iSuppli: iPod shuffle 3G costs $21.77 to make | iLounge News

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iSuppli: iPod shuffle 3G costs $21.77 to make

According to a teardown analysis of the third-generation iPod shuffle, the total cost of the device is roughly 28% of its retail price. Citing analysis from market research firm iSuppli, BusinessWeek reports that the total cost of the shuffle’s components, its remote-laden headphones, and its packaging comes to just $21.77. iSuppli found that Samsung supplied both the shuffle’s controller chip, which costs roughly $6, and the 4GB of flash memory, which also costs roughly $6; iSuppli analyst Andrew Rassweiler notes that Apple is likely using flash memory from Toshiba and Hynix Semiconductor as well. “It’s almost like six dollars worth of flash memory tied to some flash and a battery and not much else,” Rassweiler said. “It’s very basic and downsized.” The device also includes a lithium ion battery that runs $1.20, which Rassweiler describes as “the smallest we’ve ever seen.” Other component suppliers include On Semiconductor, NXP Semiconductor, and Texas Instruments.

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Comments

1

NO, NO, NO!!!!! The article does NOT say the Shuffle costs $21.77 to make! It says the cost of the components is $21.77. Thats for a bag of unassembled parts. Why is it every single time iSuppli comes out with an estimate for cost of goods, does the media quote that as the cost to make the product? Come on! What about R&D;, Marketing, Assembly, Test/manufacturing fixtures, shipping, support/warranty, burdened corporate OpEx (how much of Shuffle sales price goes to pay to mow the lawn on Apple’s campus)??? There are a LOT more things that go into the cost of making a product than just the cost of goods.

Posted by Rand on April 13, 2009 at 12:09 PM (CDT)

2

Dear RAND, you are 100% RIGHT! They forget all the other cost to the end of beeing in the shelf for sale. It’s crazy to put that in peoples head that it ONLY COST $21.77. It’s like they doing this on purpose to get people mad. there is much more behind it, just like you say.

Posted by Dennis on April 13, 2009 at 3:49 PM (CDT)

3

Dear RAND, just an headline grabber. I wonder how many Shuffles Apple needs to sell to make a profit and that goes for any Apple products.

Posted by Simon on April 13, 2009 at 5:14 PM (CDT)

4

R&D;? It’s largely off the shelf tech. The only R&D;was drawing up specs on how to shoe horn it into the chassis. Assemby? It’s a battery, a chip, and a headphone jack inside of a machine produced chassis. In China, that’s what, $0.20 in labor, maybe. Marketing? They didn’t market the thing, they just put up a web page, sent out an online notice, and waited for the consumer outrage to spread word of its existence for them.

As it is, I think their figure of $21.77 was erring on the side of caution. It’s no more than $25/unit even if you count every single possible related charge.

Posted by Code Monkey in Midstate New York on April 13, 2009 at 5:55 PM (CDT)

5

@Code Monkey: I take it you’ve never produced a physical electronic device for the consumer market in quantity millions. There is more than just taking parts off the shelf. There is board layout for that dinky PCB. The flex cables? Custom fixtures needed to make those. Test fixtures for the assembled PCBs…..custom also. All the tooling for those aluminum chassis? They are custom and are capable of making a finite amount of parts. I’ve led design teams to make consumer electronics….iSuppli’s COGs estimates while valuable are nowhere near being the ‘total” cost to produce a product. Oh and FYI marketing includes all the work they did to determine if a product with no buttons on it would sell. Marketing isn’t just advertising.

Posted by Rand on April 13, 2009 at 7:25 PM (CDT)

6

I thought the current iPod Shuffle is only the 3rd Generation.

Posted by Bori on April 14, 2009 at 3:49 AM (CDT)

7

Rand, I haven’t, but if you’re going to seriously suggest that spread out over the millions of shuffles that there is an additional $18 of R&D;and consumer research (which did them no good given how anemic the sales numbers have been)per shuffle, I have many nice bridges and tropical islands to sell you. We can be reasonably sure that Apple planned to move at least a million of these not-even-good-at-being-paperweights by the end of the year; take that as a conservative estimate for their projected sales to offset the $18/unit indirect costs and you come to a figure of 18 million dollars to design something that some of my roommates in college could have done as a computer engineering term project. If their sales estimates were even higher than my paltry one million units, that just makes the indirect costs that much more ridiculous if you were right, which you’re not.

Posted by Code Monkey in Midstate New York on April 14, 2009 at 7:14 AM (CDT)

8

Lets not forget that the only reason the parts are this cheap is because they are purchased in mass. You can’t possibly think you will be able to buy individual parts for the same price Apple got them for without buying thousands at a time. I don’t know what you are getting at by saying this is made from off the shelf parts. EVERYTHING you buy has components anyone can purchase. You just have to integrate all of the chips on a board, throw some resistors in there to avoid blowing out some components, program your own firmware, and do others things taking hundreds if not thousands of your man hours. This is absolutely no different.

Posted by Christopher Cox on April 14, 2009 at 9:30 AM (CDT)

9

$25 including related charges?!?! Are you serious? I seriously doubt an engineering student would be able to put one of these together in their basement and make it that cheaply. First of all the research alone that had to go in to selecting components for a device that small must have taken a while, and cost more money. A prototype had to be developed BEFORE mass production to ensure the components are correct, and those are purchased at far more than what mass production cost was. And you don’t know how many components they tried. I seriously doubt they got it on the FIRST try. An engineer doesn’t work for free and there was most likely more than one. So you are saying that the salary of all of the engineers during development and prototyping for hundreds of man hours factors in your “$25” including all related charges????!??! You are a very unrealistic person.

Posted by Christopher Cox on April 14, 2009 at 9:41 AM (CDT)

10

Excuse me: it’s a sound chip + battery + headphone jack + flash storage. These are not even remotely cutting edge. You can buy greeting cards that have all the essential components minus the headphone jack for $7. Get your noses out of Apple’s arse and face the truth: the 3G shuffle is a throw away product that any competent EE and his Computing Engineer buddy could have made for a term project in their fourth year. If you believe that Apple is paying more than $25/unit, you should seek help.

Posted by Code Monkey in Midstate New York on April 14, 2009 at 9:54 AM (CDT)

11

I’d like to know why Apple apparently chose to mark-up this shuffle more than they did the past iPods, BUT I’m even more interested in why Code Monkey still finds it necessary to maintain a presence on a website about a company whose practices and product line s/he clearly does not find agreeable.

Posted by Leon on April 14, 2009 at 10:31 AM (CDT)

12

Code Monkey is as entitled to his opinion as any other member of our community. iLounge does not subscribe to the viewpoint that Apple is always correct or that its products are always great. That’s one of the many things that differentiates us from those who feel the need to defend or rationalize everything the company does, doesn’t do, and so on.

Regardless of our views, we welcome the debate and discussion from our readers, whatever their views may be, so long as they’re not insulting to fellow readers. Cool down the rhetoric and language a little bit, but carry on.

Posted by Jeremy Horwitz in East Amherst, NY, USA on April 14, 2009 at 10:41 AM (CDT)

13

hi could you tell me how much the headphons cost for the ipod shuffle please.

Posted by nutmeg on February 6, 2011 at 10:59 AM (CST)

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