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New iPod Shuffle Contains $22 Worth of Parts

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BusinessWeek reports 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
 

PlaceofDis

macrumors Core
Jan 6, 2004
19,240
5
.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.
 

YanniDepp

macrumors 6502
Dec 10, 2008
488
38
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.
 

Small White Car

macrumors G4
Aug 29, 2006
10,925
1,235
Washington DC
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

macrumors 68000
Oct 5, 2008
1,759
0
Japan
I could build my own with old PC components for much more less:

 

Cromulent

macrumors 603
Oct 2, 2006
6,039
36
The Land of Hope and Glory
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

macrumors 68020
Jul 13, 2008
2,258
250
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.
 

mdntcallr

macrumors 65816
Aug 1, 2000
1,470
179
$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

macrumors G4
Aug 29, 2006
10,925
1,235
Washington DC
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

macrumors 6502
Jul 31, 2007
276
0
No surprise here. I'd happily pay the $90 again for the new shuffle. Best gym iPod EVER! :D
 

iSlicer

macrumors member
Feb 7, 2007
68
13
Himeji, Japan
Think about it first guys.

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.
 

AAPLaday

Guest
Aug 6, 2008
2,411
2
Manchester UK
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:
 

ajones46

macrumors 6502
Feb 9, 2009
376
1
Monroe, Michigan
silly...

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.
 
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