The Mighty Margin

1 point

17 years ago

Apple's tiny, third-generation, 4GB iPod shuffle, according to iSuppli, has an equally diminutive bill of materials -- the research firm says components cost just US$21.77. With a retail price of $79, that gives the iPod shuffle a nice profit margin. Of course, the difference isn't all in the margin -- iSuppli doesn't factor in the costs of licensing fees, royalties, software, shipping, or other development and channel-related costs.

Blog chatter ranged widely over Apple's so-called profit margins and corporate coffers, as well as price drops and rises for the iPod shuffle, which have done as low as $49 before creeping back up to today's $79 -- all of which brings to mind other low-cost MP3 players.

"The original price point has always been $79. They cut the price after they had been on the market for a long time. Other MP3 players are crap, which is why they are $30," commented hillstones on the AppleInsider.com post on the subject.

So how much do other low-cost MP3 players cost to build, anyway? Has iSuppli bothered to teardown any others?

"With respect to other non-display MP3 players -- we haven't done any," Andrew Rassweiler, director and principal analyst of Teardown Services for iSuppli, told MacNewsWorld.

"We actually haven't done any other media players other than Apple products, since Apple is the main 'big' player in the space (media players). The rest of the industry is composed of countless smaller-player manufacturers, none of which, in our opinion, really were worth analyzing as an individual teardown," he explained.

"Other companies can build them as cheaply, if not cheaper, but the end products are not comparable," he added.