New Shuffle's Cost? $21.77

[Vincent Ferrari]

<div class='os_post_top_link'><a href='http://www.gearlog.com/2009/04/new_ipod_shuffle_costs_2177.php' target='_blank'>http://www.gearlog.com/2009/04/new_..._costs_2177.php</a><br /><br /></div><p><em>"iSuppli did its thing to the new buttonless iPod Shuffle, tearing the device down an evaluating the price of its components. According to the company, the manufacturing price for the diminutive MP3 player is roughly $21.77, including the device itself, headphones, and package."</em></p><p><img height="323" src="http://images.thoughtsmedia.com/resizer/thumbs/size/600/at/auto/1239633222.usr18053.jpg" width="305" /></p><p>And there you have it.&nbsp; Apple is turning a profit on every Shuffle.&nbsp; Contain your shock.&nbsp; Cue anti-Apple zealots complaining about how they make "too much" profits in 3...&nbsp; 2...&nbsp; 1...</p>

[Janak Parekh]

http://daringfireball.net/linked/2009/04/13/isuppli-shuffle has an interesting response of this. In particular, John Gruber points out that:

So these components are half the size of anything seen before but iSuppli knows exactly how much they cost? I wrote about iSuppli here back in July 2007, wherein I pointed out that Apple releases its profit margins in legal filings every quarter, and those margins have ranged between 25-30 percent for almost a decade — nowhere near the jaw-dropping profit margin estimates from these iSuppli reports.

--janak

[Vincent Ferrari]

I had that bookmarked to write about tomorrow ;-)

[igreen]

Go back and read the article. $21.77 is the cost for parts only. It doesn't include any R&D, royalty, tooling, assembly, test fixture, warranty/support, shipping, marketing, or corporate OpEx costs.

[jdmichal]

http://daringfireball.net/linked/2009/04/13/isuppli-shuffle has an interesting response of this. In particular, John Gruber points out that:

John Gruber apparently got owned with my arguments already. See the updates on his post for details. He does have a valid argument against the media though, which is his only valid argument. But iSuppli itself never claims to do anything more than cost out the components. As igreen mentioned, there are many, many more costs that go into taking a product from components into the market, all of which are factored into the operating margins.