“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.
I get mine, the 16GB version, next week. I can hardly wait.
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.
Is OS X stille $6?
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
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.
What does ISuppli say about the cost of components in a Ford?
Or the cost of a Hanes t-shirt 3-pack?
@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.
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Come on Apple Marketing! You are totally missing the boat – “I Touch Myself” by the Divinyls for the next iPod touch commercial!
“And sometimes when we touch
The honesty’s too much”
– Dan Hill
@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.
“I think Apple products are made by elves.”
But the glossy ones are made by elvers. Pretty slick.
it is funny that every time these studies come out every one jumps to Apples defense….
…are there really people out there who think the cost of the parts should be equal to the cost of the final product? do they buy bottled water?
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The iPod touch itself will outsell the entire Zune lineup (their flash model included).
@ Ampar
“And sometimes when we touch
The honesty’s too much”
– Dan Hill
Yikes
Grigori, I just have to keep searching for WiFi hotspots until the fear in me subsides.
“do they buy bottled water?”
I think they are bottled water.
What is the purpose of these iSupply studies? Who gives a sh*t. As pointed out very well above, and in previous versions of this same article, the cost of materials is only a small piece of the production cost of a product. So I ask again, what is the purpose of publishing these iSupply studies. It is like they want to instigate dissatisfaction among iPod buyers.
That’s nothing. In retail, as a general average, you take costs x 4 to get the final price.
My Grandmother’s medicine for Alzheimer’s cost 8 cents a pill to produce and $20.00 at the pharmacy.
If thats true, then heck, Apple isn’t earning much per iPod.
49% is material cost…
I wonder what the return is per iPod?
You guys are buffoons. Estimating the variable costs of a device is useful, even if you don’t get it.
one needs to remember… the actual cost to Apple is probably somewhere around $80 or $90 after the volume discounts.
Very pathetic of Apple.
It only costs $147 to produce and they charge you $399? No wonder they’re so profitable with these overpriced pieces of crap.
So Apple is actually in this business to make a profit? Shocking! Now let’s get back to those evil record companies and their over inflated prices…
Peter stated, “Very pathetic of Apple.
It only costs $147 to produce and they charge you $399? No wonder they’re so profitable with these overpriced pieces of crap.”
Peter, you should read the article before the flaming begins. They are talking about the 8gb version. List price $299. That takes 25% of the point out of your statement. Eh?!!?
“It only costs $147 to produce and they charge you $399?”
The cost of components is $147. Apple’s products, of course, design, assemble, ship and market themselves just like everyone else.
Very pathetic attempt at trolling, Pedro. Aren’t you missing gym?