iSuppli tears down iPod touch, determines ‘touch is no iPhone clone’

By Suzanne Deffree, Managing Editor, News -- Electronic News, 12/19/2007

ISuppli Corp.’s teardown analysis service has dissected the Apple iPod touch and discerned that while there is a strong resemblance to its Apple iPhone cousin, the touch is certainly on its own branch of the family tree, with distinct design and unique advancements compared to the iPhone.

The firm reported today that the 8-Gbyte version of the iPod touch carries a bill of materials (BOM) cost of $149.18, based on pricing in October. The BOM has decreased somewhat since October due to declines in pricing for memory semiconductors and other components in the iPod touch, with the cost falling to the $147 level during the intervening period.

When adding the iPod touch’s direct-conversion cost of $5.86—consisting of manufacturing, assembly and test expenses—to the $149.18 BOM, the total cost is $155.04, iSuppli reported. Noting that the 8-Gbyte version of the iPod touch sells for $299, the firm pointed out that the touch continues to follow Apple’s traditional pricing strategy with a price nearly double its materials and manufacturing cost at 92.9 percent higher.

To be true, the firm stated that its estimate of the iPod touch’s costs is strictly limited to expenses for components and other materials and manufacturing, and does not include costs for software, intellectual property, accessories and packaging. The BOM figure also does not include research and development costs, because such data cannot be derived from a teardown and component analysis.

Not just an iPhone without the phone

While the Apple iPod touch is an iPhone minus several features, including cell-phone capability, Bluetooth and certain software elements, the core features of the iPhone user experience are all present in the iPod touch, including orientation sensing, Wi-Fi and the signature 3.5-inch diagonal touch screen with multi-touch sensing, placing the touch right at the top of Apple’s iPod line, iSuppli said.

“The iPod touch likely represents the future of the high end of the iPod line,” said Andrew Rassweiler, teardown services manager and principal analyst for iSuppli, in a statement. “Click wheel-interface and hard-disk drive (HDD)-based versions of the iPod are expected to wane in favor of touch-screen and flash-memory-equipped models like the iPod touch. But despite its functional and physical outward resemblance to the iPhone, and the fact that its internals borrow heavily from the iPhone, the iPod touch is no iPhone clone, and has its own unique design.”
 
Rassweiler estimated the iPod touch and iPhone designs have a 90 percent commonality in terms of components.

He exampled the key ICs at the core of both the iPod touch and iPhone is Samsung Electronics Co. Ltd.’s  video/applications processor, a chip based on an ARM microprocessor core and employing stacked on-package memory. Costing $13.19 based on iSuppli’s October estimate, the Samsung processor accounts for 8.5 percent of the iPod touch’s total cost.

Another common part between the two products is a power-management IC from NXP Semiconductors,  costing $2.61 and accounting for 1.7 percent of the iPod touch’s cost in October, iSuppli’s teardown found.
 
The firm noted, however, that the iPod touch’s design differs from the iPhone in that it is optimized to meet its form-factor and cost requirements. For example, to cut space usage, the touch makes use of some advanced packaging for its components not seen in the iPhone, including 0201 diodes and passive components in 01005 enclosures on the touch’s WLAN module, iSuppli reported.

“This is the first time iSuppli has seen these components in a product we’ve torn down,” Rassweiler said. “Apple products always seem to push the envelope in terms of space savings, and therefore we often first see the newest, most-compact components in Apple products.”

Also of note is the touch’s memory density. The high-end version of the product includes 16 Gbytes of NAND flash memory, more than any product in the Apple iPod line, including the high-end iPhone at 8 Gbytes of NAND flash, the firm stated.

The touch’s printed circuit board (PCB) design is also significantly different from that of the iPhone, iSuppli reported. According to the teardown, the iPod touch employs a single PCB as opposed to the iPhone’s modular two-PCB design.

Other differences iSuppli noted between the touch and the iPhone include a new set of components to support the iPod touch’s WLAN functions and the location of the touch-screen circuitry on the main PCB, rather than on the touch-screen module.
 
New iPod touch in Q3 2008?

Based on the history of the various Apple iPod products, iSuppli has estimated a total lifetime of one year for the first-generation iPod touch. The firm believes that if Apple follows its historic product pattern, it will manufacture about 8.5 million first-generation iPod touches during the approximately one-year period from Q3 through the beginning of Q3 2008, at which time iSuppli expects the first-generation touch will be replaced by a new product.

ISuppli warned, however, that its forecast could be impacted if Apple chooses to replace the iPod touch sooner to coincide with the introduction of a new model of the iPhone. Furthermore, if the product lifetime extends to two years, production could increase to as much as 20 million units.

The touch’s flash-based arrival has also impacted the rest of Apple’s iPod line, iSuppli said.

“The touch, along with the nano, may drive Apple’s HDD-based iPods close to extinction in the near future,” said Chris Crotty, iSuppli senior analyst, consumer electronics, in the statement. “While not a dollar-for-byte match for HDDs, flash now offers sufficient capacity that many consumers are willing to trade off storage for advanced displays and features.”

For more on the iSuppli-conducted teardown of the iPhone, see “Samsung, Infineon big players in iPhone.” 

For the EDN-conducted analysis of the of the iPhone, see “Inside Apple's iPhone: More than just a dial tone.”