Apple's iPod Costs Likely Went Up In A Flash

With the introduction of the 2GB and 4GB Flash-based Apple iPod Nano, CNET reports on Apple's rising bill of material (BOM) costs. According to both Semico Research and iSuppli, 1GB of flash memory in volume costs about $45. So the $199 2GB model contains around $90 worth of flash, while the $249 4GB version has about $180 worth of flash. Jim Handy at Semico said, "They might have been able to get something for $40, but that's still $160 worth of memory."

iSupply's Nam Hyung Kim mentioned that mini-hard drives with the same amount of storage costs about half as much, but flash usually provides better performance and takes up less room.

One thing to note is that the BOM cost of micro HDDs usually stays in the $90-100 range, but the capacity increases as technology advances so it's not exactly an apple to apple comparison (pardon the pun). In other words, a device manufacturer wouldn't get a 2GB for $45 but would up the capacity to 4GB for around $90.

Kim stated that due to Apple's high volume purchasing from Samsung it probably was getting a substantial discount, and Kim speculated that "Apple will probably never go back to hard disk drives" for it's lower capacity devices...