to pay, which is nothing.

[gnasher729]

Consumer cost > Production costs? Surely you jest.

That's not production cost. For $22, you can pick up the individual parts of a shuffle at various locations throughout China or wherever they are manufactured. If you then build a plant to make iPods, buy all the necessary machines, train lots of employees, pay them to assemble the iPods, pay for everyone else working at the plant (management, human resources, site maintenance, electricity, security, taxes and so on), and if you then add some money for iPods that fail in testing, and then you buy a box that you can put the iPod in, _then_ you have the cost of production. And that is still the cost of an iPod on the shelve at a plant in China.

Go to a good restaurant and check what the cost of parts is for a $78 meal.

[guzhogi]

Wow, this is like the 1st time I saw an article on MacRumors about the cost of materials of a product that did not have a bunch of negative posts. A lot of people have brought up the fact that it also costs $ for R&D, advertising, etc. I'm really shocked! :eek:

I wonder how much Apple really pays for each iPod, computer, etc. factoring in materials, manufacturing, advertising, R&D, salaries, etc. That would be interesting to know.

[Consultant]

You should tell these writers that they are getting paid too much.

Their articles contain only approximately few cents of parts in terms of electricity consumed by their computer.

[iPhoneNYC]

Did they say how much was alloted for "The Apple Tax"??????

[neil1980]

Thinking about it I'm surprised it costs that little...

Obviously all the R&D costs go on top but so does the cost to assemble it, deliver it to Apples warehouse, pay some staff to store them in warehouse and ship them out onto delivery wagons/planes.

Then there's the cost of running the stores that sell them and the cost of staff to run the stores...

All in all it's surprising that they make a profit

[Gasu E.]

I call B.S. on some of iSuppli's cost estimates.

They say the battery and the passives are the smallest they have ever seen-- meaning they have never seen these parts before. Additionally, for the passives, they cannot even identify the supplier.

If they have never seen these parts before, and they cannot identify the suppliers, how can they possibly tell how much Apple is paying?

If these are cutting edge-parts whose development was driven by Apple, Apple undoubtedly subsidized the R&D. How does iSuppli know this is not reflected in the piece price paid by Apple?

[bruinsrme]

I call B.S. on some of iSuppli's cost estimates.

They say the battery and the passives are the smallest they have ever seen-- meaning they have never seen these parts before. Additionally, for the passives, they cannot even identify the supplier.

If they have never seen these parts before, and they cannot identify the suppliers, how can they possibly tell how much Apple is paying?

If these are cutting edge-parts whose development was driven by Apple, Apple undoubtedly subsidized the R&D. How does iSuppli know this is not reflected in the piece price paid by Apple?

very commendable for coming to the defense of apple.

does it really matter how much the dam POS costs to build.

Look at the guitar hero guiater selling for $50, I would be the box costs more than the guitar itself.

[cswiger1]

I work in R&D. My job: Find ways to reduce the cost of our product by using less parts/labor while maintaining the same quality. I'm not the least bit concerned about how much of the price is pocketed by the company whom made it, if I’m willing to buy the product at the price on the sticker anyways.

Unfortunately for apple, I’m not willing to buy a $90 shuffle (too broke to buy toys).

[ooberpongo]

The reason why apple could made such a small battery is because they use their new lithium polymer technology first introduced with their Thin MacBook air and perfectionated with the new MacBook Pro 17" With this technology they cannot only squeeze out more performance out of the same size but actually can mold the battery in any size necessary.

[Hattig]

I found the article interesting, however academic the details are. It's interesting that the main SoC (CPU, chipset, audio drivers, USB, RAM, probably unused functionality like graphics even) is $6, that the price of 4GB of flash costs $6 (how much was it in the first iPod Nano 4GB teardown?), that you can get such tiny resistors and capacitors, etc.

[QCassidy352]

Hmph.

That's about $21 more than it's worth.

Seriously, what the hell were they thinking with this one?

lol, well put. I usually defend apple against the whiners (see my sig :)) but I really don't get the thinking behind this new shuffle.

[twoodcc]

well it doesn't seem like a total shock. of course i would love to see the shuffle go for cheaper though

[JayMan8081]

As has been noted, R&D costs have to factor into the equation as well as the cost of shipping. You also have the maintenance costs for the manufacturing facilities, retail stores, etc.

[Marx55]

The cost of components? Considering that Apple does NOT buy single components but dozens or thousands of millions of them, the manufacturing cost for Apple is in fact much lower. Probaly about 20% of the retail price. A bit greedy then...

[Deanster]

Seems like a typical Apple product these days - cutting-edge tech and production, done profitably, and sold at a premium price. Great place to be, and the envy of every other company in tech.

And for the haters, I LOVE LOVE LOVE my new Shuffle. Paired with the Apple In-Ear headphones, it's got excellent sound, minimum profile, and solves my one major complaint about the previous Shuffles - no playlists.

I'm just thrilled with the ability to load several playlists, and select depending on what kind of workout or other activity I'm doing.

I've owned the 1st and 2nd Generation Shuffles, and they've been good, but lack of playlist meant I ONLY used them for workouts, and even then, spent a lot of time skipping songs that weren't a good fit for the workout I was doing.

I bought this as a pure workout iPod, but I like it enough that it's almost entirely displaced my shiny fresh 4G Ipod Nano 16Gb with Ultimate Ears Super.fi 5 Pro earbuds. The Nano/UE combo is absolutely 'better', but the Shuffle is increasingly the one I grab first. It may well soon be the only one I bother to take with me. Switching playlists is a touch clunky, but I'm thrilled with the tradeoff for size/weight/capability.

Hate all you want, but for me the 3G iPod Shuffle is one of my favorite products in many years.

Add the In-Ear headphones (a somewhat pricey upgrade, I'll admit), and it's the best iPod I own.

[FoxyKaye]

It costs $22 in raw parts, and it sells for $79. And? Apple's a company, not a charity. They need to make money for R&D, advertising, etc.

If you find $79 is unfair for a unit that costs them $22, then it's really quite simple. Don't buy it.
Actually, I was somewhat surprised that Apple's profit margin wasn't much higher on these (e.g. they aren't selling them for like $99 - remember that the original Shuffles sold for over $100 for the 1GB model). Since iSupply's analysis doesn't account for R&D, people, assembly, shipping, etc. I'm going to make a wild guess that the real cost to Apple is maybe closer to $40-$50? Of course, flash RAM has gone way down in price as well...

[AAPLaday]

Just as a side note there is an update out for the new shuffle which improves pronunciation of the voice over feature. It weighs in at 17MB. The worth of which is believed to be about 57 dollars which brings the total parts cost and update cost to be $79 hehe :p:D

[peterdevries]

Did they say how much was alloted for "The Apple Tax"??????

I hope that was meant cynical. Otherwise: sigh...:rolleyes:

[Eric S.]

Why are we still linking to these stupid things? First of all, they're obvious. (Who really thought the tiny parts in the Shuffle could cost much more than that?) Second, they're pointless. (They ignore all the other costs involved with creating products like this, including iTunes which costs money to make but is given out for free.)

And finally, so what? Apple makes a profit related to charging more than their production costs. Amazing! Everyone sells software (costing anywhere from dozens of dollars to thousands of dollars) on DVDs that cost only pennies to make. When is iSuppli going to amaze us all with that report?

Exactly. You're not paying for the parts. Heck, I wouldn't spend $22 on the parts. What would I do with them? (I wouldn't spend any money on this Shuffle either, but that's another story.)

[SkippyThorson]

Hmph.

That's about $21 more than it's worth.

Seriously, what the hell were they thinking with this one?

Someone's a business major! :eek:

[griz]

$22 doesnt include distribution, marketing and R&D.

these things cost alot more to get to market than they are in just parts.

Also doesn't include assembly. The assumption that lowering the cost of parts increases profit is false. It is entirely possible that the smaller form factor costs more to manufacture. For any other company it would of course not make sense to reengineer something to cost more to make But Apple has never been too concerned about making things cheaper to manufacture. They are out to make it cool. And cool costs money.

[KnightWRX]

I think that the fact that parts costs are not all there is to building an iPod has been beaten to death. No one is probably going to attack Apple on that, seeing how it's easy to rebute.

However, this part of the article seems to be the real kicker :

The component cost for the first iPod touch released in 2007, for instance, amounted to about $147, or about 49% of its $299 retail price. The component cost of the third-generation iPod nano, also released in 2007, amounted to about 40% of its retail price.

They seem to be implying that Apple is making more and more profit by lowering the margin of the parts cost. However, all 3 list devices have wildly different price points.

The point they are missing here is static costs. Developing the software, maintaining and updating it, tech support training, sales training, advertising. These things don't have a per unit cost (well, maybe advertising does). Wether you sell 1 or 100,000, your cost is the same. These costs are probably going to be pretty close to one another for each device, with only the volume of devices sold outsetting these. Hence you can afford to use a smaller margin on more expensive devices, since the value in dollars for that smaller margin is bigger.

[ex8886]

$22 in parts does not mean it costs Apple $22. They have labor and packaging and marketing and development and the guy delivering the donuts and rent and paperwork and etc etc etc.



Those $3 fries. They really cause poverty in America.


Yep, add $1 for the wages of the chinese kids that work on the production line . . . shipping, R&D, and so on. I'm sure Apple has at least a 50% profit on it. Not saying it's right or wrong, but the R&D definitely screwed up on this one.


If broken down into its chemical constituents, the human body might not cost more than $22 (it's something like 80% water, don't forget).



If you're talking about raw materials, then yes. If you're talking about actual parts (which iSupply is listing the cost for, NOT just cost of raw materials for the parts), then you're not even close. Good luck making a human heart for under $22

[MagnusVonMagnum]

Why are we still linking to these stupid things? First of all, they're obvious. (Who really thought the tiny parts in the Shuffle could cost much more than that?) Second, they're pointless. (They ignore all the other costs involved with creating products like this, including iTunes which costs money to make but is given out for free.)

Give me a break already. I'm so tired of Mac fanatics making EXCUSES for why Apple makes these 40-100% profit margins on everything. You'd think iTunes was just created from the ground up to hear about how the developmental costs for 1 program somehow figure into MILLIONS of iPod sold. What a load of bologna. It's ONE program for MILLIONS of people and the iTunes store alone MORE than covers its development without having to figure iPods into it (which would only drop its costs that much more).

If you seriously believe this Shuffle had high enough development costs to justify those price margins, I could probably show you some swamp land in Florida. There is simply NO WAY it amounted to that much. A better gage would be to look at a competing product and see how it compares parts to sale prices-wise. That would give a much clearer view about how much Apple is milking its customers. Or does Apple have much higher development costs than its competitors due to paying their employees so much more money? I don't think so.

Just wait until they start getting those extra licensing fees for the headphones on this thing so you can actualy buy a decent pair of headphones to use with it instead of the absolute GARBAGE earbuds that Apple includes (the one that came with my iPod Touch wouldn't even stay in my ears while sitting, let alone walking and when they were in place, they sounded like crap compared to my quality full size headphones. But I can't use those headphones with the new Shuffle because there'd be no way to control it. And rather than provide a simple female output jack at the end of the control cord, Apple decided to hard-wire it so that they could charge that licensing fee for the control chip instead. Apple keeps finding creative new ways to charge for things that used to be included for free. I'll give them that much on the business end, but it sucks to be a CONSUMER of such devices when you KNOW you've been ripped off. Hence, I'll NEVER buy a shuffle for myself or anyone, despite it being the cheapest iPod available.

[BongoBanger]

Someone's a business major! :eek:

Well sort of although it's worth pointing out that Engadget did a straw poll of the best small mp3 player for exercise and the new Shuffle was pretty much universally ridiculed. The winner was the Sansa Clip with about 90% of the vote.

The iPod touch is awesome. The new Nanos are brilliant. The new Shuffle sucks.

That's just the way it goes.

As for price, I have no issue with what Apple want to charge for products. That's their business, not mine.

[JoeDMD]

What about all the time apple spent researching and developing the product without even making a penny? There's high risk involved and a lot of money spent that might not even pay off. Look at prescription drugs: it costs hundreds of millions of dollars to create a new drug that will make even more hundreds of millions of dollars, when the active ingredient for a single pill costs fractions of a penny.... it's threeconomics people.

While I agree that there are obviously other costs besides the components, they are primarily limited to manufacturing and marketing.

The r&d costs to apple for a product like this a minimal.

With drugs, you have researchers devoping new compounds or trying old ones in new ways, and then doing the studies to see if they work.

With the ipod, companies besides apple do the research to create the technology that goes into the product, and apple simply comes up with a design to combine the technology into a product.

[michael.lauden]

just because you can buy parts to make an iPod shuffle with 22$ - it doesn't mean you'd have an iPod shuffle.

you pay for the actual iPod software that has revolutionized the mp3 player world. if it's such a big deal that apple is making money, then don't buy it.

who would have thought... a company makes a product to get profit

[igazza]

apple have 35,000 staff to pay :D

[Eidorian]

which, are probably some of the larger costs that are being recouped with its profit margin.Pretty much this. It's not a surprise.

I could build my own with old PC components for much more less:

http://www.redneckcarparts.com/sitebuildercontent/sitebuilderpictures/redneck_pc.jpgI still looks like you're paying too much. :rolleyes:

[polaris20]

Give me a break already. I'm so tired of Mac fanatics making EXCUSES for why Apple makes these 40-100% profit margins on everything. You'd think iTunes was just created from the ground up to hear about how the developmental costs for 1 program somehow figure into MILLIONS of iPod sold. What a load of bologna. It's ONE program for MILLIONS of people and the iTunes store alone MORE than covers its development without having to figure iPods into it (which would only drop its costs that much more).

If you seriously believe this Shuffle had high enough development costs to justify those price margins, I could probably show you some swamp land in Florida. There is simply NO WAY it amounted to that much. A better gage would be to look at a competing product and see how it compares parts to sale prices-wise. That would give a much clearer view about how much Apple is milking its customers. Or does Apple have much higher development costs than its competitors due to paying their employees so much more money? I don't think so.

Just wait until they start getting those extra licensing fees for the headphones on this thing so you can actualy buy a decent pair of headphones to use with it instead of the absolute GARBAGE earbuds that Apple includes (the one that came with my iPod Touch wouldn't even stay in my ears while sitting, let alone walking and when they were in place, they sounded like crap compared to my quality full size headphones. But I can't use those headphones with the new Shuffle because there'd be no way to control it. And rather than provide a simple female output jack at the end of the control cord, Apple decided to hard-wire it so that they could charge that licensing fee for the control chip instead. Apple keeps finding creative new ways to charge for things that used to be included for free. I'll give them that much on the business end, but it sucks to be a CONSUMER of such devices when you KNOW you've been ripped off. Hence, I'll NEVER buy a shuffle for myself or anyone, despite it being the cheapest iPod available.

So I guess you're pretty pissed about Microsoft selling Office for $350, Starbucks for selling a $4 cup of coffee, BMW selling a $40K car, Paul Reed Smith selling a $4000 guitar, Nikon and Canon selling $5000 cameras, etc.

Oh wait, it's Apple. THE OUTRAGE!!!!

BTW, how can you be ripped off if you didn't buy one?

[RichardI]

That price is, of course absurd. If you don't believe it, go and get the same batch of parts and let me hear it play music ;). The real costs are in development, design, and intellectual property. Not in hardware. I am amazed every time I go out for a walk with my nifty little iPod Shuffle (2nd gen) clipped to my jacket, at the quality of the music it can generate. What Apple charges for the Shuffle is quite fair IMHO.

Rich :cool:

[lilgto64]

Even taking that into account one would assume that they are still making a 50%+ profit on each iPod. Which, truth be told, is not actually all that much.

In retail 100%+ profits are common.

The ONLY way to have 100% profit margin is if the product cost you $0 to make, ship, etc.

If I sell you a product for $1 and my cost to is $0 - that is 100% profit margin - more than 100% profit margin would be is it cost me $0 and I sold it to you for $1 but you gave me $2 instead. - or maybe if I was getting some back end rebate from the supplier that I got the product from.

Perhaps what you meant was 100% Mark-up - with is quite different than 100% profit.

if my total cost is $50 for a given product and I sell it to you for $100 than is a 100% markup because the profit is equal to the cost - but it is only 50% profit since my profit of $50 is only half - or 50% of the total sale price of $100.

As someone else mentioned part of the cost of every product any company sells is the operational cost of having office locations and retail locations etc. In fact, part of every purchase you make is used to pay for legal costs of both prosecution and defense. And there is a big difference between gross profit and net profit - Apple may have higher profit margins than the industry average - but the gross profit of 50% on a single product sold likely translates to something more like 5 or 10% net profit.

[Bubba Satori]

http://rubysdreamhome.files.wordpress.com/2008/06/vaseline.jpg

[bjeadeh]

Way to go Apple. Cool Ipod, made with cheap parts, but really cool to have, everybody's happy. I have no problem with Apple making way more money than usual on these little ipods. It's just that some apple products were built with value for the customer. I will stick with my nano, it's plenty small.

Speaking of value, I suppose it won't be long before Gates makes a commercial about giving some schmuck $80.00 to buy a music player and gets to keep the change. They go out and buy something similar at half the price, and then bows to the Microsoft God, professing their support for all that is PC, except for apple that is PC. Hmm, Maybe the shuffle should have had 8 gigs of memory...naw, no one can touch the ipod... NO ONE!

[allmIne]

So I guess you're pretty pissed about Microsoft selling Office for $350, Starbucks for selling a $4 cup of coffee, BMW selling a $40K car, Paul Reed Smith selling a $4000 guitar, Nikon and Canon selling $5000 cameras, etc.

Oh wait, it's Apple. THE OUTRAGE!!!!

BTW, how can you be ripped off if you didn't buy one?

lol, true.

People are obviously buying at the price Apple has set. I wonder if he owned a business, would he realise people are buying at X price, but set the price at X minus Y because he felt bad the customer was paying so much?

Of course not.

Either pay it and be happy, or don't and be quiet.

[DELLsFan]

http://rubysdreamhome.files.wordpress.com/2008/06/vaseline.jpg

:eek: LOL! Just LOL!

All products are marked up. I think the news on the Shuffle here is obviously designed to spark business debate on more than just Apple's music players.

After all, when you buy a Shuffle, you aren't buying just a music player ... you're buying a "holistic philosophy". You know, that "vertically integrated philosophy" where everything is supposed to "just work" for the Shuffle.

:rolleyes:

[polaris20]

lol, true.

People are obviously buying at the price Apple has set. I wonder if he owned a business, would he realise people are buying at X price, but set the price at X minus Y because he felt bad the customer was paying so much?

Of course not.

Either pay it and be happy, or don't and be quiet.

People that bash Apple for pricing seem to not understand simple supply and demand. Do you think it's a good value for the price? No? Then don't buy it.

But someone is buying, because someone thinks it's a good value. Hence why Apple is still in business.

In the event the majority of Apple product buyers cease to think they're a good value, guess what? The sales will go down, Apple will stop making money, and they'll either adjust pricing accordingly, or die.

Do I think Apple products are expensive? Yes. Do I think they're not a good value? No. So I continue to buy, until they piss me off.

[mdriftmeyer]

i hope this interesting research study and man-hours will lead to the price reduction of ipods in the future.

What the hell are you talking about? The larger cost goes into the non-parts portion which won't get less expensive.

[wgilles]

This is called capitalism.

[LethalWolfe]

I think everyone should be required to take at least a basic business class at some point in their life so we can cut down on the amount of outrage based on ignorance in the world.


Lethal

[KnightWRX]

Way to go Apple. Cool Ipod, made with cheap parts,

Did you miss the part of the article that mentionned that all the chosen parts were the highest quality available and the most advanced ?

Serious question here.

:eek: LOL! Just LOL!

All products are marked up. I think the news on the Shuffle here is obviously designed to spark business debate on more than just Apple's music players.

After all, when you buy a Shuffle, you aren't buying just a music player ... you're buying a "holistic philosophy". You know, that "vertically integrated philosophy" where everything is supposed to "just work" for the Shuffle.

:rolleyes:

Or you know, you're not just buying 22$ worth of parts in a box. We're not talking Macintosh computers here. Did you miss the 50 other posts that all said the same thing ? Basically : "There's more to any products than just parts".

I think this one is simply logical. The some of parts does not make a product. Even your Dell probably doesn't have more than 150$-200$ of actual parts in it, doesn't mean that's what it costs to make, sell and support.

I realise you're just trying to spark yet another "Apple sells stuff for more than everyone else!" debate (like we don't already have 4 threads were you participate in such debates).

[eastcoastsurfer]

Give me a break already. I'm so tired of Mac fanatics making EXCUSES for why Apple makes these 40-100% profit margins on everything. You'd think iTunes was just created from the ground up to hear about how the developmental costs for 1 program somehow figure into MILLIONS of iPod sold. What a load of bologna. It's ONE program for MILLIONS of people and the iTunes store alone MORE than covers its development without having to figure iPods into it (which would only drop its costs that much more).

If you seriously believe this Shuffle had high enough development costs to justify those price margins, I could probably show you some swamp land in Florida. There is simply NO WAY it amounted to that much. A better gage would be to look at a competing product and see how it compares parts to sale prices-wise. That would give a much clearer view about how much Apple is milking its customers. Or does Apple have much higher development costs than its competitors due to paying their employees so much more money? I don't think so.

Just wait until they start getting those extra licensing fees for the headphones on this thing so you can actualy buy a decent pair of headphones to use with it instead of the absolute GARBAGE earbuds that Apple includes (the one that came with my iPod Touch wouldn't even stay in my ears while sitting, let alone walking and when they were in place, they sounded like crap compared to my quality full size headphones. But I can't use those headphones with the new Shuffle because there'd be no way to control it. And rather than provide a simple female output jack at the end of the control cord, Apple decided to hard-wire it so that they could charge that licensing fee for the control chip instead. Apple keeps finding creative new ways to charge for things that used to be included for free. I'll give them that much on the business end, but it sucks to be a CONSUMER of such devices when you KNOW you've been ripped off. Hence, I'll NEVER buy a shuffle for myself or anyone, despite it being the cheapest iPod available.

Go take an economics, accounting, and finally a marketing class. The cost of goods has very little to do with the 'value' or selling price of a product. As long as you can sell your product for a greater price than what you paid to build it that's what you do. If you can sell it for 1000% of your build price you do it. This isn't an Apple apology. It's called business.

Generally crazy high margins don't last because of competition (big margins bring competitors from all over). Apple has a nice position of being more desired that most of its competitors at the moment so they can keep these margins up.

[allmIne]

Go take an economics, accounting, and finally a marketing class. The cost of goods has very little to do with the 'value' or selling price of a product. As long as you can sell your product for a greater price than what you paid to build it that's what you do. If you can sell it for 1000% of your build price you do it. This isn't an Apple apology. It's called business.

Generally crazy high margins don't last because of competition (big margins bring competitors from all over). Apple has a nice position of being more desired that most of its competitors at the moment so they can keep these margins up.

I completely agree with you. That'll not stop some people from complaining about the price, regardless. :confused:

[seedster2]

Why are people getting so defensive about a breakdown of parts cost?

Apple is allowed to charge whatever the market will bear. It's up to the customer to decide whether it's worth it.

Making outlandish comparisons to drug manufacturers, or attributing their suspected margins on bundled itunes software isn't really necessary:confused:

Anyway, I doubt :apple: has invested that much R&D into this shuffle. It's a complete dud esthetically and functionally;)

[ftaok]

The ONLY way to have 100% profit margin is if the product cost you $0 to make, ship, etc.

If I sell you a product for $1 and my cost to is $0 - that is 100% profit margin - more than 100% profit margin would be is it cost me $0 and I sold it to you for $1 but you gave me $2 instead. - or maybe if I was getting some back end rebate from the supplier that I got the product from.

Perhaps what you meant was 100% Mark-up - with is quite different than 100% profit.

if my total cost is $50 for a given product and I sell it to you for $100 than is a 100% markup because the profit is equal to the cost - but it is only 50% profit since my profit of $50 is only half - or 50% of the total sale price of $100.

As someone else mentioned part of the cost of every product any company sells is the operational cost of having office locations and retail locations etc. In fact, part of every purchase you make is used to pay for legal costs of both prosecution and defense. And there is a big difference between gross profit and net profit - Apple may have higher profit margins than the industry average - but the gross profit of 50% on a single product sold likely translates to something more like 5 or 10% net profit.
Dude,

You're wrong. Profit margin is defined as gross profit divided by cost of goods sold. Gross profit is net sales minus cost of goods sold. There's other stuff in there that gets factored, like operating costs, etc.

Also, profit margins typically refer to companies and not a single product.

In your example

Net Sales = $1
Cost of Goods Sold = $0

Profit Margin = (1-0) / 0 = infinity

In the iPod Shuffle example, not including development costs etc.

Net Sales = $80
Costs of Goods Sold = $22

Profit Margin = (80 - 22) / 22 = 263%

It's very easy to get Profit Margins exceeding 100% ... well maybe not easy, but it is possible.

ft

[LethalWolfe]

Go take an economics, accounting, and finally a marketing class. The cost of goods has very little to do with the 'value' or selling price of a product. As long as you can sell your product for a greater price than what you paid to build it that's what you do. If you can sell it for 1000% of your build price you do it. This isn't an Apple apology. It's called business.

Generally crazy high margins don't last because of competition (big margins bring competitors from all over). Apple has a nice position of being more desired that most of its competitors at the moment so they can keep these margins up.
Something else people should keep in mind is that not all products have equal markups and some products are even sold for a loss (or near loss). The classic example is the razor & blades business model where the razor is basically given away but the blades have a high markup. Printers and printer ink is the same thing. Apple's software is pretty much a loss leader to sell its hardware and I don't think a lot of people realize that and realize that's why Apple can sell software so cheaply. For example, Final Cut Studio contains around $30k-$35k worth of applications and Apple sells the whole thing for $1300. There's no such thing as free lunch so Apple has to try and make up those losses somewhere.


Lethal

[Eric S.]

So I guess you're pretty pissed about Microsoft selling Office for $350, Starbucks for selling a $4 cup of coffee, BMW selling a $40K car, Paul Reed Smith selling a $4000 guitar, Nikon and Canon selling $5000 cameras, etc.

Not only that, just watch Antiques Roadshow sometime and see what some people would pay tens of thousands of dollars for, completely aside from any materials cost involved - just stuff people have lying around. The value of an object is what people are willing to pay for it, which is generally unrelated to its production cost.

[polaris20]

Not only that, just watch Antiques Roadshow sometime and see what some people would pay tens of thousands of dollars for, completely aside from any materials cost involved - just stuff people have lying around. The value of an object is what people are willing to pay for it, which is generally unrelated to its production cost.

Ah yes, but you see they're wasting their money!! They could have bought a brand new one that does the same thing!! What a poor value!!

[happydude]

*yawn* wow, you mean apple charges more than what the constituent parts are worth for their products in an attempt to make up for the R&D, manufacturing and marketing costs. gosh, what a ground breaking story. holy sh#t!! :eek:

[pohl]

Wow....perhaps, now that everybody is armed with this information, you all can just go build your own and **** about how expensive Apple's products are. :D

After all, if assembling one of these is so cheap & easy, why spend time complaining. Just go roll your own.

[macguy256]

Dude,

You're wrong. Profit margin is defined as gross profit divided by cost of goods sold. Gross profit is net sales minus cost of goods sold. There's other stuff in there that gets factored, like operating costs, etc.

Also, profit margins typically refer to companies and not a single product.

In your example

Net Sales = $1
Cost of Goods Sold = $0

Profit Margin = (1-0) / 0 = infinity

In the iPod Shuffle example, not including development costs etc.

Net Sales = $80
Costs of Goods Sold = $22

Profit Margin = (80 - 22) / 22 = 263%

It's very easy to get Profit Margins exceeding 100% ... well maybe not easy, but it is possible.

ft

Actually, you're wrong. Profit margin (or more correctly, gross profit margin, in this case) is defined as:

Profit Margin = (Revenue - Cost of Goods Sold) / Revenue

Here's a link that explains it:
http://en.wikipedia.org/wiki/Gross_profit_margin

What you are describing is mark up:
http://en.wikipedia.org/wiki/Markup_(business)

The poster you were correcting actually got it right.

[KnightWRX]

The classic example is the razor & blades business model where the razor is basically given away but the blades have a high markup.

I'm not quite sure this one holds up anymore. Have you seen the prices of Gilette starter packs ? Sure there's a definite markup on the price of the blades, but I'm pretty sure there's not even 0.50$ of parts in that package. Of course Tiger Woods can't be that affordable as far as advertising goes.

I think pretty much the only example left of this type of market is video game consoles and cellular phones.

[polaris20]

I'm not quite sure this one holds up anymore. Have you seen the prices of Gilette starter packs ? Sure there's a definite markup on the price of the blades, but I'm pretty sure there's not even 0.50$ of parts in that package. Of course Tiger Woods can't be that affordable as far as advertising goes.

I think pretty much the only example left of this type of market is video game consoles and cellular phones.

How about Inkjet or laserjet printers?

[Barbie]

One third Production, one third Marketing and then one third profit.

That's the way it happens most of the time, especially if you want to make a profit !!!

Barbie.

[nutritious]

Not a surprise, and I wouldn't be surprised if apple could get away with selling it for $60, but it's not like it matters much for me. As long as I can't play flac files on an ipod without modding it through some type of software, I won't buy one. And I hate the fact apple uses lower quality amps and dacs compared to competitors.

[KnightWRX]

How about Inkjet or laserjet printers?

That's a toughie. There's not that many parts in there to begin with and most of it is made out of cheap plastic. Maybe multi-functions for less than 75$ would still be in that type of market.

[mozadek]

Any fan boy here will tell you that you are paying extra for the apple experience of being smarter and cooler than people who don't use an iPod ;)

[andrew0122]

http://s2.guide-images.ifixit.com/igi/1cVAyfINqeAlxGbc.standard

It's that pesky dime that adds all of the value!

[flottenheimer]

As stated: "iSuppli's calculations ... do not include research and development, manufacturing, distribution, and patent royalty costs."

[tuckerja]

As stated: "iSuppli's calculations ... do not include research and development, manufacturing, distribution, and patent royalty costs."

Please! Steve Jobs just waives his magic wand and products appear!

But seriously, you are right as well as the fact that for them to make a profit they have to hike up the price. IF you add in all these costs, they will probably make around 10% profit. (just a guess, don't ask me to prove that)

[alexbates]

So if an iPod can be made for $22 out of the $79 it is sold for from Apple, could I gather the parts and build the new Mac Pro for $1500 out of the $2500?

I am curious how much other Apple products cost to make compared to what you would buy them for at retail price.

[Arcady]

I don't care that the Shuffle costs $22 to make and sells for $79.

I do care that an iPod USB cable costs 50¢ to make and sells for $20. That's ridiculous.

[synth3tik]

In other words Apple is skipping on quality, YEAH!!!! WOO HOO!

[BTW]

Returns, lawsuits, and technical support also factor into the price as well. :)

[canucksfan88]

lol, way to gouge the consumers

i bet you if this was microsoft, everyone would be bashing...

oh how people love their apple

[Thunderhawks]

http://www.macrumors.com/images/macrumorsthreadlogo.gif (http://www.macrumors.com/2009/04/13/new-ipod-shuffle-contains-22-worth-of-parts/)

BusinessWeek reports (http://www.businessweek.com/technology/content/apr2009/tc20090410_507831.htm) on a teardown of the new iPod shuffle by research firm iSuppli, revealing that Apple's diminutive player contains approximately $22 worth of parts.According to iSuppli's analysis, over half the cost comes from two Samsung components, the main controller chip and the 4GB of flash memory at approximately $6 each. The battery, capacitors, and resistors in the new iPod shuffle were also discovered to be remarkably small by industry standards.iSuppli's calculations consider only the actual parts of the device and do not include research and development, manufacturing, distribution, and patent royalty costs.

Article Link: New iPod Shuffle Contains $22 Worth of Parts (http://www.macrumors.com/2009/04/13/new-ipod-shuffle-contains-22-worth-of-parts/)


All the parts to make a Mercedes only cost $ 6,000, not including assembly. The paint is $ 16.50 and the solvent to clean up is not accounted for.
And it is amazing how the parts all fit together and are big or small.

Geez:-)

[Dagless]

What a mark up! That's not great for me as a consumer though, but for a variety of reasons I'm sticking with my 2G Shuffle still.

[IronRoses]

Why doesn't this surprise me? It doesn't, not one bit.

I expect this is the same across the entire ipod range and the mac mini and so on. Maybe not so much the mac pro but it wouldn't surprise.

And this is what we mean by "Overpricing"

Granted they need to break even and make profit but this is just a rip off.

Then again, i knew that as soon as i saw the shots of the shuffle, just an overpriced grey plastic piece of crap which i would never order in my life.

[LethalWolfe]

If you really want to go through the looking glass think about this. The raw materials to make the parts to make the Shuffle cost less than the finished parts themselves when sold Apple. So not only is Apple over-charging the consumer but Apple itself is getting over-charged by its suppliers!

The conspiracy is even bigger than we initially thought.:eek:


Lethal

[IronRoses]

lol, way to gouge the consumers

i bet you if this was microsoft, everyone would be bashing...

oh how people love their apple

*shakes hands*

Oh how right you are.

This comment alone proves what hypocritical bastard fanboys are.

Your'e right, if this was microsoft the story would be sooo different but since it's Apple fanboys makes excuses such as "but look at the size of it guys!"

Thats a complete and utter crappy excuse, this mark up is just wrong.
And lets face it, the ipods aren't THAT awsomely built.
Apple squeeze all this hardware in to small cases and they break within the first year (like my ipod cassic) then apple try and rip you off by saying "oh hd fix will cost you £80 sir"

[mozadek]

i bet you if this was microsoft, everyone would be bashing...


You got that right

[IronRoses]

So if an iPod can be made for $22 out of the $79 it is sold for from Apple, could I gather the parts and build the new Mac Pro for $1500 out of the $2500?

I am curious how much other Apple products cost to make compared to what you would buy them for at retail price.

Yes you could and it's called a custom pc matey!

[pohl]

i bet you if this was microsoft, everyone would be bashing...

Sure...apple fans just looove to go trolling where the softies hang out so that we can complain about prices. Yup, that's the ticket.

But, back to reality, the bashing that you hypothesized could only possibly happen if Microsoft produced something worth coveting. That's the secret ingredient that brings trolls here, after all.

[MacFly123]

So what if the parts cost $22, i could go out and buy these components myself, it doesnt mean i'd be able to make a Shuffle!

Not to mention doesn't Apple buy all these parts in MASSIVE bulk quantity that gets the big discounts that we could never get.

I'm just spit balling here, I know obviously we could never make something like that ourselves unless we are engineers and product assemblers with lots of expensive equipment. And yes of course all the r&d, marketing, packaging, etc. etc.

It is interesting to know, but pointless. I do like seeing these things taken apart though, I like to see how things work etc. :p

[Legolamb]

You know what this reminds me of. Henri Matisse (Wiki it yourself) did an exquisitely elegant drawing of a woman's back that managed to capture the energy and sensuality of the nude with only a few lines. He was visiting the gallery where it was being exhibited when a visitor rather sarcastically asked him "well how long did it take you to draw that?" Matisse's response: "About 25 years".

[Eric S.]

If you really want to go through the looking glass think about this. The raw materials to make the parts to make the Shuffle cost less than the finished parts themselves when sold Apple. So not only is Apple over-charging the consumer but Apple itself is getting over-charged by its suppliers!

The conspiracy is even bigger than we initially thought.:eek:

Sure, and if you want to dig all the component materials out of the ground you could get them all for free. Of course you'd have to pay for the shovel.

[philips]

$22 doesnt include distribution, marketing and R&D.

these things cost alot more to get to market than they are in just parts.

Please please stop forgetting the support costs. Try to imagine who many people actually involved in e.g. returning faulty device.

P.S. Also, the iSuppli analysis disregards QA. It is generally considered part of manufacturing. It costs money to QA. And presence of QA means that some percentage of produced items are discarded as rejects right after assembly line.

[diemos]

Gotta make that money! good for Apple.

[nutritious]

Look at everyone making excuses. The shuffle is still a crap player which I wouldn't even use if it were given to me for free. Seriously, at least put a button on it. I wouldn't buy it for $5. I can only imagine how horrible the sound quality on it is.

Really, the only ipod I'd consider is the ipod touch just for multimedia sake, but I have an iphone so there is no point. I'd honestly rather get an Archos 5 over an ipod touch but I heard archos has poor customer support. Though the ipod touch can sound better with 3rd party accessories. Yeah, never mind the whole archos 5 thing.

I really am quite disappointed with all of apple's ipods because of their poor sound quality compared to other manufacturers.

[Eric S.]

I can only imagine how horrible the sound quality on it is.

According to the excellent review (http://www.appleinsider.com/articles/09/03/21/apples_3g_ipod_shuffle_reviewed_a_step_too_far.html) by AppleInsider:

Thankfully, there does appear to have been a boost in the iPod shuffle's audio fidelity with this third iteration. The slight background hiss during quiet moments appears to be gone. Whether or not the intended output has improved is harder to determine and may vary from user to user, but in testing it seemed like the new shuffle was above the second-run model in quality but below high-end devices like the iPhone. Bass and treble are a bit more distinct.

I'm with you, though; I wouldn't buy it. For me it's not the sound quality, it's the ease-of-use factor. The 2G shuffle's design is about as perfect as you can get. This one is a step or two down.

[WoFat]

I'm shocked. SHOCKED to find profit going on here. Until further notice The Apple Store is closed! (Here's your bonus, Mr. Jobs)

[dvdhsu]

Consumer cost > Production costs? Surely you jest.

Yeah I know man, this world's turning upside down. :D

[jons]

Honestly, if you don't factor in R&D, marketing, wages, licensing etc... every software program ever written has a 100% markup...

[dwl017]

My guess is that the 09 Mac Mini has roughly $175 or less worth of parts.

[Minimoose 360]

This gave me lulz.

[applefan702]

Do you honestly think Apple would sell an iPod for $22? This article is saying that the components/parts are worth $22. Apple has to be able to make a profit y selling it, so that is why they sell it for $79.

:apple::):apple:

[Eidorian]

What a mark up! That's not great for me as a consumer though, but for a variety of reasons I'm sticking with my 2G Shuffle still.Buy refurbished, give Apple less money.

[GreyHare]

Known by their numeric label 01005, which in electronics shorthand describes their dimensions in millionths of a meter

The 01005 package size is actually an English package size, from the part dimensions in tens of mils (approximately; 1 mil = 0.001 inch); 01005 is about 10 x 5 mils. The metric size code is 0402, which corresponds to the official size in tenths of mm (0.4 x 0.2 mm). Almost all mechanical drawings for electronic parts these days are in metric units; English package names are still used out of habit. Yeah, I'm a pedant.

Here where I work, we don't design in parts smaller than 0603 (1608 metric, 1.6 x 0.8 mm) because they're a pain to solder by hand; our soldering iron tips are about 1/64" wide. It's hard to find good (read: don't bend out of shape easily) tweezers with tips smaller than that. If it weren't for automated assembly, using these small parts would be insane. Controlling placement and the proper amount of solder would drive up the price if humans had to do it, and that's before considering the increase in cost because of assemblies rejected due to manufacturing errors.

The fact that Apple can do this blows my mind. I mean, I can read the numbers and do the math like any other engineer, but still... sneeze on this thing before the parts are soldered down and the board fails. You're never going to find the parts.

[jmpage2]

Even taking that into account one would assume that they are still making a 50%+ profit on each iPod. Which, truth be told, is not actually all that much.

In retail 100%+ profits are common.

Typical fluff of someone with no idea of what retailers actually pay for products.

100% margins in computers and consumer electronics are extremely rare. When I worked at an upscale shop back in the 90's we would often see 50% margins on the higher end products, where as many of the more budget oriented items had profit margins of 15-20%.

The only things that have 100% margin in the areas of consumer electronics and computers today are cables and extended warranties.

If Apple spends $25 or so on a Shuffle, they are probably charging distributors and large chains $50-$60 and they are then selling for $80, which means much lower than 100% margins for the retailers actually pushing these products.

[tuckerja]

Ok for this to cost the consumer $22 there would have to be a few things. The people who designed it would have to have done it for free, they would have a lonely human being making the aluminum housing for free and putting it together for free. Then that man would have to drive all the shuffles to each apple store for free.

Just because the parts cost $22 DOESN'T mean that all the money that went into it is discarded. Of course there is a markup, but its not $56 per shuffle!!!

[aaarrrgggh]

...people will understand.

Wholesale markups are usually on the order of 30% of raw materials/parts. Retail markups are usually on the order of 100% of wholesale prices for mass-market stuff. In each industry, these markups are generally well understood.

So, backing things out from retail price: $79/2=$39.50 Wholesale Cost. $39.50/1.3=$30.39 Apple's cost. $30.39/1.2=$25.32 Manufacturer's cost.

That means that assembly and packaging should be (if you believe these markups) about $3.

Gross profit margin is the (retail price - cost)/retail price. Analysts track gross margins carefully with products because... R&D and Marketing costs are well understood and less volatile, not to mention fixed costs to the company.

Net Profits and Net Margins are what comes after all the other costs have been factored in. This gives a sense of management effectiveness, rather than product profitability.

And, for anybody thinking a retailer is making bank with a 100% markup, I suggest you take a business class or start your own business and see how it really works.

[bruinsrme]

I think everyone should be required to take at least a basic business class at some point in their life so we can cut down on the amount of outrage based on ignorance in the world.


Lethal

Who's outraged.

I have one of these things and I have to say its a POS. I have reverted back to my 2nd gen shuffle.

I can't use my preferred headphones and the headphones are adequate at best.

[iMacoo7]

I find it awesome that the parts are not just common parts and that they are as small as they are.... size of a grain of salt-Now thats small!

[ikramerica]

With the ipod, companies besides apple do the research to create the technology that goes into the product, and apple simply comes up with a design to combine the technology into a product.

Really? That's why all MP3 players are alike?

Due to an Amazon marketplace scam, I ended up with a previous gen shuffle clone. They even copied the form of the shuffle. But trust me, they may have had a lot of the same parts, but this was not anything like a shuffle. Even a chinese copy is not close.

So, Apple spends time and money coming up with many, many iPod designs, brings some to full prototype, but only a few make it to production. It's not anything like a Dell tower, where they basically assemble off the shelf parts, put on a Windows OS, and call it a day. That is true minimal R&D. Apple's R&D is some of the most extensive in the industry. It costs money.

[mikeinternet]

I'm surprised they even cost that much.

[mikeinternet]

Who's outraged.

I have one of these things and I have to say its a POS. I have reverted back to my 2nd gen shuffle.

I can't use my preferred headphones and the headphones are adequate at best.

Doesn't someone make a extension cord that has the controls built in and let's you plug any head phones in?

If not someone should.

Another idea like that, that i have been thinking about since before the first shuffle and is even now more predictable...
Make a nice set of over-the-ear headphones and plug the shuffle into the side of them. Then have the controls built into the sides of the headphones.

[bruinsrme]

Doesn't someone make a extension cord that has the controls built in and let's you plug any head phones in?

If not someone should.

Another idea like that, that i have been thinking about since before the first shuffle and is even now more predictable...
Make a nice set of over-the-ear headphones and plug the shuffle into the side of them. Then have the controls built into the sides of the headphones.

no third party support.

I was thinking about cutting and splicing a pair of headphones i like.

[mikeinternet]

no third party support.

I was thinking about cutting and splicing a pair of headphones i like.

Why couldn't this be done? The shuffle wouldn't know the difference between these and other headphones.

[bedifferent]

Really? That's why all MP3 players are alike?

Due to an Amazon marketplace scam, I ended up with a previous gen shuffle clone. They even copied the form of the shuffle. But trust me, they may have had a lot of the same parts, but this was not anything like a shuffle. Even a chinese copy is not close.

So, Apple spends time and money coming up with many, many iPod designs, brings some to full prototype, but only a few make it to production. It's not anything like a Dell tower, where they basically assemble off the shelf parts, put on a Windows OS, and call it a day. That is true minimal R&D. Apple's R&D is some of the most extensive in the industry. It costs money.

Well stated, however not a lot of people seem to understand the costs of research and development. It appears to me that the general population is embracing the road to mediocrity in all things, where cheap is valued and any thing else is "pretentious", "unnecessary" and "brand driven". I've lost count of the numerous individuals proudly stating how they can throw the same parts together and get a Windows based OS that is more powerful for less than its Apple counterpart. Any one can build a car or computer if they are educated in that field. However, can they build a car that drives well, is safe, and looks and feels like a top of the line car? Can they build a computer that runs well, is beautifully designed and meets their needs? Or is a computer or car that gets you from point a to point b, regardless of how or in what method, the desired option? Is mediocrity better than exceptional? I'm saddened that more often mediocrity is the desired choice.

My above comment isn't directed at the shuffle per se, but more so at the comments regarding Apple hardware as overpriced and pretentious, which seem to be increasingly prevalent on MacRumors.

[VoR]

Not a lot of people seem to understand that concept. It appears to me that more and more America and the general population is embracing the road to mediocrity in all things, where the cheap is better and any thing else is "pretentious", unnecessary and "brand driven". I've lost count of how many individuals state how they can throw the same parts together and get a Windows based OS that is more powerful for less than its Apple counterpart. Any one can build a car or computer if they are educated in that field. However, can they build a car that drives well, is safe, and looks and feels like a top of the line car? Can they build a computer that runs well, is beautifully designed and meets their needs? Or is simply a computer or car that gets you from point a to point b, regardless of how or in what method, the better option? Is mediocrity better than exceptional? I'm saddened that more often mediocrity is the desired choice.

I think exceptional is better than mediocrity.

Good post, just like the others.

[bruinsrme]

Why couldn't this be done? The shuffle wouldn't know the difference between these and other headphones.

This can be done, I just have to purchase another set.

You need to cut and splice after the remote.
The remote is needed to control the volume, most unfortunate.

[TheOrioles33]

And its costs 10 cents to print a $100 bill. Whats the point?

[.Andy]

And its costs 10 cents to print a $100 bill. Whats the point?
It costs me heaps more just for the ink. Are you using a bubblejet or a laser?

[mazola]

I'm buying the parts and making my own!

:mad:

[Mackan]

Would be more interesting if they actually did some of these checks on different products from different companies. And *then* compared them, to get a picture of what the possible profit margins are.

[Bruce Oksol]

New iPod Shuffle Contains $22 Worth of Parts[/url]

This is the most inane thing I've read all day (maybe all year). I believe the human body has about $1.97 worth of tangible value. Cremate a body and you get about 4 ounces of ash.

[ruinfx]

This is the most inane thing I've read all day (maybe all year). I believe the human body has about $1.97 worth of tangible value. Cremate a body and you get about 4 ounces of ash.

organs are actually worth a lot.

[Bruce Oksol]

Would be more interesting if they actually did some of these checks on different products from different companies. And *then* compared them, to get a picture of what the possible profit margins are.

You will note that no one even thinks it is worth the time to tear down a Zune to see what it's composed of.

[Bruce Oksol]

Look at everyone making excuses. The shuffle is still a crap player which I wouldn't even use if it were given to me for free. Seriously, at least put a button on it. I wouldn't buy it for $5. I can only imagine how horrible the sound quality on it is.

Really, the only ipod I'd consider is the ipod touch just for multimedia sake, but I have an iphone so there is no point. I'd honestly rather get an Archos 5 over an ipod touch but I heard archos has poor customer support. Though the ipod touch can sound better with 3rd party accessories. Yeah, never mind the whole archos 5 thing.

I really am quite disappointed with all of apple's ipods because of their poor sound quality compared to other manufacturers.

Mr Ballmer,

Thank you for your input.

Steve

[.Andy]

This is the most inane thing I've read all day (maybe all year). I believe the human body has about $1.97 worth of tangible value. Cremate a body and you get about 4 ounces of ash.
Reducing it to a pile of ash is probably not the best way to determine the value of an item :p.

[Dustman]

I could build my own with old PC components for much more less:

http://www.redneckcarparts.com/sitebuildercontent/sitebuilderpictures/redneck_pc.jpg

Hahaha... That's priceless.

[iCantwait]

$22?
THATS AWESOME, 'HAHAHAHAHAHAHAAHA. i love business, if people are stupid, then take their money. i love you apple

[Anuba]

C'mon, it's a $79 gadget. $22 in materials, plus R&D + software + marketing + retail margin... it's worth $79 hands down. If you wanna look at bizarre margins, check out all those damn iPod and iPhone skins, what's the profit margin on those... 99.5%?

[diabolic]

Articles like this aren't a problem. It's the geniuses who have no understanding of business, manufacturing, or retail, thinking they are analyzing the article and determining Apple should only be selling them for $23.

[iCantwait]

capitalism ftw

[ftaok]

Actually, you're wrong. Profit margin (or more correctly, gross profit margin, in this case) is defined as:

Profit Margin = (Revenue - Cost of Goods Sold) / Revenue

Here's a link that explains it:
http://en.wikipedia.org/wiki/Gross_profit_margin

What you are describing is mark up:
http://en.wikipedia.org/wiki/Markup_(business)

The poster you were correcting actually got it right.

Whoops, my bad. Should read that Wiki entry more thoroughly.

My apologies to lilgto64.

ft

[JGowan]

When you've sold nearly 200 million of anything, I suppose you can cut deals with suppliers when ordering a lot of the components. Just a hunch.

I have no problem with paying $79 for an iPod that's 4GB (well, in theory at least -- I don't want this one) -- to me, that's quite a bargain. I paid $399 for a 5GB iPod on 11/12/01 and was very happy with the product and the price. It's all relative. To some, spending $79 on an iPod would keep them making their bills that month. To the wealthy, a sports car is a mere trinket.

In this case, I hope Apple sells just enough to realize that they need to go back to controls on the device.

In my mind, the 2nd generation Shuffle will always be the defacto standard of a screenless mp3 player. It didn't need to be changed. Why couldn't they have stuck 4GB into that form facto, ... ? You know it would fit.

:: grumble ::

[bobertoq]

http://www.macrumors.com/images/macrumorsthreadlogo.gif (http://www.macrumors.com/2009/04/13/new-ipod-shuffle-contains-22-worth-of-parts/)

BusinessWeek reports (http://www.businessweek.com/technology/content/apr2009/tc20090410_507831.htm) on a teardown of the new iPod shuffle by research firm iSuppli, revealing that Apple's diminutive player contains approximately $22 worth of parts.According to iSuppli's analysis, over half the cost comes from two Samsung components, the main controller chip and the 4GB of flash memory at approximately $6 each. The battery, capacitors, and resistors in the new iPod shuffle were also discovered to be remarkably small by industry standards.iSuppli's calculations consider only the actual parts of the device and do not include research and development, manufacturing, distribution, and patent royalty costs.

Article Link: New iPod Shuffle Contains $22 Worth of Parts (http://www.macrumors.com/2009/04/13/new-ipod-shuffle-contains-22-worth-of-parts/)Worth of parts? I dont suppose there were any workers in the factories they needed to pay, or shipping costs...

[PaperMacWriter]

How much more is it for 8GB flash memory? Double the price? 3x the price? Any idea? If its a reasonable price for 8GB instead of 4GB, then I think that some people would pay at least $20-$40 more for it. Can't be too hard for Apple switch the size of flash memory(assuming its the same kind in a larger capacity). Nobody really needs more than 2,000 songs on there iPod at one time anyway...

[ebrunn]

I though you wanted the device to cost more to make than what you sell it for?:confused:

[Pferri]

http://www.washingtonpost.com/wp-dyn/content/gallery/2009/04/10/GA2009041001969.html?referrer=facebook

#38

[Djcyder]

I though you wanted the device to cost more to make than what you sell it for?:confused:

Apple isn't into government yet.

[alexbates]

http://www.washingtonpost.com/wp-dyn/content/gallery/2009/04/10/GA2009041001969.html?referrer=facebook

#38

Haha... good one! I haven't had peeps in forever.

[MattG]

I could build my own with old PC components for much more less:

http://www.redneckcarparts.com/sitebuildercontent/sitebuilderpictures/redneck_pc.jpg

Does it come in any colors but red?

[skyrider007]

wow, you guys are taking this stuff way too seriously. surely there must be more important thing to discuss about. to each their own.

[months]

I don't know why you are all complaining about the design of the new generation of shuffle, it's amazing!

I bought one and use it at the gym and I love it. It's suuuper small, you have to see it in person.

There is no need at all for buttons on the unit, the VoiceOver technology is great, it tells you your playlists and songs. Also, what I found out is that if you are in a playlist and activate VoiceOver, the name of the song comes up obviously, but then, if you click the volume up or down, it says the name of the next song in order. So essentially you can skip through your songs and stop at one when you hear the name of it.

[mdriftmeyer]

I'm buying the parts and making my own!

:mad:

Best of luck getting those parts, sensors and exact access to how to make it install and run, not to mention be recognized by iTunes.

[deggs37]

Is this really surprising for a company that drops the price of the iPhone by $200 in just two months after release...

Yeah, I'm still bitter.

[Anuba]

I don't know why you are all complaining about the design of the new generation of shuffle, it's amazing!

I bought one and use it at the gym and I love it. It's suuuper small, you have to see it in person.

There is no need at all for buttons on the unit, the VoiceOver technology is great, it tells you your playlists and songs. Also, what I found out is that if you are in a playlist and activate VoiceOver, the name of the song comes up obviously, but then, if you click the volume up or down, it says the name of the next song in order. So essentially you can skip through your songs and stop at one when you hear the name of it.
The #1 complaint I keep hearing has nothing to do with the design of the main unit, but the fact that you're forced to use the crappy proprietary earbuds which tend to fall out of some people's ears, especially when they're running or working out. They could've included standard iPod earbuds plus a short cord with the buttons and a female plug so that you could connect any headphones you want.

[allmIne]

Why doesn't this surprise me? It doesn't, not one bit.

I expect this is the same across the entire ipod range and the mac mini and so on. Maybe not so much the mac pro but it wouldn't surprise.

And this is what we mean by "Overpricing"

Granted they need to break even and make profit but this is just a rip off.

Then again, i knew that as soon as i saw the shots of the shuffle, just an overpriced grey plastic piece of crap which i would never order in my life.

There's just so much wrong with every post you've made in this thread.

[allmIne]

Is this really surprising for a company that drops the price of the iPhone by $200 in just two months after release...

Yeah, I'm still bitter.

I have no idea what relevance that has, but hey, you'll know next time. That's what companies do, either when costs come down, or when sales plateau.

I'll wager Apple weren't the first, or the last. That's just business.

[pondie84]

And this is what we mean by "Overpricing"

Granted they need to break even and make profit but this is just a rip off.

Wow... how generous of you to allow Apple to break even... or even make profit!

[allmIne]

Wow... how generous of you to allow Apple to break even... or even make profit!

lol. Some crazy opinions around here, aren't there? I'm glad none of them own businesses, anyway, for their own sakes.

[Eric S.]

wow, you guys are taking this stuff way too seriously. surely there must be more important thing to discuss about. to each their own.

Let's see:
No 10.5.7 yet
Nothing new on Snow Leopard
Of course no news from Apple on HW plans
No Steve Jobs sightings

Nope, nothing more important.

[deggs37]

I have no idea what relevance that has, but hey, you'll know next time. That's what companies do, either when costs come down, or when sales plateau.

I'll wager Apple weren't the first, or the last. That's just business.

It's relevant to the point Apple likes to overprice everything. Otherwise known as the Apple tax. Which is what this thread is mostly discussing. You really believe costs dropped 33% in just 2 months? No, it was all profit from the beginning.

[iMaggot]

Why are you guy surprise :confused:

[designgeek]

This is exactly the margins we look for in the food service industry; about 30% food cost, 30% employee pay, 30% building and utilities and 10% (only if you're lucky) profit but usually around 5%. Some of the best technology availible will cost you. It's neat to know but not really that surprising.

[skyrider007]

Let's see:
No 10.5.7 yet
Nothing new on Snow Leopard
Of course no news from Apple on HW plans
No Steve Jobs sightings

Nope, nothing more important.

ure invited to come over to my manor for a cup of tea and biscuits

[sflocal]

Go to a good restaurant and check what the cost of parts is for a $78 meal.

You're analogy is wrong sir. You failed to consider the fact that the whiners complaining about the margin never leave their parent's basements, have no social life including not having a girlfriend to take out to experience said $78 meal. They believe ordering a "Happy Meal" is a literal phrase.

I think the $78 is a good value for the consumer. I see quite a few number of people using the new shuffles at the gym. Pretty impressive little things.

[JAT]

It would be interesting to see what the ignorant folks who think this price structure is a problem would think of something like a speaker. Bookshelf, tower, whatever. A typical brand sold in retail stores has, at minimum, double 100% markup. (and I mean after including ALL overhead, not just parts) Sometimes far more. This has always been the cost structure for these products, although these days some internet-only companies break the mold.

Let's say a Polk Audio speaker sells for $100. It cost Best Buy ~$45 to buy it and less than $5 to store it til it sells. It cost Polk around $20-25 to make it, under $15 in parts.

[pondie84]

It's relevant to the point Apple likes to overprice everything. Otherwise known as the Apple tax. Which is what this thread is mostly discussing. You really believe costs dropped 33% in just 2 months? No, it was all profit from the beginning.

In a capitalist system there is NOTHING wrong with making as much profit as you want. If a product is priced too high for the market and it is not a monopoly market then consumers will not purchase the product, forcing the price down.

Apple will sell the Shuffle at whatever price it thinks will maximise their profits. This is what businesses do.

[Journojulz]

It's relevant to the point Apple likes to overprice everything.

Maybe that is because it uses the money to design the next innovation?

If apple simply stopped everything else and made only the new shuffle - - maybe it would retail for less.

But if you want arguably the best designed range in the world of technology and design - then be prepared to pay for it.

If you think the 'apple tax' is bad - you should see what the 'Van Gough' tax does to 22c of cloth and pigment!. :D

[sammich]

Premium/Monster home theatre cables (you know the gold plated stuff). You should check out the markup on those. 500 to 1000% easy. $300 dollars for 2 meters of plastic and copper?

[Shagrat]

The reason why apple could made such a small battery is because they use their new lithium polymer technology first introduced with their Thin MacBook air and perfectionated with the new MacBook Pro 17" With this technology they cannot only squeeze out more performance out of the same size but actually can mold the battery in any size necessary.

Perfectionated??? Who wrote your script? G.W.Bush?

I must have misunserstandified.:D

[Shagrat]

... but actually can mold the battery in any size necessary.

and mold grows on bread...:D

EDIT...OK, OK, Mold is an accepted American spelling.

I'll shut up!

[gnasher729]

While I agree that there are obviously other costs besides the components, they are primarily limited to manufacturing and marketing.

The r&d costs to apple for a product like this a minimal.

If all the other cost is minimal, why don't you buy iPod parts for $22 and sell iPods for $44 with a massive 100 percent profit? Or why doesn't Dell buy parts for a million iPods for $22 million and sell them for $44 million at a massive 100 percent profit? Please explain.

And this is what we mean by "Overpricing"

Granted they need to break even and make profit but this is just a rip off.

First, your post shows that you have not the slightest understanding of what these numbers mean. For $22 (if iSupplis guestimates are correct) Apple can purchase the parts that make up an iPod. The parts are just a tiny part. There is research and development. There is paying for the rights for codecs, patents etc. Then there is a tiny detail that you seem to have forgotten, and that is that you have to take the parts and actually build an iPod from them. Now you have an iPod in China. You have to get it into the shops. Pay for the sales people. Pay for warranties, repairs, and so on. And you don't sell a single iPod because you forgot money for advertising. And you forgot that all these things don't happen by themselves, you have to pay the people doing the work to make things happen.

And what do you mean by "granted they need to break even"? This is just unbelievably stupid. If Apple breaks even, they might as well not bother selling the iPods. A business doesn't need to break even, they need to make profit, otherwise they might as well stop running the business.

Think about this: Let's say you have this brilliant idea for a new product: The iPod Puzzle. Just a little cardboard box with all the parts of an iPod Shuffle inside it. Lot's of diehard Apple fanatics around would buy it. If we assume that the parts manufacturers would give you the same pricing for 10000 items that they give to Apple, how much do you think would it cost you to put 10,000 "iPod Puzzle"s into the hands of paying customers?

Would be more interesting if they actually did some of these checks on different products from different companies. And *then* compared them, to get a picture of what the possible profit margins are.

I have never seen iSuppli publishing numbers for anything other than Apple products. Which would make me really curious about who is paying for their "research" and who has an interest in publishing it. I wouldn't be surprised if it was the same people who started the discussion about the imaginary "Apple tax" http://www.theregister.co.uk/2009/04/11/microsoft_flames_macs/

I personally think its interesting to see the component breakdown for devices like this.

Sure this is interesting. Do you expect iSuppli to ever give us the numbers for a Zune? Or a Dell PC?

[Anuba]

and mold grows on bread...:D

EDIT...OK, OK, Mold is an accepted American spelling.

I'll shut up!
Not surprising. Some of their dictionaries have begun to accept "nucular" now.

[bartzilla]

Why are we still linking to these stupid things? First of all, they're obvious. (Who really thought the tiny parts in the Shuffle could cost much more than that?) Second, they're pointless. (They ignore all the other costs involved with creating products like this, including iTunes which costs money to make but is given out for free.)

And finally, so what? Apple makes a profit related to charging more than their production costs. Amazing! Everyone sells software (costing anywhere from dozens of dollars to thousands of dollars) on DVDs that cost only pennies to make. When is iSuppli going to amaze us all with that report?

You do know that Apple is actually a big kid now and doesn't need you to defend it, especially against something that was a comment rather than an attack?

I personally think its interesting to see the component breakdown for devices like this. And I don't begrudge Apple a single penny I've ever paid them for my ipods, computers or anything else.

[BlueRevolution]

In a capitalist system there is NOTHING wrong with making as much profit as you want. If a product is priced too high for the market and it is not a monopoly market then consumers will not purchase the product, forcing the price down.

The fact that you stay so true to Adam Smith's ideals is cute, but he lived 250 years ago. These days, we're not talking about a strict features/price supply/demand relationship. Most of Apple's iPod profit margin comes from simple hype. Hell, most of their massive profit margin period is the product of hype. I own an iMac and an iPod because they are worth the money to me, but I don't think for a moment that the pricing is the product of market forces. Apple does in fact have a monopoly.

The bit that amuses me about this analysis is that it goes purely on parts, yet seems to be taken as gospel here. Marketing, manufacture, shipping, packaging... all similar on a per-unit basis across the iPod line. If it costs Apple $15 to manufacture and distribute a Shuffle, it may cost them $20 to manufacture and distribute a Touch or iPhone. I'm willing to bet that at the end of the day their profit margins by percentage is larger on the more expensive devices, and certainly larger in absolute terms.

So what's the complaining about? If it's worth the price tag to you, buy it. If it isn't, don't buy it.

[gnasher729]

And its costs 10 cents to print a $100 bill. Whats the point?

For those who want to know more: http://www.bankofengland.co.uk/publications/foi/disc070320.pdf

Your numbers are not well researched, or the Bank Of England is a bit more efficient than the US treasury. Note that these numbers are cost of production, not parts.

[pondie84]

I own an iMac and an iPod because they are worth the money to me, but I don't think for a moment that the pricing is the product of market forces. Apple does in fact have a monopoly.

A monopoly on what exactly? The iPod market? Well yes, but there are other comparable media playing devices. The pricing IS a product of market forces. If people didn't think macs and ipods were worth the price they were given then they wouldn't purchase them. This would mean that Apple would either need to make less profit via less sales, would need to increase prices to combat the lowered sales (thereby risking losing more sales) or need to lower prices in an effort to increase sales. I'm not exactly sure why you think market forces don't apply to Apple products.

The iPod Shuffle isn't in a monopoly market no matter what way you want to look at it. They have a series of competitors, and even compete with other Apple products (e.g. iPod nanos etc.).

[bartzilla]

I own an iMac and an iPod because they are worth the money to me, but I don't think for a moment that the pricing is the product of market forces. Apple does in fact have a monopoly.

Apple have a monopoly on Apple products?

My God, you're right. I think that Dell have a monopoly on Dell branded products too. And *gasp* HP have some kind of lock on HP products as well. I don't even want to think about Ford having some kind of monopoly on Ford cars.

We're through the looking glass here people. Expect the shock troops of the New World Order to close this thread down any moment now.

[MattInOz]

Apple have a monopoly on Apple products?

My God, you're right. I think that Dell have a monopoly on Dell branded products too. And *gasp* HP have some kind of lock on HP products as well. I don't even want to think about Ford having some kind of monopoly on Ford cars.

We're through the looking glass here people. Expect the shock troops of the New World Order to close this thread down any moment now.

Those Dirty Monopolist at Ford not happy with one they have on Ford Branded cars went at got themselves monopolies on other branded cars as well. At least Apple was happy with one brand monopoly.

[*LTD*]

So what.

[allmIne]

It's relevant to the point Apple likes to overprice everything. Otherwise known as the Apple tax. Which is what this thread is mostly discussing. You really believe costs dropped 33% in just 2 months? No, it was all profit from the beginning.

It's a business. It provides goods for a profit. So where's the problem? Obviously people are buying it, so there's no reason for Apple to reduce the price of the Shuffle.

I'm sensible enough to admit I've no real idea about business, beyond what I learned in economics 101. So I'll leave it to a company doing pretty well for itself given the circumstances to determine their own price structure on their own products.

[grumps]

This is one of the more bizarre discussions with the usual ridiculous arguments that get trotted out every time there is a discussion about the cost of ANYTHING.

Get this

Apple will charge whatever people will pay for anything.

They are a business...watch my lips...BUSINESS.

They are in business to make a PROFIT.

If they were a CHARITY and were spending $100 to deliver $22 dollars of aid they would be a bad CHARITY (and there are lots of those).

Apple is not a CHARITY.

If you don't want a shuffle for the price that it costs then you should not buy one.

I would like a new BMW Z5 for about $25000 but I don't think that this is going to happen.

Hey if you really want to look at mark ups try big Pharma...the cost of the materials in a pill of Viagra, Lipitor, Prozac...pennies....

[Smacky]

Suckas

[Schizoid]

I have a ming vase here,
probably about 25 pence worth of clay and paint... people say it's worth a lot more... weird

[Jayomat]

I have a ming vase here,
probably about 25 pence worth of clay and paint... people say it's worth a lot more... weird

:)

[iPie]

So many experts of economics on MacRumors! I am going to propose that all heads of state consult the MacRumors Economic Oracle to solve our current economic crisis.:rolleyes:

Enrollment for the exclusive MBA offered by the MacRumors School of BuSiness (MRS BS) is now open. :eek:

MacRumors Consulting is now offering free advice, GM, Chrysler look no further - :cool:

[macshill]

I wonder what some of you would say if you saw a break down of a Zune. :rolleyes: ("Ooh, those bandits at Micro$oft tick me off!")

[allmIne]

So many experts of economics on MacRumors! I am going to propose that all heads of state consult the MacRumors Economic Oracle to solve our current economic crisis.:rolleyes:

Enrollment for the exclusive MBA offered by the MacRumors School of BuSiness (MRS BS) is now open. :eek:

MacRumors Consulting is now offering free advice, GM, Chrysler look no further - :cool:

Lol. It's no wonder we're in the situation we're in, really, is it? The only consolation is, none of the people complaining about the price own a business. They couldn't possibly.

Tighter than drums, they really are.

[Aqueus]

I wonder what some of you would say if you saw a break down of a Zune. :rolleyes: ("Ooh, those bandits at Micro$oft tick me off!")

what is the breakdown of the other mp3 products?

[gnasher729]

I wonder what some of you would say if you saw a break down of a Zune. :rolleyes: ("Ooh, those bandits at Micro$oft tick me off!")

But we won't see those numbers. For unknown reasons iSuppli only publishes numbers for Apple products. No Microsoft products, no Creative, no Samsung, no Dell, or HP, only Apple.

And the numbers they supply are completely meaningless. They are a _guess_ of the cost of individual parts, which is an absolutely meaningless number. Only good to incite the clueless masses who somehow think that sales price minus cost of parts equals profits, plus the usual trolls who have to chip in their wisdom.

what is the breakdown of the other mp3 products?

Who knows? You won't get these numbers from iSuppli. If you check their website and then their news column, all articles except one are about Apple (the last one is about Hynix trying to raise money).

[hiimamac]

So what.

I think what makes things seem over priced, they are, in a way, is that the mac pro is as much as 80% higher over cost, that's a 400% increase. What makes it seem so bad is there is no mid range tower at a much lower price point. Things like ecc ram vs standard ram also keep price up.

The sad thing is in paper you could build a machine that bears the mac pro except in rendering. On the other hand price out a dell with the same specs and it will cost more. Unfortunatly, the iMac is the mid range, take away the display and you looking at $699. Apple would do well to consider this and move the mini to the $199 market. They would more than make up fir it in market share plus in software. If you're really an enthusiast, get the efix USB dvuce, and build a hack i7 fir $800. This would give you the best bang fir dollar or get an iMac.

[Sir Cecil]

I recently tossed a $300,000 painting in the trash when I learned it was made with only $20-worth of paint.

[NYR99]

I worked at McDonald's for many years. 1 hamburger cost about $.23 in "parts", and sold for $.99.

THIS IS NORMAL

[polaris20]

So many experts of economics on MacRumors! I am going to propose that all heads of state consult the MacRumors Economic Oracle to solve our current economic crisis.:rolleyes:

Enrollment for the exclusive MBA offered by the MacRumors School of BuSiness (MRS BS) is now open. :eek:

MacRumors Consulting is now offering free advice, GM, Chrysler look no further - :cool:

The amount of economic experts here are starting to rival the amount if Photoshop experts that can tell a fake photo.

[Eric S.]

Not surprising. Some of their dictionaries have begun to accept "nucular" now.

Relax. All the words we use were either made up at some point or modified from something else.
:cool:

[iMacmatician]

The amount of economic experts here are starting to rival the amount if Photoshop experts that can tell a fake photo.And the number of prophets who can pull the date for the next Mac update out of thin air.

If you think the 'apple tax' is bad - you should see what the 'Van Gough' tax does to 22c of cloth and pigment!. :DBest quote I have read here in a long time!

[farmboy]

organs are actually worth a lot.

In the United States, organs are free. By federal law you cannot charge for an organ. The cost that IS paid is for the harvesting, processing, testing, storage, delivery, paperwork, etc. In other words, it's not the organ it's the processing fee.

[Anuba]

I think what makes things seem over priced, they are, in a way, is that the mac pro is as much as 80% higher over cost, that's a 400% increase.
Well the computers are a different story altogether. iPod prices are just fine. iPods are competitively priced and relatively cheap, even though the margins are technically quite substantial. I honestly never heard anyone complain about the prices on iPods. The software prices are fine, too. iWork is a steal and they're more or less giving Logic Studio away (if you compare to similar products).

The reason why they take so much heat for their pricing on the computer hardware side of things is that Apple are so tone-deaf in that particular market. They want crazy profit margins on re-packaged generic PCs like it was 1982 and computers were some sort of magical boxes the masses have never seen before. This is why everyone from forum pundits to journalists to Microsoft keep attacking them over the "Apple tax". Nothing to do with Apple's prices in general, just the computers.

[MagnusVonMagnum]

It would be interesting to see what the ignorant folks who think this price structure is a problem would think of something like a speaker. Bookshelf, tower, whatever. A typical brand sold in retail stores has, at minimum, double 100% markup. (and I mean after including ALL overhead, not just parts) Sometimes far more. This has always been the cost structure for these products, although these days some internet-only companies break the mold.

Let's say a Polk Audio speaker sells for $100. It cost Best Buy ~$45 to buy it and less than $5 to store it til it sells. It cost Polk around $20-25 to make it, under $15 in parts.

No, it would be interesting to see what a competing music player costs in parts to see where Apple's models stand in terms of the competition. Why is it every time we see one of these parts threads, there's no information given as to what the competition's products cost in terms of parts so we can compare? Just listing $19 in parts for something that costs over $60 sounds bad. Maybe it's normal, but how can you tell when no other information is given?

So instead of having the same tired arguments between fanatics (who think anything Apple does is OK) and the realists (who expect companies to have ethics and make a "reasonable" profit without soaking the consumer for everything they're worth in every way imaginable that's possible), maybe the person or site presenting their article could do a little more homework and present how Apple's products compare to others in costs and if available, in profit margins, which is the true tell-tale of whether Apple has ANY ethics what-so-ever because this headphone jack thing looks very bad to me.

Maybe ethics are based on "outdated" things like religions, which teach not to cheat at the scales, etc., but some of us are old fashioned and expect value, not hype and attempts to get license fees out of things like headphones where a simple female connector jack would do just fine and let you connect any headphones you want to their control cable. That latter thing tells me all I need to know about Apple's ethics, really. They clearly want to extort money out of the competition (or eliminate competition entirely that don't want to pay their extortion charges) and therefore Apple has no ethics. Most corporations don't. They lobby for anti-consumer laws and then try to soak them at every turn. Is that the morality and ethics countries like the U.S. were based on? That falls on Steve Jobs, really. He has been directing the company for years and profit at any cost seems to be high on his mind.

So while I cannot be 100% certain whether the parts/cost ratio is completely out of line with the Shuffle without more data or comparisons to the competition, I can be sure that the headphone cable/chip thing was designed to do exactly the things I've outlined above and that does not speak well for Apple as a whole. You cannot respect companies that are essentially greed mongers. Small business owners often advertise how they are "fair" and "honest". Corporations always seem to lack in those areas and lobby for even more profit. Maybe it's because of the shareholder system which seems to demand returns for investors whereas small privately owned companies can make more ethical decisions, but that just means the corporate system is broken and needs a regulated overhaul. The recent recession and failure of banks and corporations alike proves that it's long overdue.

[kornyboy]

Wirelessly posted (iPhone: Mozilla/5.0 (iPhone; U; CPU iPhone OS 2_2_1 like Mac OS X; en-us) AppleWebKit/525.18.1 (KHTML, like Gecko) Version/3.1.1 Mobile/5H11 Safari/525.20)

It is interesting that the parts cost $22. I don't see Apple making a whole lot of money on the shuffle if you consider costs of hosting and developing the online store plus costs of operating Apple stores.

[Anuba]

Wirelessly posted (iPhone: Mozilla/5.0 (iPhone; U; CPU iPhone OS 2_2_1 like Mac OS X; en-us) AppleWebKit/525.18.1 (KHTML, like Gecko) Version/3.1.1 Mobile/5H11 Safari/525.20)

It is interesting that the parts cost $22. I don't see Apple making a whole lot of money on the shuffle if you consider costs of hosting and developing the online store plus costs of operating Apple stores.
Also, retailers want their share too, but they sell iPods at the same prices as the Apple stores do, so obviously Apple doesn't get $79 for those Shuffles.

[polaris20]

No, it would be interesting to see what a competing music player costs in parts to see where Apple's models stand in terms of the competition. Why is it every time we see one of these parts threads, there's no information given as to what the competition's products cost in terms of parts so we can compare? Just listing $19 in parts for something that costs over $60 sounds bad. Maybe it's normal, but how can you tell when no other information is given?

So instead of having the same tired arguments between fanatics (who think anything Apple does is OK) and the realists (who expect companies to have ethics and make a "reasonable" profit without soaking the consumer for everything they're worth in every way imaginable that's possible), maybe the person or site presenting their article could do a little more homework and present how Apple's products compare to others in costs and if available, in profit margins, which is the true tell-tale of whether Apple has ANY ethics what-so-ever because this headphone jack thing looks very bad to me.

Maybe ethics are based on "outdated" things like religions, which teach not to cheat at the scales, etc., but some of us are old fashioned and expect value, not hype and attempts to get license fees out of things like headphones where a simple female connector jack would do just fine and let you connect any headphones you want to their control cable. That latter thing tells me all I need to know about Apple's ethics, really. They clearly want to extort money out of the competition (or eliminate competition entirely that don't want to pay their extortion charges) and therefore Apple has no ethics. Most corporations don't. They lobby for anti-consumer laws and then try to soak them at every turn. Is that the morality and ethics countries like the U.S. were based on? That falls on Steve Jobs, really. He has been directing the company for years and profit at any cost seems to be high on his mind.

So while I cannot be 100% certain whether the parts/cost ratio is completely out of line with the Shuffle without more data or comparisons to the competition, I can be sure that the headphone cable/chip thing was designed to do exactly the things I've outlined above and that does not speak well for Apple as a whole. You cannot respect companies that are essentially greed mongers. Small business owners often advertise how they are "fair" and "honest". Corporations always seem to lack in those areas and lobby for even more profit. Maybe it's because of the shareholder system which seems to demand returns for investors whereas small privately owned companies can make more ethical decisions, but that just means the corporate system is broken and needs a regulated overhaul. The recent recession and failure of banks and corporations alike proves that it's long overdue.

So charging what people are willing to pay, in order to make money to further R&D, pay for advertising, pay salaries, and to make shareholders money isn't ethical?

The corporate system needs an overhaul because publicly held companies have to please their shareholders?

Not a big fan of capitalism, huh?

What the banks did to the US and what Apple charges for an iPod are two very, very different things, and the former is completely irrelevant to this thread.

[Anuba]

So instead of having the same tired arguments between fanatics (who think anything Apple does is OK) and the realists (who expect companies to have ethics and make a "reasonable" profit without soaking the consumer for everything they're worth in every way imaginable that's possible), maybe the person or site presenting their article could do a little more homework and present how Apple's products compare to others in costs and if available, in profit margins, which is the true tell-tale of whether Apple has ANY ethics what-so-ever because this headphone jack thing looks very bad to me.
The ethical dilemma mostly comes from having to kiss up to shareholders who keep getting greedier and greedier. "What, only $5 billion in profits? We expected $10 billion, please fire 10,000 of your employees or we'll take our money elsewhere". Apple have spoiled their shareholders with record profits for many years now, and there would be an uproar if they cut their prices.

I wish more companies were run like Ikea. The world's largest furniture manufacturer is in fact not a public company at all -- you can't buy Ikea stock, because it's actually a foundation. They don't have to kiss up to anyone except the end customers, they don't have to resort to mass-firings because some pompous investor wants a ruby-encrusted yacht.

[Eric S.]

The ethical dilemma mostly comes from having to kiss up to shareholders who keep getting greedier and greedier. "What, only $5 billion in profits? We expected $10 billion, please fire 10,000 of your employees or we'll take our money elsewhere". Apple have spoiled their shareholders with record profits for many years now, and there would be an uproar if they cut their prices.

But also don't forget pressure from Wall Street investors: "What, only $5 billion in profits? We expected $10 billion, please fire 10,000 of your employees or we'll hammer your stock price until it's worthless."

[Bubba Satori]

Oh man, this thread is hilarious. Just as good as the Microsoft ad threads. Keep'm coming. :D

[bobertoq]

Is this really surprising for a company that drops the price of the iPhone by $200 in just two months after release...

Yeah, I'm still bitter.the one reason apple was able to drop the price by $200 was because apple started to get a subsidy from AT&T for every iPhone apple sells. If apple didnt get any subsidies, apple would lose massive amounts of money on the iphone.

[maokh]

$22 in parts? That is pretty crappy margin....
they are almost giving the thing away.

[Anuba]

the one reason apple was able to drop the price by $200 was because apple started to get a subsidy from AT&T for every iPhone apple sells. If apple didnt get any subsidies, apple would lose massive amounts of money on the iphone.
True. Still, the whole debacle was interesting to watch because if there's one thing that Apple apologists all agree on, it's that the price doesn't matter, it's all about the interaction of hardware and software creating an experience you can't put a pricetag on, and that Apple's products are worth every penny. When the price was dropped, the exact same people said "GIMME BACK MY $200 DAMMIT!!!" But... I thought you said the experience was worth $599 yesterday? ;)

[MagnusVonMagnum]

So charging what people are willing to pay, in order to make money to further R&D, pay for advertising, pay salaries, and to make shareholders money isn't ethical?

Well, that depends on whether there are any alternatives or not. In the case of Macintosh computers, Apple seems to think that they are allowed to be the only player in the OS X hardware market and can "legally" stop others from entering it. You cannot have it both ways. If you are FOR Capitalism, then you MUST compete. If you want to play protectionist, then you are not for Capitalism. Apple continually wants its cake and to eat it too.


The corporate system needs an overhaul because publicly held companies have to please their shareholders?

Not the corporate system. The government is the one that needs the overhaul. Corporations are legal entities. They should not be treated as humans. They should not be allowed to lobby the government as a person would (or have someone do it for them). It is in fact the lobbying that is the problem. Our government is supposed to represent its people, not its corporations. Yet the reality is that it does the latter most of the time because that's where the money is. Lobbying has become a code word for "legal bribe" because that is EXACTLY what it has become. Petitioning your congress to listen to you is one thing. Spending MILLIONS or even BILLIONS to push your company's agenda over the general populace isn't right. This is rule for and by the people, not for and by the corporations. It's a sad day when so many on this forum do not and cannot tell the difference. The basis of capitalism is that competition is good for the consumer and brings about better choices and lower prices. Monopolies are bad for the consumer because it brings about higher prices and few or no choices. When Capitalism becomes about companies joining together into loose federations to protect each other from consumer rights, freedoms and choices it has lost its way.

Everything Apple does anymore is anti-competition. They do not want to compete with Dell directly because it means their profit margins will go down and the consumer will see lower prices. So they maintain that they DO compete with Dell even though Apple is free to ship Macs with Windows but Dell is not free to ship OS X with its hardware. Essentially, if you want OS X, you HAVE to buy your hardware from Apple even though it's the SAME HARDWARE you get from Dell. Apple is tying their OS to their hardware to prevent you from buying your hardware elsewhere if you want to maintain your software library (nobody wants to dump all their software investment to run Windows exclusively; If you're coming from Windows you don't have to do that since the Mac can run Windows, even virtually, but you are not allowed to run OS X virtually)

The sad sad part is that the Apple fanatics think that's perfectly OK. Apple doesn't have to compete with anyone because they're smaller? They're often the #3 hardware seller out there. That's not small. We're talking about hardware sales here, not OS sales. Their OS sales have NOTHING to do with their hardware ranking. Hardware and software are not the same thing and are not the same market.


Not a big fan of capitalism, huh?


I'm not a huge fan of the greed that is often behind capitalism, but capitalism itself is supposed to be beneficial to the consumer by promoting competition to keep choices high and prices low. When that no longer functions because companies are trying to cheat the system then capitalism is no longer an effective economic system.

Pure socialism lacks incentive to do well, but a hybrid system may be what's needed to promote creativity while also maintaining basic living standards for everyone. I find it amazing that so many people out there claim to believe in a religion like Christianity and yet the eschew its basic tenants of charity and treating your neighbor like your own family and avoiding greed and worshiping money. To me, it only proves that most people are in fact hypocrites and have a long way to go on a spiritual level. So no, I don't much like the way capitalism has ruined this country on so many levels. Greed in government (lobbying), greed in corporations, greed at the market place, greed in daily life. It all adds up to misery for all in the end. No I'm not claiming to be any kind of traditional Christian either. I'm simply using it as an example given its #1 status in world religions. Most religions teach similar values. Most people ignore them and still lie, cheat, murder and steal.


What the banks did to the US and what Apple charges for an iPod are two very, very different things, and the former is completely irrelevant to this thread.

You say it's irrelevant but in fact both are based on GREED and so they are much more closely related than you would have people believe. You might find it amazing how well things could run in this world if people weren't trying to constantly cheat or rip off each other any way they can to get ahead.

In any case, like I said, let's see some figures for parts from other companies. Maybe $19 in parts isn't so ridiculous, but how are we going to know if we don't have a frame for comparison?

[Eric S.]

True. Still, the whole debacle was interesting to watch because if there's one thing that Apple apologists all agree on, it's that the price doesn't matter, it's all about the interaction of hardware and software creating an experience you can't put a pricetag on, and that Apple's products are worth every penny. When the price was dropped, the exact same people said "GIMME BACK MY $200 DAMMIT!!!" But... I thought you said the experience was worth $599 yesterday? ;)

That wasn't just the "Apple tax," that was the "Apple early adopter tax."

[Mister Snitch]

A human being contains about $30 worth of chemicals. Therefore, a human being should be worth about $30, wholesale.

[Anuba]

A human being contains about $30 worth of chemicals. Therefore, a human being should be worth about $30, wholesale.
Yeah. Then again it costs a fortune to house, feed and educate a human in preparation for adult life, so you might wanna add a a few hundred thousand in, um, post-production costs. I don't think they send iPod Shuffles to college.

[Eidorian]

A human being contains about $30 worth of chemicals. Therefore, a human being should be worth about $30, wholesale.That sounds about right.

[gnasher729]

Well, that depends on whether there are any alternatives or not. In the case of Macintosh computers, Apple seems to think that they are allowed to be the only player in the OS X hardware market and can "legally" stop others from entering it. You cannot have it both ways. If you are FOR Capitalism, then you MUST compete. If you want to play protectionist, then you are not for Capitalism. Apple continually wants its cake and to eat it too.

You have very strange ideas what "competing" means. Apple competes. Their plan for competing: Invest tons of money for the best possible design, invest in the best parts you can get, and invest hundreds and hundreds of millions in the best operating system to entice people to buy their computers.

Dell could have competed that way. Seven, eight years ago Dell could probably easily have outbid Apple when NeXT was for sale with their operating system that became the basis for MacOS X. They could have bid $500 million instead of Apple's $400 million, and then invested the same many hundred million dollars to turn it into what it is now. DellOS X could have been the worlds best operating system, and we could all be posting on DellRumors.com, and you would be whinging and whining that Dell has a monopoly on DellOS X compatible hardware.

Dell chose not to do this. All the other computer manufacturers chose not to do this. They decided to compete on price instead. How idiotic is it to think that when Apple invested probably a good billion dollars into MacOS X, they should let any other company benefit from it?

The first and foremost method for competing is: Find something that distinguishes you from the competitors. Find something that makes you stand out from the crowd. Dell decided that their distinguishing mark is low price and configurability. Apple decided that their distinguishing mark is MacOS X. You don't want Apple to compete. You want them to hand over their hard earned advantage to others, so that you can get computers with MacOS X cheaper from someone else who didn't invest the money. That is truly pathetic.

[MagnusVonMagnum]

You have very strange ideas what "competing" means. Apple competes. Their plan for competing: Invest tons of money for the best possible design, invest in the best parts you can get, and invest hundreds and hundreds of millions in the best operating system to entice people to buy their computers.

No, YOU are the one with the strange idea of what "competing" means. I'll tell you what competing means. Competing means not trying to sue everyone that wants to sell hardware that can run your operating system but instead letting your hardware sell itself. If it's as great as the Apple fanatics say it is and has great value then no one will buy those machines from companies like Psystar. Trying to sue everyone who would sell hardware in the same marketplace as your own is not competing. It's just the opposite. It's anti-competition. Apple seems to think they should be the only ones allowed to install OS X on clone hardware. The fact they own and control OS X has "what" to do with the hardware they're selling??? NOTHING anymore.

If they want to compete, then it needs to be apples to apples. OS X is competing against Windows. That's software against software. I'll buy into that argument. But a Mac Pro tower should be competing against a Dell or HP tower. But what is it actually competing against? NOTHING because nothing else is "allowed" to run OS X. That is a virtual monopoly on hardware for OS X. Well, we'll see about that in court.


How idiotic is it to think that when Apple invested probably a good billion dollars into MacOS X, they should let any other company benefit from it?


How idiotic is it to think that HARDWARE has a flipping thing to do with SOFTWARE??? Maybe you think Microsoft should not be allowed to sell Office for OS X because they're profiting from OS X's existence? Dell isn't even selling software for goodness sake so it's not even that close of a comparison. Dell is selling HARDWARE. If that hardware is capable of running OS X, so be it. If it's capable of running Linux then so be it. If it's capable of running OS/2, then so be it. If it's capable of running Windows, then so be it. If it can run ALL OF THEM, so be it! It's HARDWARE! A consumer should be able to choose the best hardware that suits his or her NEEDS (imagine that) and then move on to the software they WANT to use. If that software is OS X, then so be it! They should pay for it and then install it. How freaking hard is that to grasp? Why is it that Apple fanatics seem to think that Apple is somehow *entitled* to monopolize OTHER MARKETS because they wrote an operating system for the software market???? Yes, you should BUY OS X from Apple. What does THAT have to do with being forced to buy THEIR CLONE hardware (thereby eliminating all other avenues of hardware competition) if you want to run their SOFTWARE????

They're artificially TYING their operating system to their hardware and forcing you to buy one to get the other. That is ILLEGAL and it's why they will lose in court. Hardware and software are completely different markets (ask Microsoft and Lenovo if they are in the same markets) and the fact your company may operating in BOTH markets does not mean they can leverage one against the other! Imagine if Philip Morris said you had to buy their cigarettes in order to buy Kraft Macaroni and Cheese! The fact that Philip Morris sells both does not mean they can tie one to the other. If Zippo sold cigarettes, should they be able to force you to buy their lighters in order to buy their cigarettes or vice versa? NO NO NO!

[Anuba]

Why is it that Apple fanatics seem to think that Apple is somehow *entitled* to monopolize OTHER MARKETS because they wrote an operating system for the software market????
But... software is intellectual property and as long as Apple doesn't offer the option to buy a full license of the OS on DVD, you cannot acquire one. You can't become an OS X licensee without buying a Mac -- any OS X DVD you subsequently buy is an upgrade. The fact that an upgrade DVD technically allows you to perform a clean install (just like a Windows upgrade does) doesn't change the scope of the license agreement. And I very much doubt that it's illegal to tie software to hardware, there must be plenty of legal precedents establishing that it's illegal to extract proprietary software from hardware and use it as you see fit. Software is licensed, not sold, and thus the first-sale doctrine doesn't apply. They sell Mac as an appliance, not hardware with bundled software, so from a legal POV, taking the OS and selling it separately bundled with third-party hardware would be something akin to extracting the OS from some gaming console, or a Nokia cellphone, and loading it onto your own hardware products.

Even if the court feels rebellious and rules in Psystar's favor in the new case that goes to trial on November 9, fine... let's say Apple were to build a kind of hardware dongle into Macs that serve as copy protection for the OS so that it won't run on clones... would that be illegal? Nah, lots of software uses hardware USB dongles for copy protection. A Mac would simply be a software bundle with a really, really, really large physical copy protection key.

[carlgo]

I could build my own with old PC components for much more less:

http://www.redneckcarparts.com/sitebuildercontent/sitebuilderpictures/redneck_pc.jpg

Here is my screen play:

A street person is sleeping on the sidewalk. Commuters and shoppers are stepping around him. He wakes up, pees against the side of a building and starts yelling at people randomly and muttering darkly, casting hostile eyes at frightened children and old ladies.

Next scene he lurches into a nearby Apple store, filled with shiny, privileged people. He spits on a glass tabled display of sleek aluminum notebooks, scattering customers. As a burly security guy starts towards him, he curses unintelligibly and stumbles out the door, yelling back at the wide-eyed people in the store.

He staggers down the street, again yelling at people and threatening them. This time, his dialogue is clear enough to understand: he wants a computer so he can find out how to make a bomb and kill people who mock him and the (muffled, but obvious curseword adjectives) Apples are not affordable.

In despair, he turns into an alley to get his shopping cart, hoping to find enough plastic wrappers and fast food containers to buy a Dell. Instead, he finds this computer in a crate.

His eyes weep as he carts it down the street. In the last scene, he is in a mission, dressed nicely and groomed. His speech is clear and rational. "Apples were too expensive. I don't need no fancy s*** just to look up stuff". The camera pans quickly over the screen. It looks like he has accessed bomb-making, porn and jail-house romance sites, but it is hard to tell.

In the last scene he is happily gazing at the screen, along with several friends with excited looks on their grizziled faces. He looks up at the camera and says "I got just what I needed at a price I can afford. And I got Windows".

[Drumerdude]

even though there is about $20 in parts, it doesn't mean you can go out and make an ipod shuffle. I know most of us probably can't even afford some of the equipment used to make the shuffle.

[thunderweb]

even though there is about $20 in parts, it doesn't mean you can go out and make an ipod shuffle. I know most of us probably can't even afford some of the equipment used to make the shuffle.

Agreed.

Unless you're gonna go out and start MANUFACTURING iPods then I wouldn't be complaining. Ya so what if Apple is netting, what $20 profit per shuffle? Does not nearly every other company try and do the same thing? If we were to look at say a car company and apply the same ideas that people are applying to the shuffle profit margin to them there wouldn't be any question that they are in it for the money. Isn't that what a business tries to do? Make money?

[pr5owner]

even though there is about $20 in parts, it doesn't mean you can go out and make an ipod shuffle. I know most of us probably can't even afford some of the equipment used to make the shuffle.

no but for $40 bux you can get a sandisk sansa clip that does more than the ipod shuffle and even comes with a display.... (i seriously have no clue why anyone would buy that apple peice of crap)

the sansa does the following

plays MP3, wma, wav, aax, FLAC, OGG (yes i have some songs in OGG and FLAC)
FM Radio
FM Recording
on the fly playlist generation
OLED Screen (do you have any idea how much more convinient it is to have a sceen? for example i have a top 1000 hits of the last 30 years, i dont really remember every single song, but when i come across a song i like, i can just look at the screen to see whats playing, HTF do you do that on the shuffle?)
LONGER battery life
Voice recording (i find the main use for most people is lecture halls recordings)
selectable Auto, MTP or MSC (works on both linux and apple, simple drag and drop)
better sound quality than the shuffle
cheaper with the same warranty (both 1 year)

[pr5owner]

If you don't want a shuffle for the price that it costs then you should not buy one.

I would like a new BMW Z5 for about $25000 but I don't think that this is going to happen.

Hey if you really want to look at mark ups try big Pharma...the cost of the materials in a pill of Viagra, Lipitor, Prozac...pennies....

if your not emo and you can look past a brand name, i would say the Genesis Coupe is WAY MORE fun than a Z5

for about $28ish you can get a 3.8L V6 GT spec Genesis coupe

306HP
13.5" Brembo disc brakes
6spd
Limited slip diff
sport tuned suspension
leather
HID with auto leveling
just about everything the bmw would give you

[Eric S.]

no but for $40 bux you can get a sandisk sansa clip that does more than the ipod shuffle and even comes with a display.... (i seriously have no clue why anyone would buy that apple peice of crap)

Maybe I don't want a screen on my clip music player, and I don't give a damn about FM radio. That sansa thing is too big.

[PowerFullMac]

So that's the reason for them making everything smaller! Just think of their profit margins on the MacBook Air!

[heatmiser]

Oh man, this thread is hilarious. Just as good as the Microsoft ad threads. Keep'm coming. :D

Nothing makes Apple fanatics more frantic than the chance to defend Apple. :O)

[trevpimp]

$22

Wow that would be really cool,......

if I knew how to actually build it ;)