iSuppli: iPod Nano Materials Cost $43.73

The good folks over at market research firm iSuppli picked apart Apple's latest iPod Nano, going through the parts piece by piece to come up with a true cost of materials. The final tally? Just $43.73, which only applies to the parts, and not the cost of labor, the so-called Apple Tax, and everything else that jacks up the price more than three-fold in the retail sector.

"Instead of piling on features, as so many brands do with their latest products, Apple with the sixth-generation iPod has maintained or even removed some attributes in order to fit the form factor and function desired," said Andrew Rassweiler, director and principal analyst and teardown services manager, for iSuppli. "This has enabled Apple to to offer the smallest iPod including a touchscreen, while keeping component costs to a strict budget."

According to iSuppli, only the fourth generation iPod Nano had a less expensive Bill-of-Materials (BOM), which at the time came out to $40.80. Nevertheless, the sixth-gen device is poised to be Apple's most profitable Nano yet.

"When manufacturing costs of $1.37 are added to the BOM, the new Nano carries a combined material and product cost of $45.10," iSuppli explains. "This adds up to about 30 percent of its retail price.

"Since the third generation of the Nano line, the average cost to retail price ratio has been 33 percent, or roughly one-third of the retail price. However, with its lower BOM cost, the new iPod should command a higher margin than the previous member of the line."