iSuppli: New Nano Costs $58.85 to Make


iSuppli's teardown of the new 4GB and 8GB iPod Nanos reveals that Apple's profit per unit is likely to be healthy: the 4GB model costs a mere $58.85 in materials and labor, while the 8 gigger is $82.85. Both units cost less than half the retail price to produce, as Businessweek reports.

Stock markets like news like this, because it tells them that component and labor costs are static or falling, while profit margins stay fat. Of course, as iSuppli acknowledges, the cost-per-unit- of R&D, shipping, marketing, distribution and other expenses aren't factored into the raw production costs. But the estimate is that the new 4GB iPod Nano costs $US13.00 less than the preceding model - a substantial saving. To put this in perspective, Apple has seen $31 sliced off the top of the cost of the cheapest Nano since the original 2GB appeared in 2005.

Nano is thought to be the most profitable-per-unit in Apple's iPod line-up, and is also one of the most popular. So the difference to Apple's bottom line it can make is considerable.

Apple has also been successful at playing off contractors as they tender for Cupertino's lucrative business, driving Apple's price-per-unit down, as key components - like flash memory and batteries - get cheaper and cheaper as firms fight for the right to be an iPod supplier.