Apple Spends Just $50 to Make the $149 6G iPod nano

An iSuppli Bill of Materials issued on Monday puts the estimated cost of making Apple’s latest iPod nano at $43. The lower cost of materials and manufacturing leaves wider profit margins for Apple, should iSuppli be accurate in its estimates.

According to iSuppli's teardown analysis, the parts comprising the 8 GB version of the sixth-generation iPod nano cost precisely $43.73. The price does not include manufacturing costs, which are estimated at just $1.37.

With the manufacturing costs added to the BOM, the new nano carries a combined material and production cost of $45.10, iSuppli notes.

“This adds up to about 30 percent of its retail price,” the company believes.

“Apple Inc.’s new sixth-generation iPod nano proves the old adage that less is more by delivering a compelling user experience in a product exhibiting remarkable economy in terms of its size, feature set and Bill-of-Materials (BOM),” writes iSuppli principal analyst Andrew Rassweiler.

“The 8GByte version of the latest iPod carries an estimated BOM of $43.73, iSuppli’s teardown analysis of the product has revealed. This gives the sixth generation product the second-lowest BOM of all members of the iPod line,” says the analyst.

“Instead of piling on features, as so many brands do with their latest products, Apple with the sixth-generation iPod has maintained or even removed some attributes in order to fit the form factor and function desired,” Rassweiler added.

“This has enabled Apple to offer the smallest iPod including a touch screen, while keeping component costs to a strict budget.”

Looking at each part, iSuppli reveals that the most expensive subsection of the new nano is the memory system.

Apple’s small media player has 8GB of NAND flash from Toshiba, and 512Mbits of mobile Double Data Rate (DDR) DRAM from Samsung. Combined, these cost Apple $14.40.

“…this section represents roughly 33 percent of the total BOM cost of the new nano,” iSuppli notes.

The display/touch screen module, priced at $11.50, is the next most expensive. It makes up for 26 percent of the total BOM.

Third on the cost list is the player’s processor, which costs $4.95, or 11.3 percent of the BOM.