Apple COO Tim Cook explained Apple's iPod strategy at a Goldman Sachs conference yesterday: Sell less, make more. Worldwide iPod unit shipments were up 5 percent December-to-December — relatively low growth, thanks to slumping sales of Apple's cheap Shuffle. But iPod revenue still grew 17 percent. "Shuffle pulled the units down, the iPod Touch pulled the revenue up. Frankly, it was much more important for us to have a great launch on Touch and to establish that product ... than it was on units," he said. Cook continued:
Apple has fattened the iPhone and iPod Touch's memory — and the company's profit margins. The 16GB iPhone retails for $499 — a $100 price jump, which might kick the iPhone above a 40 percent gross margin. Not bad for an industry that normally gives away phones as a loss leader. [Silicon Alley Insider]
iSuppli tore apart the iPod Touch. Turns out it's not just a broken iPhone. WIthout all the phone components to clutter things up, the Touch is thinner and has room for more memory. And, at $147 in parts per device, the iPod Touch costs Apple about $120 less to make. Then again, it doesn't reap the iPhone's service-fee kickbacks.