Market research firm, iSupply announced results of a tear-down of the new iPod - a processes where the firm takes apart the new product to discover what components and systems Apple used. The firm found that Apple has lowered costs without sacrificing functionality.
Due to design changes and component price declines, Andrew Rassweiler, senior analyst for iSuppli, [we] estimate that Apple has reduced the Bill-Of-Materials (BOM) cost for the new $199 retail-priced 4Gbyte nano to $72.24, less than the $89.97 that was estimated for a first-generation 2Gbyte nano upon release.
The key contributor to the manufacturing savings comes from a new system-on-chip (SOC)design that Apple utilizes, reducing the total amount of chips required by consolidating functionality to a single chip.
The Cupertino Calif.-based company used a Samsung SOC, which is based on an ARM Ltd. microprocessor, includes a flash disk controller, eliminating the need for a separate controller. The integrated design saves costs as well as power, however severs its ties with previous SOC provider PortalPlayer Inc..
Apple also moved to CapSense technology, replacing Synaptics Inc.â€™s technology as the circuitry behind the iPodâ€™s characteristic click-wheel interface.
Craig Berger, the semiconductor analyst at Wedbush Morgan says he thinks Appleâ€™s gross margin on the new Nanos could be as high as 50% given the substantial price declines in NAND flash memory prices this year.
He notes that one year ago, the high-end Nano had $150 worth of NAND, compared to $92 today. He notes that the $58 savings is 23 points of gross margin.