Report: Newest Apple iPod Nano Cheaper to Produce


Apple Inc.'s (AAPL) newest version of its iPod nano is the second-cheapest to produce out of the six generations of the media players, increasing the likelihood that the new product will boost profits for the computing and media-player giant, according to a report released Monday.

The sixth-generation Nano costs $43.73 in materials, making it the second-cheapest nano only to the fourth-generation version, which cost $40.80 in materials, research firm iSuppli said in a statement today. Apple was able to cut costs by eliminating the camera that was in the previous version and keeping the amount of memory on the device the same.

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"Instead of piling on features, as so many brands do with their latest products, Apple with the sixth-generation iPod has maintained or even removed some attributes in order to fit the form factor and function desired," said Andrew Rassweiler, director and principal analyst and teardown services manager at iSuppli, in the statement.

With the cost reduction, Apple will likely expand the Nano's gross margin (the price minus the cost of goods) beyond the 67% threshold averaged since the introduction of the third-generation Nano device, according to iSuppli. Apple started selling the new Nano at a base price of $149 on Sept. 1.

Apple hopes to reinvigorate demand for its iPod line, whose unit sales for the quarter ended June 26 fell 8% from a year earlier to 9.41 million, Apple said in July. Overall, Apple's fiscal third-quarter earnings jumped 78% to $3.25 billion on a record $15.7 billion in sales, largely stemming from iPhone and iPad sales.