Huge margins
An analysis of the
iPod Shuffle by market researchers iSuppli shows that Apple is making huge
amounts of cash on everyone sold. The people at iSuppli voided their warranty
and opened the back of their iPod shuffle to work out the cost of every
component.
Apparently the shuffle has found that the components, the
headphones, and the packaging it ships in comes to $21.77. This means that it
costs Apple about 28 per cent of the device's retail price to make. Even
allowing for development or manufacturing costs, iSuppli thinks that means that
Apple is making huge profits on the gizmo.
But Apple is not the only one
raking in the dosh. South Korea's semiconductor giant Samsung makes the main
application chip used in the device, controlling music and costs
$5.98. Samsung also supplied the four gigabytes of flash memory, used
primarily to store music, at a cost of about $6.
Steve Jobs famously said
that Apple did not know how to make a netbook for less than $500 which was not a
hunk of junk. However the Shuffle shows that Apple sticks cheap products under
an expensive wrapper and charges the earth for it. Apple could easily make a
netbook for $200 it just would have to charge $1000 for it.