“Apple issued a major salvo to the industry this month with the Nano digital music player, which has up to 4 GB of flash memory for $249. Unlike most other flash players, the Nano has a big color screen and can hold about 1,000 songs. And it’s more likely to survive a hard fall than full-sized iPods, which use hard drives,” Michelle Kessler reports for USA Today.
“The Nano is so inexpensive that Apple is probably losing money on it, with the hope of profiting through music sales and later models, [chip analyst Jim Handy of Semico Research says]. Even so, nearly all of Apple’s rivals are probably rushing to develop Nanolike devices of their own, he says,” Kessler reports. “The numbers aren’t out yet, but Handy expects competitors to gobble up so much flash that there may be temporary shortages and price increases on the wholesale market.”
Full article here.
CNET’s Michael Kanellos has reported, “Right now, 1GB of flash memory in the volume market costs about $45, according to both Semico and iSuppli. Thus, the 2GB iPod Nano, which sells for $199, contains around $90 worth of flash, while the $249 4GB version has about $180 worth of flash, said Semico’s Jim Handy. ‘They might have been able to get something for $40, but that’s still $160 worth of memory,’ he said… Apple likely got a substantial discount from its flash supplier, which [iSupply’s Nam Hyung Kim] and others say is Samsung.”
Full article here.
AppleInsider reports that Apple “struck a deal with Samsung in which the iPod maker would purchase as much as 40% of Samsung’s second-half flash memory output in exchange for a significant volume price reduction. Some analysts speculate that Samsung offered Apple a 50% discount, which would bring Apple’s per-Gigabyte cost for flash memory inline with that of the hard disk drive-based storage used in the iPod mini.”
Full article here.
Advertisement: Apple iPod nano. 1,000 songs. Impossibly small. From $199. Free shipping.
Related articles:
USA Today: ‘iPod nano a hit’ – analyst predicts 26 million iPods will be sold in next two quarters – September 19, 2005
Also-ran MP3 player makers miffed by Apple’s impossibly low price for iPod nano – September 09, 2005
yeah.. apple’s getting a 50% discount on flash, AND they took quite a few things OUT of the nano (firewire, etc)
Sounds like time for a Jihad — get in line with your flame-throwers and fire up Mail.app!
Gee, if you folks were as tough on geopolitical ANALysts as you were on the author of the speculative Nano article, the world would be a much better place.
http://911BLIMP.net
In past earnings conference calls, Apple has stated average margins of 28%. For the iPod, due to the low margin Shuffle, margins have been 20%.
Since no analysts threw a hissy fit at the last conference call, one can only assume that the forward-looking guidance from Apple was that margins would continue at 20% for the iPod. I’d wager my nano that the margin on it is at least 20%.
Some “anal-yst”.
This guy was probably reassigned from the grey-box “value” pc or RIO/Zen/alsoran beat and is trying to use the same assumptions for anal-lyzing those losers to anal-lyze Apple.
As others have stated, “APPLE SELLS NOTHING AT A LOSS”. It is not in their gene structure.
Someone get this guy some new crayons and a fresh note pad for his Apple assignment.
sd.–it was Mark TWain, I believe, who said “Better to be silent and thought a fool, than to speak and remove all doubt.”