iPod touch teardown reveals hefty margins, no hidden Bluetooth
Component and manufacturing costs for Apple's new 8GB iPod touch media player account for only $155 of the device's $299 retail price, according to a fresh product teardown from iSuppli Corp.
The research firm notes that the $44 touchscreen and sensors, which are sourced from the combination of German-based Balda and other Far Eastern suppliers, are the most expensive components of the player, accounting for approximately 28 percent of the product's total cost.
"Functionally, the Apple iPod touch is an iPhone minus several features, including cell-phone capability, Bluetooth and certain software elements," said Andrew Rassweiler, teardown services manager and principal analyst for iSuppli. "Otherwise, the core features of the iPhone user experience are all present in the iPod touch, including orientation sensing, web surfing via Wi-Fi and the product?s signature feature: a 3.5-inch diagonal touch screen with multi-touch sensing."
Rassweiler estimates that Apple's iPod touch and iPhone designs share about 90 percent of the same components. Among them are a Samsung Electronics video/applications processor -- a chip based on an ARM microprocessor core and employing stacked on-package memory -- which comprises another 8.5 percent of the player's bill-of-matials at $13.19. The two touchscreen devices also share a power-management IC from NXP Semiconductors, costing $2.61 and accounting for 1.7 percent iPod touch's total cost.
However, the touch?s design differs from the iPhone in that it is uniquely optimized to meet its form-factor and cost requirements, iSuppli said in its report. To cut space usage, the touch makes use of some advanced packaging for its components not seen in the iPhone, including 0201 diodes and passive components in 01005 enclosures on the touch?s WLAN module.
"This is the first time iSuppli has seen these components in a product we?ve torn down,? Rassweiler added. "Apple products always seem to push the envelope in terms of space savings, and therefore we often first see the newest, most-compact components in Apple products."
See more high-quality iPod touch teardown photos.
The iPod touch design also pushes the envelope in terms of memory density; the high-end version of the product includes 16Gbytes of NAND flash memory, more than any product in the Apple iPod line. In contrast, the high-end iPhone offers only 8Gbytes of NAND flash.
Another notable difference is in the Printed Circuit Board (PCB) design. The touch employs a single PCB as opposed to the iPhone?s modular two-PCB design.
See more high-quality iPod touch teardown photos.
Other differences between the iPod touch and the iPhone include a new set of components to support the touch?s Wireless LAN (WLAN) functions and the location of the touch-screen circuitry on the main PCB -- rather than on the touch-screen module.
Based on the history of the various Apple iPod products, iSuppli has assumed a total lifetime of one year for the first-generation iPod touch. The firm estimates that if Apple follows its historic product pattern, it will manufacture about 8.5 million first-generation iPod touches during the approximate one-year period from the third quarter of 2007 through the beginning of the third quarter of 2008. At that time, iSuppli expects the first-generation touch will be replaced by a new product in the third quarter of 2008.
However, the firm hedged its bets by explaining that its forecast could be impacted if Apple chooses to replace the iPod touch sooner to coincide with the introduction of a new model of the iPhone. Furthermore, if the product lifetime extends to two years, production could increase to as much as 20 million units, the firm said.
"The touch, along with the nano, may drive Apple?s HDD-based iPods close to extinction in the near future,? added Chris Crotty, senior analyst, consumer electronics, for iSuppli. "While not a dollar-for-byte match for HDDs, flash now offers sufficient capacity that many consumers are willing to trade off storage for advanced displays and features."
The research firm notes that the $44 touchscreen and sensors, which are sourced from the combination of German-based Balda and other Far Eastern suppliers, are the most expensive components of the player, accounting for approximately 28 percent of the product's total cost.
"Functionally, the Apple iPod touch is an iPhone minus several features, including cell-phone capability, Bluetooth and certain software elements," said Andrew Rassweiler, teardown services manager and principal analyst for iSuppli. "Otherwise, the core features of the iPhone user experience are all present in the iPod touch, including orientation sensing, web surfing via Wi-Fi and the product?s signature feature: a 3.5-inch diagonal touch screen with multi-touch sensing."
Rassweiler estimates that Apple's iPod touch and iPhone designs share about 90 percent of the same components. Among them are a Samsung Electronics video/applications processor -- a chip based on an ARM microprocessor core and employing stacked on-package memory -- which comprises another 8.5 percent of the player's bill-of-matials at $13.19. The two touchscreen devices also share a power-management IC from NXP Semiconductors, costing $2.61 and accounting for 1.7 percent iPod touch's total cost.
However, the touch?s design differs from the iPhone in that it is uniquely optimized to meet its form-factor and cost requirements, iSuppli said in its report. To cut space usage, the touch makes use of some advanced packaging for its components not seen in the iPhone, including 0201 diodes and passive components in 01005 enclosures on the touch?s WLAN module.
"This is the first time iSuppli has seen these components in a product we?ve torn down,? Rassweiler added. "Apple products always seem to push the envelope in terms of space savings, and therefore we often first see the newest, most-compact components in Apple products."
See more high-quality iPod touch teardown photos.
The iPod touch design also pushes the envelope in terms of memory density; the high-end version of the product includes 16Gbytes of NAND flash memory, more than any product in the Apple iPod line. In contrast, the high-end iPhone offers only 8Gbytes of NAND flash.
Another notable difference is in the Printed Circuit Board (PCB) design. The touch employs a single PCB as opposed to the iPhone?s modular two-PCB design.
See more high-quality iPod touch teardown photos.
Other differences between the iPod touch and the iPhone include a new set of components to support the touch?s Wireless LAN (WLAN) functions and the location of the touch-screen circuitry on the main PCB -- rather than on the touch-screen module.
Based on the history of the various Apple iPod products, iSuppli has assumed a total lifetime of one year for the first-generation iPod touch. The firm estimates that if Apple follows its historic product pattern, it will manufacture about 8.5 million first-generation iPod touches during the approximate one-year period from the third quarter of 2007 through the beginning of the third quarter of 2008. At that time, iSuppli expects the first-generation touch will be replaced by a new product in the third quarter of 2008.
However, the firm hedged its bets by explaining that its forecast could be impacted if Apple chooses to replace the iPod touch sooner to coincide with the introduction of a new model of the iPhone. Furthermore, if the product lifetime extends to two years, production could increase to as much as 20 million units, the firm said.
"The touch, along with the nano, may drive Apple?s HDD-based iPods close to extinction in the near future,? added Chris Crotty, senior analyst, consumer electronics, for iSuppli. "While not a dollar-for-byte match for HDDs, flash now offers sufficient capacity that many consumers are willing to trade off storage for advanced displays and features."
Comments
The "high margins" you might calculate from that alone don't take into account a lot of OTHER costs. Such as:
* Manufacturing - turning those parts into something!
* Research and design (hardware and software) to create the product
* Transportation and storage (of parts and products)
* Packaging and marketing
* Customer service, technical support and warranty repairs
* Sales costs (running the web store and physical stores that sell the products)
Etc.
/Adrian
You would think apple could maybe have one of those things- what is that, oh yea, a sale. A discount of some sort at some time maybe? Nevermind Apple will never drop the price of anything for any reason.
And when Apple does reduce the price of something (iPhone), then the entire world falls apart and people get upset.
Interesting - but remember that iSuppli is estimating just a "bag of parts."
The "high margins" you might calculate from that alone don't take into account a lot of OTHER costs. Such as:
* Manufacturing - turning those parts into something!
Line 1 states that "component and manufacturing costs" account for the stated percentage, but without severely security-compromised insider info, I can't imagine how they would actually arrive at an accurate figure there.
Initial product R&D, packaging and continued OS programming updates & development all have to be considered as part of the product cost. Depending on Apple, Inc. accounting practices (Standard cost v. normal costs, for example), marketing, store operations, and maybe even post-sale support of a product could be considered as general business costs and not figured into product costs by Apple.
Line 1 states that "component and manufacturing costs" account for the stated percentage, but without severely security-compromised insider info, I can't imagine how they would actually arrive at an accurate figure there.
iSuppli seems to enjoy pulling numbers out of thin air. They assume they know what Apple paid for parts, even though they're probably paying based on a privately-negotiated contract, that nobody on the outside will ever be able to see.
Although I haven't seen their breakdown for the iPod Touch, iSupply typically counts software as a zero-cost item, because nothing physical is produced as a part of its distribution. (Their MacBook teardown counts Mac OS and iLife as $5 - the cost of the DVD media.) Needless to say, the iPod Touch's software suite cost a lot of money to develop, and part of the price covers all that R&D. Given that this particular software package is one of the key distinguishing features of the product, treating it as a free component is extremely misleading, to say the least.
Finally, it is very misleading to call the "retail price minus bag-of-parts price" a "margin". Gross margins take into account all costs, not just what the company theoretically paid for unassembled, untested parts.
You would think apple could maybe have one of those things- what is that, oh yea, a sale. A discount of some sort at some time maybe? Nevermind Apple will never drop the price of anything for any reason.
And somehow this comes as a shock to you?!
And when Apple does reduce the price of something (iPhone), then the entire world falls apart and people get upset.
Great point. How can we EVER forget all of the bitching and crying people did when the price dropped? SJ will never do that again!
For reference, an 0201 component is 0.020" by 0.010" across. That means that 01005s are 25% the size. 01005 components are 0.25mm x 0.125mm. That is freakin' small.
Interesting - but remember that iSuppli is estimating just a "bag of parts."
The "high margins" you might calculate from that alone don't take into account a lot of OTHER costs. Such as:
* Manufacturing - turning those parts into something!
* Research and design (hardware and software) to create the product
* Transportation and storage (of parts and products)
* Packaging and marketing
* Customer service, technical support and warranty repairs
* Sales costs (running the web store and physical stores that sell the products)
Etc.
let's not forget:
- Patents
- Future patent infringement lawsuits
with discounts on computers and ipods, and other things apple.
annual. sale.
i find it hilarious that the whining about apple never having a sale comes right after its annual, black friday sale.
with discounts on computers and ipods, and other things apple.
annual. sale.
With such a meager discount, I can hardly hold it against anyone if they forgot. It's a easier to order from some other web store that doesn't have locations in your state. You get the same "discount" year-round that way.
after all that is said and done, the apple's still in it to not only make profit immediately but to save for the future. you can't make money unless you spend money.
almost all products in general have to be sold for about double their manufacturing cost. i fail to see why this is any different.
almost all products in general have to be sold for about double their manufacturing cost. i fail to see why this is any different.
Part of the problem is people misreading what it is, But I'm not really sure why iSuppli does this and why it's almost exclusively the Apple products that the web news site pick up on them. I guess the Apple news sites pick up on them to show Apple's doing well and making money, other sites pick up on them to "show" people that they're getting ripped off. The responses are pretty predictable all around.
0201 components are tiny. I did not even know that 01005 components even existed.
For reference, an 0201 component is 0.020" by 0.010" across. That means that 01005s are 25% the size. 01005 components are 0.25mm x 0.125mm. That is freakin' small.
It's hard for me to imagine making discrete devices that small, as well as making a machine that can repeatably manipulate parts that small.
With such a meager discount, I can hardly hold it against anyone if they forgot. It's a easier to order from some other web store that doesn't have locations in your state. You get the same "discount" year-round that way.
it will never cease to amaze me how some people will find a reason to gripe no matter what. First, its that the PRICE is too high. No SALES....then they have a sale but it isnt GOOD ENOUGH a sale to make you happy.
customers have a right to make the decision to buy or not buy.
customers do not have a right to set the price.
so far, each successive fiscal quarter has proven that more customers are opting to buy than the year before.
pretty simple indicator that Apple is doing it right.
0201 components are tiny. I did not even know that 01005 components even existed.
For reference, an 0201 component is 0.020" by 0.010" across. That means that 01005s are 25% the size. 01005 components are 0.25mm x 0.125mm. That is freakin' small.
For me, that's the interesting thing in this. The iPod Touch is using more advanced manufacturing technology than the iPhone which gives them room to cram more components in the iPhone or make it smaller when they get around to using the same modern components.
Wouldn't this be true with almost anything? (Only cars really have more value in individual parts than unit as whole)
If I build a dining room table out of wood that cost me $150 in wood and sell it for $1000 is that bad too?