Apple’s 8-gig iPod touch costs $147 to build, including $44 for the multi-touch screen, according to an iSuppli teardown published by BusinessWeek.
That means that at a $299 retail price, Apple makes about $152 gross profit per unit, before expenses like packaging, marketing, sales, etc. — a gross profit margin around 51%. This is similar to Apple’s other iPods, which sell for roughly twice as much as the cost of their materials, notes BW’s Arik Hesseldahl.
In fiscal 2008, Piper Jaffray analyst Gene Munster expects Apple (AAPL) to sell 9.1 million iPod touch units at an average price of about $338 (accounting for both $299 8-gig and $399 16-gig units). Assuming a roughly 50% gross margin across the line on those sales, Apple could make about $1.54 billion in gross profit on FY08 iPod touch sales of about $3.08 billion.
That iPod touch revenue accounts for about 31% of Munster’s projected $10.0 billion FY08 overall iPod sales (60.5 million units). And he expects overall iPod revenue to account for about 32% of his projected $31.6 billion Apple FY08 sales. At least someone’s making money in the music business!
Business Insider Emails & Alerts
Site highlights each day to your inbox.