BusinessWeek: "Unpeeling Apple's Nano"

[Kent Pribbernow]

<div class='os_post_top_link'><a href='http://www.businessweek.com/technology/content/sep2005/tc20050921_4557.htm?campaign_id=rss_tech' target='_blank'>http://www.businessweek.com/technology/content/sep2005/tc20050921_4557.htm?campaign_id=rss_tech</a><br /><br /></div><i>"It costs Apple $90.18 in materials to build the unit and $8 to assemble it, leaving a profit margin before marketing and distribution costs of about 50%. That's consistent with the margins on earlier iPod versions and serves as a reminder of what a profit machine the iPod family of products has become for Apple since it was introduced in 2001."</i><br /><br />Apple can thank it's cushy profit margins on iPod's runaway success. If they were anywhere <i>but</i> on top, they would be suffering the same fate as other digital audio hardware vendors out there, namely Rio and Creative. With the former going out of business, and the latter suffering losses. Meanwhile, iPod continues to steamroll the competition, and that means fat margins. <br /><br />Enjoy it while it lasts, Steve! Gravity pulls on everyone.

[Darius Wey]

A bit off-topic, but I only just realised today Apple scrapped their iPod education discounts through resellers. It's nice to see that Apple is having a success run, but completely lame to know that they scrapped a discount on their seemingly price-fixed iPods. :roll:

[Jason Eaton]

...through resellers...

Well I think it is Apple's goal to phase out resellers, at least that is the impression I get when I read about what happens between the two groups.

Resellers get product after Apple stores, they get limited quantites of product, and throw on the removal of discounts from resellers... you get a person wanting a product, that often can not be gotten at a reseller on release day (or even a month later) and at a lower price through Apple. Why would they buy at a reseller?

...

On topic, Apple has always made sure to include a good deal of padding on their products prices. So the profit on the iPod nano is no surprise. As a consumer would I like lower prices? Sure. Do I fault Apple for keeping the prices high because the market tolerates it? No. Basic economics state that you raise the price to what markets can tolerate. Apple loyalist will buy anyways, and the strong demand for the product will keep the prices high.

Heck, if Nike can price *SHOES* to a hundred bucks or more for rubber and leather, why not Apple on an iPod? Besides Nike shoes don't even store music. :D

*tangent*

A pair of shoes with little speakers in them, powered by kentic energy on the foot fall. So it plays music while you run/ride giving you incentive to keep going. Stop and the music stops. Nah... puddles would suck.

[Jason Dunn]

What I can't get over is the discount that Samsung offered them - it makes the Nano a "big bang for the buck" product. I saw one the other day and it was very impressive.