Apple iPod Nano 2nd Generation 4GB Teardown

Overview / Main Features

The second generation Nano we analyzed was purchased a few weeks before the closing bell on the second generation, so we got to analyze a product quasi-simultaneously with it's replacement to give a consistent snapshot in time of the two products side by side.

The second generation Nano was released in September 2006, along with the latest incarnation of the iPod Shuffle. The second generation Nano featured more than a beauty makeover and, when compared with the original model, offered not only more memory, and a more rugged shell but the internal design no longer used a PortalPlayer PP5021C core IC (Dual ARM Core DSP) but a Samsung S5L8701B05 (ARM Core DSP, w/ flash disk controller). The switch to Samsung helped integrate discrete circuitry from the first generation thus reducing complexity, component and manufacturing costs, and furthered Samsung's consolidation grip on Apple iPod product line, which, at the time of writing (Q4 2007) is for the time, all but complete.

Samsung also has dominated as Apple's largest share provider of NAND flash to all iPod products.

Apple iPod Nano 2nd Generation 4GB Main Image

The Nano, like the Shuffle targets all mainstream music player clientele worldwide. Since the beginning of our 2nd gen Nano analysis, the product has since been replaced by the 3rd gen Nano which expands the Nano into video territory making the 2nd gen obsolete. Flash pricing erosion has fueled and will continue to fuel the massive acceptance of PMPs as part of the mainstream consumer vernacular - and the Nano will continue to be the sweet spot for Apple - as competing players will also have great popularity in this price / functionality range.

Unlike other products, however, and 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 September 2006.

Apple iPod Nano 2nd Generation 4GB - Enclosure Disassembly

At the time of writing this product is obsolete (Q4 2007). Before being replaced, the 2nd gen Nano was sold for as low as $149 (2GB), and up to $249 for the 8GB version.

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 second generation iPod Nano at approximately 22 million units.

The second generation Nano survived only 1 year, and as this appears to be a sweet spot for Apple, will likely be upgraded and eventually (along with the iPod Touch) likely cannibalize hard-drive based iPod's to near extinction in the near future as flash, while not being a dollar-for-byte match to hard drives, now offer enough capacity that the majority of consumers may find HDD-based iPod's irrelevant.

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.

Function / Performance

No functional or performance testing was performed on the iPod Nano.

Apple iPod Nano 2nd Generation 4GB Cost Analysis

Main Cost Drivers Representing ~75% of total materials cost

Samsung Semiconductor - K9HBG08U1M-PCB00 - Flash - NAND, 32Gb, MLC QDP, 2.7-3.6V (Qty:1)

Sharp Microelectronics - LS015A7UC01 - Display Module - 1.5' Diagonal, TBD Color TFT CG Silicon, 132 x 176 Pixels (Qty:1)

Samsung Semiconductor - Application Processor - DSP, ARM Core (Qty:1)

Qimonda - HYE18L256169BF-7.5 - SDRAM - Mobile, 256Mb, 16Mx16, 133MHz (Qty:1)

NXP - PCF50635 - Power Management IC (Qty:1)

Samsung SDI - PGF213455A - Battery - Li-Ion Polymer, 3.7V, 370mAh (Estimated) (Qty:1)

Tripod Technology - - 6-Layer - FR4/RCF HDI, 2+2+2 (Qty:1)

Wolfson Microelectronics - WM8750S - Audio Codec - Stereo, w/ Speaker Driver (Qty:1)

Total Costs w/Conversion Costs ~$56

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 the display), 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.

Remember also that labor rates 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

The Apple iPod Nano second generation features a total component count of 348 components (not including box contents), of which 54 components are mechanical in nature. The second generation managed to integrate some of the features and components that were discrete in the first generation design, thus reducing overall component counts and complexity, as well as cost. The first generation Nano featured 383 components (not including box contents), of which 48 components were mechanical in nature.

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 core of the 2nd generation Nano design is the Samsung application processor. The first generation Nano featured a PortalPlayer PP5021C core IC (Dual ARM Core DSP) but a Samsung S5L8701B05 (ARM Core DSP, w/ flash disk controller). The switch to this Samsung solution integrated the flash disk controller out of the design (SST SST55LD019K ATA Flash Disk Controller) thus reducing complexity, component and manufacturing costs, and furthered Samsung's consolidation grip on Apple iPod product line, which, at the time of writing (Q4 2007) is for the time, all but complete.

In terms of the rest of the design, it consists primarily of the NAND flash, display and battery, in terms of key functional components and cost drivers. Although most of the core IC functionality is in the Samsung apps processor, there is still in both the second and third generation Nanos, the Wolfson Microelectronics audio codec. The application of this audio codec seems to have been key in delivering a smooth, consistent user audio experience from iPod to iPod.

Key Components

Main PCB

MPU

• Samsung Semiconductor - Microprocessor - DSP, ARM Core

Battery / Power Management

• NXP - Power Management IC
• Linear Technology - LTC4066 - USB Power Manager with Low-Loss Ideal Diode and Li-Ion Battery Charger

Memory*

• NAND Flash - Samsung Semiconductor - K9HBG08U1M-PCB00 - 32Gb
• SDRAM - Qimonda - HYE18L256169BF-7.5 - Mobile, 256Mb, 16Mx16, 133MHz
• NOR Flash - SST - SST39WF800A - 8Mb, Multipurpose, 1.8V

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

User Interface

• Audio Codec - Wolfson Microelectronics
• Clickwheel Controller - Cypress Semiconductor - CY8C21434-24LKXI - PSoC Mixed Signal Array w/ 512b SRAM

Display

• 1.5-inch diagonal, 176x132-pixel, 65k Color TFT

Battery

• Li-Ion Polymer - 233457 Size - 370mAH (estimated) - Multiple Sources

Apple iPod Nano 2nd Generation 4GB - Box Contents