No Buttons, Nice Profits: Apple Spends $22 To Build $79 iPod Shuffle

from Silicon Alley Insider by Eric Krangel

Apple (APPL) can make each of its new, button-less iPod shuffles for only $21.77 worth of materials, according to a new iSuppli report summarized by BusinessWeek. That's a $57 gross profit on every $79 unit, or a 72% gross profit margin. (Does not include shipping, manufacturing, marketing, distribution, etc.)

How does that fit into Apple's overall business? Assuming Apple sells 21 million iPod shuffles over the next four quarters, as Piper Jaffray analyst Gene Munster estimates, that's around $1.2 billion of gross profit on $1.7 billion of revenue (at the current retail/component prices). Not bad.

iSuppli's teardowns are just estimates, but it's possible the new iPod shuffle is one of the more profitable pieces of hardware in Apple's portfolio. Previous iSuppli reports estimate other iPods and the iPhone 3G around a 50% gross margin.

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See Also:

• Apple's New iPod Shuffle Good For Business (AAPL)
• Is Apple About To Shuffle The Headphone Industry Again? (AAPL)
• Apple's Tiny New iPod Shuffle Locks You Into Apple Earbuds (AAPL)