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New iPod Shuffle Contains $22 Worth of Parts
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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
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
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?
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.
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).
Unfortunately for apple, I’m not willing to buy a $90 shuffle (too broke to buy toys).
Not Lithium Ion but Lithium Polymer
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.
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.
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.
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.
well it doesn't seem like a total shock. of course i would love to see the shuffle go for cheaper though
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.
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.
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.
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...
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
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.)
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.
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 :
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.
However, this part of the article seems to be the real kicker :
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.
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 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
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.
Someone's a business major!
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.
What R&D?
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.
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.
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
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
