New iPod Shuffle Contains $22 Worth of Parts

[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

 

[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!.

 

[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.

 

[Shagrat]

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

and mold grows on bread...

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...

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.