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October 12, 2007

iSuppli: iPod Classic a 'Stopgap Measure'

Apple’s (News - Alert) iPod portable media players are generally viewed as forward-looking products that offer innovative designs and functionality. That is not the be case with the company’s recently introduced iPod Classic model, industry analyst firm iSuppli said in a Thursday report.

iSuppli did a ‘teardown’ of the iPod Classic, and noted that—in addition to being the only remaining iPod with a Hard Disk Drive (HDD)—it lacks the advanced features (e.g. wireless connectivity, touchscreen) found in Apple’s other players.
Under the hood, iSuppli said, iPod Classic is virtually the same as previous iPod models, with only a few changes to parts and component suppliers. By sticking with the tried-and-true, the firm said, Apple is able to offer a media player with more storage capacity and a lower price. But, because iPod Classic is not as forward-looking like Apple’s other products, iSuppli predicted that it will have a short life in the marketplace.
“Apple’s continuation of the iPod model without adding new features suggests a stopgap measure necessitated by lack of time to develop an HDD-based touch iPod,” said iSupplie analyst Chris Crotty, in a statement. “Apple may not have had time to develop an HDD-based touch-screen iPod before the 2007 holiday season.”
iSuppli predicted that iPod Classic shipments for 2007 will reach about 3.1 million, with growth slowing after that to only 3.5 million for the entire year of 2008.
iPod Classic is available in two models: one with 80GB of storage ($249) and one with 160GB of storage ($349). According to iSupplie, it costs Apple $78 for each HDD in the lower-priced model, and $140 for the HDD in the more pricey version. Apple, the firm noted, usually makes more money from the high-end versions of its products, and iPod Classic is no exception.
“This is because the only difference between the low- and high-end products is the cost of the HDD and the flash memory chips,” iSuppli analyst Andrew Rasssweiler said in a statement.
One of the changes in Apple’s most recent iPod product family lineup was broad use of NAND flash memory rather than HDD. Flash memory, sometimes referred to as “non-volatile computer memory,” offers a number of advantages over HDD, one of them being that it has no moving parts (as HDD does) to break down. Flash offers users faster boot-up times and less drain on batteries.
iSuppli’s teardown analysis indicated that Apple’s bill of materials (which doesn’t include research and development costs) for the 80GB iPod Classic comes to roughly $127; the 160GB version costs Apple about $190.
“The 80Gbyte version of the classic carries a BOM that is 11.2 percent lower than that of the previous flagship iPod’s $143 cost,” iSuppli said in its report. “With the previous model having only 30Gbytes of capacity, the classic succeeds in reducing BOM cost while increasing its storage.”
Mae Kowalke previously wrote for Cleveland Magazine in Ohio and The Burlington Free Press in Vermont. To see more of her articles, please visit Mae Kowalke’s columnist page. Also check out her Wireless Mobility blog.


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