iSuppli teardown shows Apple’s 8GB iPod touch’s component costs at US$147

“According to a teardown analysis conducted by market-research firm iSuppli, the Touch isn’t just a stripped-down iPhone, but rather it has some unique design traits of its own. ISuppli pegs Apple’s total cost of components on the 8GB version of the Touch at $147, or about 49% of the $299 retail price on the device. This would follow the pattern of other devices in Apple’s iPod family that generally carry material costs that amount to about half, give or take a few percentage points, of the retail price,” Arik Hesseldahl reports for BusinessWeek.

MacDailyNews Note: iSuppli estimated only the total cost of components and does not factor in R&D, marketing, and other costs associated with Apple’s iPod touch. Those TV and print ads (we’ve seen touch ads on the backs of many major magazines since the devices release) are certainly not free.

Hesseldahl continues, “While it has the same core features as the iPhone (except, of course, those that require a phone), the Touch, unveiled on Sept. 5, likely represents the road map that Apple will follow on future iPods, says iSuppli’s Andrew Rassweiler. “We expect the click-wheel versions of the iPod to wane in favor of touch-screen-based models,” he says. The iPod Classic may turn out to be the last iPod to use a hard drive. Future versions are more likely to run exclusively on flash memory.”

“Given prior history, the iPod Touch will probably stay on the market in its current form for about a year, only to be upgraded sometime in the third quarter of 2008. During that year, Rassweiler expects, Apple will sell about 8.5 million units. In terms of sales popularity, that would put the Touch about midway in Apple’s family. The iPod Nano is the most popular model, expected to sell nearly 28 million units in 2008, while the Classic will sell about 3.5 million units, according to iSuppli forecasts.

Full article here.

39 Comments

  1. Are we going to listen to this iSuppli crap again? To borrow an analogy from STARSHIP TROOPERS (the book, not the movie), a bad cook can turn perfectly good apples and other ingredients into an inedible mess thus reducing the value of those ingredients, while a good cook can turn those same ingredients into a fine pastry. Let’s see iSuppli turn out an iPod. Betcha they’d zune it.

  2. Microelectronics lesson from a former consumer electronics manufacturing engineer. What iSupply is trying to estimate is the Bill of Material (B.O.M.) cost for the touch. Do not be alarmed if the B.O.M. is 1/3 of the retail price. As Metryq eluded to, when I go to a restaurant and order a meal I am paying mostly for the preparation not the raw components.
    Much of the cost is in assembly (hence why we sold out our economy to China), quality control, and logistics (what, you think everything magically gets to where it need to go?).

    Just my $0.02

  3. R&D;is expensive.

    I guess iSuppli figured Apple employees went to work one day and found what Elves had left for them to sell. Unlike other business’ that return to the turds that were left from the day before – Apple employees most likely don’t count on Elves to do their research and product development.

  4. @Drunk Cheney

    What do you mean, Apple iPod Touches are NOT made by Elves??? Good cookies are made by Elves. They say so on TV. I think Apple products are made by elves.

    Thats why they look and taste so good. ” width=”19″ height=”19″ alt=”grin” style=”border:0;” />

  5. @Ray,

    Well put. As a design engineer, I know that Non-Recurring Engineering (NRE) is not cheap either! For the rest of you, NRE is all that design and innovation work. The good thing about NRE is that you can amortize it. You build the cost of NRE into the first N number of units you build and sell. From unit N+1 on, that turns to profit.

    Profit is the game that Apple has figured out.

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