The guys and dolls over at iSuppli have taken apart one of those new iPod Shuffles—you know, the one that talks to you—and have estimated the total cost of components to be $21.77; the iPod Shuffle retails for $79. Setting aside the additional costs of the little music player, such as industrial design and programming, that represents only 28 percent of its retail price. The rest, friends, is profit.
The B Plot to price’s A Plot is Samsung’s involvement in the player. Samsung chips account for the flash storage and processor. Pretty funny, then, to see people calling some of Samsung’s portable media players “iPod killers”—why would Samsung want to kill something that lines its coffers so nicely?
But what do I know?
The new iPod Shuffle is the real iPod killer. If something happens to mine I’ll be moving over to a Samsung. Or something comparable.
“such as industrial design and programming”… and engineering, and assembly, shipping, sales, customer service, ads… the list goes on.
These stories about how awful is for charging $300 for a device that only costs $100 in parts are absurd. I could probably buy all the pieces and components for a BMW for half what it costs to buy a complete car. I still wouldn’t have a BMW.
Look, Apple has to set its retail price high enough to account for its wholesale prices. In retail, you typically keystone–you charge twice what you paid for. This covers your overhead, your employees, the development and marketing costs, etc. Some of it’s still profit, of course, but most of it is necessary. It takes more than just parts to make a product.
But, let’s say that Apple has some iPod Shuffles they need to sell to Best Buy. The thing cost them $20 to make, not counting wages/marketing/etc. So they keystone, and sell the Shuffles to Best Buy for $40 per item. Apple knows that Best Buy will keystone, or set prices roughly there, so they’ll be retailing in Best Buy for $80.
So, Apple can’t sell directly to the customer for much less than eighty. Likewise, they don’t want any individual stores selling for less than eighty, because that hurts everyone else.
It makes sense, really. :)
Makes sense to someone who really, really wants to justify Apple charging so much for such a simple, cheap-to-produce device.
You know what always me me laugh at these…..
one single 2×4 cost $4.
see how much it cost to change one in your wall..
Apple is evil. Markups of hundreds of percent. The battery can’t be changed. You can’t use your own headphones. You have to use ITunes.
On my first generation iPod Shuffle the battery went nearly dead in less than a year. Apple wanted almost as much as I originally paid for it to replace the battery. Greedy and ecologically unsound behavior on Apple’s part. First and last product I ever bought from Apple.
How people get so gaga over Apple when they’re being ripped off and trampled on over and over by them amazes me. I would venture to guess the majority of Mac users are haters of capitalism and “big business”; yet they let themselves be repeatedly raped by Apple.