Apple overhauls supply base to make new iPod nano

By James Carbone -- Purchasing, 9/20/2007 1:58:00 PM

Apple has made some significant changes to its supplier roster of its latest version of the iPod nano music player, according to researcher iSuppli.

The new device introduced last week is virtually a completely new design, reuses almost no components and has a number of new suppliers compared to the previous model, a product dissection conducted by iSuppli Teardown Analysis service reveals.

Component suppliers making their nano product line debut in the latest version include Micron Technology Inc., Dialog Semiconductor and Intersil Corp., while Synaptics Inc. returns to the platform after an absence. Previous suppliers NXP

Semiconductors and Cypress Semiconductor Corp. were dropped from the latest version of the product. 

“The changes in components have resulted in significant cost reductions in the nano design, allowing Apple to offer a product that is less expensive to build and that has enhanced features compared to its predecessor,” says Andrew Rassweiler, senior analyst and teardown services manager for iSuppli.

The low-priced version of the new nano carries a bill of materials (BOM) cost of $58.85 for the 4Gbyte version and $82.85 for the 8Gbyte version.

iSuppli’s estimate of the new nanos’ BOMs is strictly limited to costs for components \and other materials used to construct the product. The estimate does not include costs for manufacturing, software, intellectual property, accessories and packaging. The BOM figures also do not include research and development costs, since such data cannot be derived from a teardown and component analysis.

The BOM of the new 4Gbyte nano is 18.5% lower than the $72.24 direct materials cost of the previous version of the nano released in late 2006.

The retail price of the 4Gbyte version is $149, compared to a hardware BOM of $58.85. For the 8Gbyte version, the retail price is $199, compared to a hardware BOM of$82.85.