of Materials (BOM) is only of $58.85. As for the 8GB model, its BOM is around $82.85 and it retails for $199. “The changes in components have resulted in significant cost reductions in the Nano design,” said Andrew Rassweiler, senior analyst and teardown services manager for iSuppli. The 4GB Nano is 18.5 % cheaper to build than its predecessor, which featured a cost of materials $72.24.
So, basically, Apple is selling the Nanos for twice the level of their hardware BOM costs, which should translate into a very nice profit. As iSuppli points out, this “represents a high level compared to most electronic products.“
Still, there are a few things to be said on Apple’s defense. The study doesn’t take into consideration actual manufacturing costs, software, intellectual property, accessories and packaging. Research and development costs have also been left out.