iPod Nano costs £58 to make, 1p to make great

Matt Weston, 25 Oct

nano parts from japanese siteEric Pratt takes apart consumer electronics devices. He took apart the new 2 Gig iPod Nano and this is what he found: (a) It retails for $199, but is actually worth $103 in parts and labour. Over here? £139/ £58. (b) The flash memory from Samsung costs $54/ £30 but the flex circuit that controls the click wheel costs just 1.8c/ 1p. And that, remember, is what makes the iPod great. He doesn’t say how much the, ahem, screen costs.

More photos of Nano parts on this Japanese site.
Story via Boing Boing.

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Geoff says:
Call me stupid or out of touch if you like but I find the numbers provided by Eric Pratt onwith regard to the ipod as surprising. Let me start with the flex circuit - having worked in the flex circuit industry I can tell you with certainty that the materials for that circuit exceed 1p - it is made of polyimide and has a cover coat, both items will cost more than 1p. Plus there appears to be a chip of some sort on the flex circuit so some kind of passivation will be required - it all costs.

Next is the margin. I find it really amazing that the gross margin ex works Apple subcontractor to consumer is only 59%. For a start one has to take out the VAT that leaves a 51% margin to ship and distribute the product and sell it to the consumer? What margins are these guys working on? A few years back one could reckon on the manufactured price being 20% of the retail price; has that changed? If so what margins do the likes of Apple, the distributors and retailers work off these days?
by Geoff on 26 Oct