New iPod nano (aka 'little fatty') brings in fat margins

According to Business Week, the latest iPod nano, nicknamed "little fatty," is raking in some pretty hefty profits.

A teardown analysis of the component costs by market research firm iSuppli indicates that these latest nanos boast the widest margins yet, despite the addition of a video screen.

Excerpt from the article:

After taking apart the nano, iSuppli estimates that all the parts inside cost Apple $58.85 for the $149 model with 4 gigabytes of storage capacity, and $82.85 for the 8GB version priced at $199.

That puts it at more than $13 cheaper per unit compared with the 4 GB nano a year ago, or more than $31 cheaper than the original 2 GB nano. Obviously, iSuppli's estimate does not include the cost of software development, packaging, assembly, distribution, and all the other intangible costs.

According to iSuppli analyst Chris Crotty, some of the price reductions were achieved by playing various suppliers against one another. He says:

For instance, with the latest nanos, Synaptics has returned as the supplier of the technology behind the distinctive click-wheel control. Synaptics had supplied the original click-wheel circuitry on the first iPods, but was then supplanted by Cypress Semiconductor.

Similarly, NXP Semiconductors supplied the power management component on prior iPod nanos. But this time, the former chip unit of Royal Philips Electronics has been replaced by Germany's Dialog Semiconductor...

Some analysts caution that there are other less-tangible costs to consider in guessing the overall cost of the nano, such as reserves to cover warranties on defective units.

Still, the lower component costs for the nano should certainly help where the bottom line is concerned.