Apple's New iPod Shuffle Costs Only $22 To Build

Apple has managed to slash the cost of building its third generation iPod Shuffle music player to just under $22 or roughly £15, according to components specialist iSuppli.

The analyst firm, which became famous after systematically breaking down all the latest consumer electronics devices to probe their innards and find their manufacturing costs, says that Samsung is the big winner in Apple's iPod Shuffle plans, grabbing up to $12.98 - thanks to processor and memory module wins. As for the Lithium Ion battery, it apparently costs $1.20

iSuppli did not take into consideration other costs like research and development, packaging and shipping prices. Other semiconductor companies like Philips' NXP semiconductor, Texas Instruments, Hynix and Toshiba are also reportedly amongst other firms involved in the iPod Shuffle construction.

PC Mag reports that Apple has managed to squeeze even more from its suppliers and thereby increase its own margins. The Shuffle costs 28 percent of the player's retail price while the first generation iPod Touch's bill of material was half its retail price and the Nano around 40 percent.

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Our Comments

The 3rd generation iPod Shuffle is expected to generate a gross profit of at least $1.2 billion on sales of $1.7 billion. That's not bad given that the it is a mature product that's not being marketed by Apple as a tier-1 product. Another thing that iSuppli noted is that Apple is extremely attentive even to the tiniest of details - literally - with some passive components being a fraction of the size - and costs - of current models.

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