Apple iPod Shuffle 3rd Generation 4GB Teardown

Overview / Main Features

Two and a half years now after the release of the last clip-on 2^nd generationiPod Shuffle, Apple has managed to take the lowest end of the iPod range and actually further downsize the product while adding features to a virtually featureless device. The iPod Shuffle is little more than a chunk of memory with a single-chip media player attached to it. All the other components (it's surprising how many discrete components it actually contains!) basically provide power, interface and interconnect functions for the memory and media player chips.

To one up (or down) the last round of Shuffle, Apple have eliminated the control buttons all together from the Shuffle and moved them to the headset - making the headset very similar to those commonly used with handsets.

Furthermore, in order to overcome the Shuffle's historic greatest weakness (lack of user feedback mechanism), Apple has opted to go with a sort of faux voice synthesis. The Shuffle "speaks" to the user, reading artist and album names, etc., but there's a bit of trickery going on here - the device does not possess text to speech using silicon processing, but rather iTunes software generates the vocal files using software, and pre-records them in the form of audio files. It's cheaper and more flexible in a strange way, than trying to incorporate new silicon-level features - especially when the gigs of flash come so cheap.

However, considering the sudden halt in the erosion of NAND flash pricing, and it's prominence within this design, we have to wonder how much longer the previously true rule (of Apple doubling their memory content every year at no extra cost) may soon have to slow or stop. Nonetheless, the 3^rd gen Shuffle features 4 times the amount of memory we analyzed in the first round of Gen 2 offering at 1GB, and is still $1 cheaper in terms of memory (than Gen 2 in late 2006). In fact, based on our cost estimates - the Shuffle (at $79USD) has to be one of the most profitable Apple products we have seen in percentage terms.

Target Market

Users interested in the "music-only" feature, but especially users interested in the "super-portability" and basic rugged indestructibility of the Shuffle. It is most typically used by those using it in an athletic / outdoors or gym environment and is particularly well-suited for this.

There are many competing products in this space ranging from name to no-name products, but, as with other Apple products, there is always a loyal cult following, however Apple's ultimate goal is always to excel with a user interface that draws the average, non-tech savvy person to their product.

Released

Launched March 2009.

Pricing and Availability

At the time of writing (April 2009) - there is only one Shuffle available from Apple (4GB) and it is priced at $79USD in the US. This is the same price they sold the 1GB 2^nd gen Shuffle for 2.5 years ago.

Volume Estimations

Based on our tracking and forecasts of the shipments of the various Apple iPod products - we have assumed a total "lifetime production volume" for this incarnation (only) of the iPod Shuffle at 40 million units over a 2-year lifespan.

As a reminder, teardown volume production assumptions are primarily used for our cost analysis in terms of amortized NRE and tooling costs, especially for custom components specific to the model being analyzed (mechanical components especially). Unless assumed volumes are different by an order of magnitude, minor changes in volume (say 1 million vs. 2) rarely have a large net effect on our final analysis because of this.

Cost Notes

Main Cost Drivers (Representing ~84% of total materials cost)

$6.00 - K9HBG08U1A-BCB0 - Samsung Semiconductor - Flash - 32Gb, NAND, MLC, PoP

$5.98 - S5L8442A01 - Samsung Semiconductor - Application Processor - ARM Core, PoP

$1.55 - Headset - Stereo, w/ Volume Control

$1.20 - DAPD98PA - Tianjin Lishen Battery - Battery - Li-Ion Polymer, 3.7V, 73mAh, w/ Interconnect Flex PCB

$0.65 - USB-to-TRS Cable - 3.5mm

$0.59 - Enclosure, Main, Top - Die-Cast Aluminum, Machined, Anodized, Silkscreened

$0.49 - Belt Clip - Die-Cast Metal, Anodized, Plated, & Etched

$0.44 - Enclosure, Main, Bottom - Die-Cast Aluminum, Machined, Anodized, Silkscreened

$0.27 - 2-Layer - Flex Kapton

$0.22 - Box - Clear Injection Molded Polycarbonate

Direct Materials Costs$20.81

Materials and Manufacturing$21.77

What Is Not Included in our Cost Analysis

The total materials and manufacturing costs reported in this analysis reflect ONLY the direct materials cost (from component vendors and assorted EMS providers), AND manufacturing with basic test costs. Not included in this analysis are costs above and beyond the material manufacture of the core device itself - cost of intellectual property, royalties and licensing fees (those not already included into the per component price), software, software loading and test, shipping, logistics marketing and other channel costs including not only EMS provider and the OEM's margin, but that of other resellers. Our cost analysis is meant to focus on those costs incurred in the manufacture of the core device and exceptionally in some circumstances the packaging and literature as well.

Manufacturing Notes

Country of Origin / Volume Assumptions

Apple has historically produced it's iPod product lies with a number of EMS providers / partners:

iPod Shuffle: Asustek

iPod Nano: Hon Hai, Inventec Appliances

iPod Video: Quanta (and possibly Inventec Appliances)

These manufacturers produce the bulk of the iPods in and from souces that are mostly in China.

Furthermore, we have assumed that custom mechanicals (plastics, metals, etc. were sourced in China, as well. Sub-assemblies may also come from other countries of origin, but for the purposes of this analysis, when there is no proof to the contrary, we have stayed with this assumption (China being the country of origin) for all levels of assembly.

Country of origin assumptions relate directly to the associated cost of manufacturing, where calculated by iSuppli. In the cases of "finished" sub-assemblies (such as Bluetooth modules), we do not calculate internal manufacturing costs, but rather assess the market price of the finished product in which case country of origin assumptions may or may not have a direct effect on pricing.

Labor rates in our analysis are applied directly only to hand inserted components and systems in our bill of materials, and although regional assumptions do, these new rates do not have a direct effect on our modeled calculations of placement costs for automated SMD assembly lines. "Auto" inserted components (such as SMT components) placement costs are calculated by an iSuppli algorithm which allocates a cost per component based on the size and pincount of the device. This calculation is affected by country or region of origin as well.

Design for Manufacturing / Device Complexity

Believe it or not, the Apple iPod Shuffle still features a total component count of 154 components (not including box contents), which is still and improvement over the 213 components (not including box contents) found in the last generation Shuffle.

The Apple iPod Shuffle is the smallest self-contained functional finished product we have ever torn down and also is one of the least complex / integrated.

Component counts have a direct bearing on the overall manufacturing cycle times and costs, and also can increase or decrease overall yields and re-work. Our calculations of manufacturing costs factor counts and more qualitative complexities in the design.

Note that manual labor has a much smaller effect on auto-insertion assembly lines (for the Main PCB, for example), where manufacturing costs are much more capital equipment intensive and driven by these investment costs.

Design Notes

The Apple iPod Shuffle is a very simple and well-integrated design that really features only three major important functional puzzle pieces (the memory, the central processing chip, and battery) which also drive the bulk of the cost. Overall there are very few "important" secondary components.

Memory*

• Flash - 32Gb, NAND, MLC, PoP - K9HBG08U1A-BCB0 - Samsung Semiconductor

* - Most memory items are multi-sourced - sources indicated here are typically one of several sources.

MPU

• Application Processor - ARM Core, PoP S5L8442A01 - Samsung Semiconductor

Battery

• Battery - Li-Ion Polymer, 3.7V, 73mAh, w/ Interconnect Flex PCB - DAPD98PA - Tianjin Lishen Battery